Retailers in particular are responding fast with price-driven initiatives to get customers through the door. These initiatives are mainly designed to stop the customers from shopping with the competition and to drive customer traffic. But are they the right customers? Is it the right custom?
We worked with a client who had a two million-strong customer base. They measured success by the number of people coming through the door. When we analysed their data we discovered that 91% of their total revenue was coming from just 400 customers. That is, there were 1,999,600 customers who were either costing the business more money than they were making, or had not been offered something of relevance to get them to make a repeat purchase.
It’s therefore not the number of customers in your database that counts; it’s how well you know them and how well you can tailor your products and services to meet their needs.
It is also naïve to suggest that price will be the only determinant of customer behaviour. When people have less money to spend, yes, price is important, but it is every bit as important that they are buying something which will last the distance, so that the money they have worked harder to earn hasn’t been wasted. Woolworths in the UK didn’t collapse because their prices were not good, they were. One of the main reasons they collapsed was because they couldn’t find a balance between price and quality of either the product or the customer experience.
For insight to truly be of use it has to be connected to the immediate short-term needs of the business and to the ability of the businesses to affect change as a result of the new knowledge. Adding transaction data to customer research connects the short term with the foresight required for long-range planning and strategy development. Insight will help inform objective setting, but most importantly insight must be delivered in a way which allows the business to respond ‘at pace’. Technological advancements now mean that we can access and interpret data at breakneck speed, and we have people who know how to enable the technology to do the job brilliantly.
Businesses that learn to adapt themselves based on delivery of fast insight will be the most successful. If there is one lesson we can all learn from our current economic situation, it is that we must reassess who we listen to. Your own customers are the best people to tell you how to make your business succeed. The transaction and customer data you hold allows you to listen to them en masse and deliver their every need.
Do not miss the opportunity.
Paul Alexander is the founder and chief executive officer of the UK’s leading customer insight group, Beyond Analysis. Responsible for sales and marketing, operations, partnerships and customer service, Paul established Beyond Analysis in 2007 and has grown the business into a highly successful and internationally recognised consumer insight and strategy business.
An industry expert whose opinion is sought by business and marketing organisations across the world, Paul has extensive experience in media and advertising and is a passionate believer in the power of data to transform a business. He takes a holistic view of a business to provide marketers with the tools they need to support their strategic goals and understands how customer insight, coupled with through the line marketing, can be used to drive business prosperity.
He has worked extensively in both local and international markets, and understands what is required to assimilate cultures and board agendas in order to make cohesive strategies and business decisions. Previous positions held by Paul include chairman of C6, non-executive director of Deal Group Media Plc and global head of consumer markets for dunhumby LTD.