How Customer Data Can Affect Other Retail Operations
In the world of retail, the customer is king. Merchants spend a lot of time and effort trying to learn about their customers – their needs, their annoyance, their individual preferences and anything else that can help retailers sell products.
Data can be a valuable tool in assisting merchants with this task. Modern technology enables merchants to quickly and effectively collect information about consumers and then sort it into actionable reports. These reports can help a number of retail-related operations, whether it’s setting the right prices or creating compelling marketing campaigns that get shoppers to visit a retailer in the first place.
Using transaction and product history
As the Database Marketing Institute notes, there are two types of customer behavioral data that can help businesses engage their customers: product history and transactional history.
Product history refers to knowing the specific items that customers are purchasing. It’s one of the metrics that is most commonly used by companies and is executed by looking at customers’ purchases and then drawing conclusions to determine customers’ likelihood to buy other products. For instance, retailers could see that customers purchasing heavy winter jackets also purchase gloves and hats. Armed with this knowledge, they could create better bundle packages to encourage more purchases.
Transaction history is a less frequently used metric because it’s less understood. It revolves around utilizing three specific behaviors – recency, frequency and monetary value (RFM). These factors can also enable merchants to gain more insight into customer actions. For instance, RFM has helped retailers understand that frequent buyers respond better to marketing initiatives than less frequent buyers, or that recent buyers are more likely to respond compared to less recent buyers.
“External appended data and modeling is profitable in some instances for prospecting. For customer communications it is better to use customer product specific data combined with affinity analysis, and transaction based data with RFM analysis,” the source explains. “These two can increase profits in customer promotions with comparatively little expense.”
Applying insight broadly
As retailers move forward, it’s critical that they not only collect customer data, but also utilize it broadly. Metrics and other information can affect a wide-swathe of retail operations. For example, merchants shouldn’t just use data for price and product management, they could also leverage it for executing marketing campaigns.
Retailers can ensure all areas of operation have access to this data by using a solution such as SalesWarp. SalesWarp provides retail businesses with one centralized data source for all products, orders and customers that all key stakeholders and departments can access. By consolidating this important data and statistics, merchants can ensure the relevant people are able to do their jobs more effectively, regardless of whether they are responsible for price management, product and inventory management, warehouse operations, marketing or other strategic business areas.