With the relentless pace of high street restructuring, modern retailing has truly become a game of ‘survival of the fittest’. Ambitious retailers are starting to look at how they make money from one of their most precious assets: customer data. The extent to which it can provide a full 360 degree customer view makes it even more valuable.
I’m not just talking about internet retailing here. People out shopping carry a goldmine of data on their smartphones in social networks like Spotify and Facebook and in location-based apps like Passbook and Foursquare. And new data-gathering gizmos are hitting the market every day. Shoppers wearing Sunnto fitness belts, for example, are gathering data on their heart rates and how many calories they’re burning and sending it to mobile apps. Using Big Data analytics, retailers can mine, blend and analyse this data to discover new sources of revenue within their own customer and prospect bases and also sell it on to third parties.
The ideal place for these technologies to converge and provide benefits is in the shopping centre. We’re already talking to business and IT leaders in malls and airports who are making plans to build infrastructures that will combine free Wi-Fi for customers with back office analytics services so that retail tenants will be able to send tailored offers to shoppers’ mobiles depending on their preferences and locations. In an airport, for example, a retailer could send a shopper who is en route to Oslo a discounted wine voucher to purchase before they get on their flight, knowing how expensive wine is to buy in Norway.
Compliance is not enough
However, the extent to which customers’ data can be monetised is constrained by one important element - trust. In the scenario above, the person receiving the wine voucher would have first needed to opt-in to a personal shopping experience by handing over some of their personal data, sacrificing privacy. So before attempting to monetise Big Data, some retailers will need to 'go back to the future' and old-fashioned practices of engendering customer loyalty by earning trust.
So how can retailers build trust with customers in the modern digital age? One thing is for sure: if you’re going for the full 360 degree customer view, it’s not enough to simply tick the necessary boxes and achieve minimum compliancy. You have to go above and beyond this and:
- Be transparent about how data will be collected and used and explain it in clear, everyday language and large print.
- Understand that some customers are more comfortable giving over data when they know it is going to be aggregated and ‘anonymised’. Clarify the scenarios in which you will use data in this way, for example to improve the customer experience and service.
- Offer a spectrum of opt-ins for customers to select as their trust with the retailer grows, ranging from 'no you can't collect any data whatsoever from me' to 'yes, I would like to give up all my privacy in exchange for VIP offers and discounts and a tailored shopping experience'.
- Understand that when it comes to opt-ins most customers will be guided by the positive experiences of friends and family, not retailers so it's important to give them time, choices and incentives rather than applying pressure or deception.
- Know that it only takes a second to lose a customer’s trust and have them opt-out. As soon as a customer sees something that makes them deeply uncomfortable, like a purchase they made being automatically posted and shared on Facebook without knowingly having authorised it, that trust is likely to be broken.
As Amazon proves, there’s no better way to sustain loyalty than by providing an unbeatable shopping experience that’s easy, personal and fun. This is where the ability to blend different data sources can really give retailers an edge. Take this scenario: my heart rate goes up when I walk past a bicycle shop window displaying that beautiful Specialised pro/race road bike I’ve always lusted after. Imagine if a data analyst working for the mall I’m walking through could alert the bicycle retailer to my location by analysing my Foursquare feed and then correlate this with data from my Sunnto app that showed my heart was pounding faster as I stood in front of the window. The shop might decide to send a ten percent discount to my mobile if I purchased the specialised bike in the next hour - and chances are I would!
That last example might seem very futuristic, but it’s theoretically possible today. And as the so-called ‘Internet of Things’ movement develops and there are even more consumer devices and gadgets out there like Google Glass with integrated sensors and unique IP addresses, the potential for retailers to get smarter and more profitable is quite staggering. In addition, the ability to increase customer revenue, the insights provided by Big Data analytics will become valuable currency for retailers to collaborate and negotiate more efficiently downstream with suppliers. So although it may seem like a large investment today to go that extra mile to build customer trust and loyalty, the potential return on that investment has never been greater.
Davy Nys is VP EMEA & APAC at Pentaho.