More retailers are finding that Big Data can revitalize an industry challenged by a slow economy, increasingly empowered consumers, mobile proliferation and an ever-growing number of channels.
Five ways Big Data is revolutionizing retail marketing
1. Growing, cross-channel data volumes
The rise of mobile, tablets and social media has accelerated the growth of available customer data. A typical retailer knows not only the basic demographic information about a customer, but purchase history, call center interaction, mobile/social interaction, supply chain data and more. The sheer volume of information available to retailers is unprecedented, even for brands that have years of experience analyzing customer data.
2. Increasing investment in technology
You’d be hard-pressed to walk into a Best Buy right now and find a hard drive that stores less than a terabyte. Storage is so cheap that it’s leveling the playing field for many companies when it comes to Big Data. Retail leaders have started investing in centralized databases and focusing on data hygiene and analytics, giving them insight into their customers that wasn’t possible even a few years ago.
In 2013, retailers will spend nearly $2 billion on business intelligence and $9.4 billion on infrastructure. For Macy’s, the investment has paid off: Tomak, the executive who modernized Macy’s data processes, attributes a 10 percent increase in store sales to improved analytics capabilities.
3. Solving the omnichannel puzzle with data
Retailers with a data-centric mindset are crunching an incredible amount of customer behavior data to understand how customers are researching and buying products. Insights reached through analyzing transaction data, foot traffic and in-store checkout wait times have led to shifts in marketing strategies and in-store tactics. In response, retailers have introduced in-store kiosks, free Wi-Fi, and armed their sales staff with mobile devices that allow them to better serve Web-savvy customers on the spot.
Similarly, marketers shouldn’t ignore one channel at the expense of the other. In fact, Walgreens found that customers who shop both in-store and online spend 3.5 times as much as customers who favor only one channel.
4. Improving personalization
Big Data gives retailers the unique opportunity to mirror the shopkeeper of yore, adapting communication and sales techniques to life events and preferences. Research cited on the Harvard Business Review blog found that personalization can deliver five to eight times the ROI on marketing investment and boost sales 10 percent. Consumers are fine with sharing personal details so long as it earns them something.
Technology will further enhance the consumer experience as Next Best Offer (NBO) technology becomes reality. NBO represents the convergence of real-time data analysis and mobile offers. By reaching consumers at the right time, in the right place, through the right channel, NBO provides personalization on steroids and is the future of the industry.
5. Segmenting the most valuable customers
Harnessing Big Data is a massive undertaking, but the payoff lies in finding the most profitable customers. Prioritizing these high-value customers is essential to success, especially considering that it costs more to acquire new customers than to keep the best customers. Improvements in data-crunching abilities allow retailers to analyze the behavior and needs that drive individual customers, which results in more relevant and targeted offers.
A recent study by Aberdeen Group found that 59 percent of retailers identified a lack of consumer insights as their top data-related pain point. Yet retailers have more customer data than ever. For brands competing in an industry with slim margins, harnessing the right data and smart analysis will lead to better engagement, more loyal customers and a competitive advantage.