Large retailers have been urged to make a greater effort to gather relevant details onRead More
Retailers ‘must do more’ to make big data work
Large retailers have been urged to make a greater effort to gather relevant details on their customers' opinions and buying habits in order to make the most of their big data investment.
A new report from consultancy firm AT Kearney, which looked at the activities of firms in Australia, revealed that even though investment in data analytics tools is growing in the country, many companies are not getting the results they expect.
The Sydney Morning Herald reports that spending on big data solutions are growing by around 30 per cent a year. But despite this, only one in 12 firms are currently seeing a satisfactory return on this.
Principal and analytics expert at AT Kearney Ian St-Maurice said one of the key reasons for this is that enterprises are taking a much too broad approach to the technology and failing to target their best customers effectively.
"If you try to boil the ocean you're not going to move anything," he stated. Supermarkets, for instance, are spending far too much time trying to engender loyalty from their most promiscuous shoppers, when they should be focusing their efforts on retaining the business of their most loyal and semi-loyal customers.
"I don't think there's a lot of value in hunting people who might at best be break-even for you and might actually destroy value for you if you offer them too much," he said. "If I were [a retailer], I'd like to understand those people who are not quite promiscuous but still tend to stray to the competition. Often there is some event like a specific stock-out of their favourite item or something else that drove them to another retailer."
What businesses need to do is engage more directly with the customers in order to find out why they are turning elsewhere, and factor the results of this into their big data analytics solutions, Mr St-Maurice continued. Adding this qualitative information to a big data initiative can help add context to the process, leading to results that provide much better insight into where operations can be improved.
There could be many factors involved in causing a retailer to lose sales. Some of the more common reasons include unproductive foot traffic, low conversion rates, small baskets or too many people buying solely promotional items. But tackling these problems will depend on companies recognising where the issues lie and understanding the underlying causes.
For instance, if the problem is low conversion rates, retailers should consider conducting interviews with consumers as they exit the store to find out why they are leaving empty-handed.
"If it's done in a positive way, as long as you are very targeted with your questions, most people don't mind," Mr St-Maurice said, adding: "It's about getting a higher-level understanding of where, along that value tree, [retailers] think they're losing the game, and then focusing their qualitative and quantitative efforts on those levers and then testing and trying different approaches to turn things around."