Why data monetisation will redefine retail success
Focused. Centric. Obsessed. The words have changed over the years, but the sentiment remains the same; put your customer at the heart of everything you do, or someone else very quickly will.
As we enter 2020, grocery retailers have never been better equipped - nor less prepared - for that challenge. While the tools, technologies and techniques to help realize the true value of customer data have never been so nuanced, the very rules of the customer experience (CX) game have changed. Today’s gold standard very quickly becomes tomorrow’s cliché.
Some years ago, Forrester proclaimed the arrival of the ‘Age of the Customer’. Heralded as a period in which the power dynamic would shift from retail institutions to digitally-savvy consumers, the Age of the Customer promised both unparalleled opportunity and existential threat.
Like any suitably portentous statement, Forrester’s assertion has defenders and detractors in equal measure. On whichever side of the coin you happen to fall, one thing is increasingly hard to dispute: your company’s ability to monetize customer data will rapidly become the defining factor in its ongoing success.
An insights-driven culture is a competitive advantage
“We’re in an age when what customers think — and do — matters more than any other business factor,” writes Forrester Vice President Gene Leganza in introduction to the consulting firm’s 2020 predictions report. “Companies that are advanced at being insights-driven outcompete the majority of less insights-mature firms by a wide margin.”
The accuracy of that statement is something we can see for ourselves in the results of a new study. Commissioned by dunnhumby and conducted – appropriately enough – by Forrester, “The Future of Retail Revenues Must Be Data Led” surveyed more than 600 grocery retailers around the world on issues relating to data monetization, customer experience and revenue growth.
We learned much from the study, but one standout finding is that for those retailers that have chosen to monetize insights from their customer data, around two-thirds (61%) claim to have seen CX improve directly as a result of that decision. There are other advantages to data monetization too, revenue growth being an obvious one (56%) but increased innovation (52%) perhaps an unexpected bonus. But it really is the CX gain that stands out here.
Gearing up for the data monetization journey
In an age in which four in five businesses believe that they are competing “mostly or completely” on the standard of their CX, the opportunity to drive improvements through data monetization seems too compelling to pass up. In grocery retail specifically, with margins shrinking and costs rising, that decision feels like less of an opportunity and more of a necessity.
And yet, of those surveyed by Forrester, only a third (35%) of grocery retailers are monetizing insights from their customer data at present. An even smaller number (15%) are what Forrester defines as ‘leaders’ in this space.
If this sounds critical on my part, it isn’t intended as such. Although an attractive proposition for retailers who are effectively sitting on volumes of customer and sales data, the true value of which is not being realised, data monetization is no quick win. Indeed, 96% of the companies surveyed said they face inherent challenges when it comes to utilising their data effectively.
For some, monetizing data within the confines of a tighter regulatory environment is proving tough. For others, the fear of alienating or annoying customers through poorly targeted campaigns holds them back. Many also struggle with the technological expertise they believe is required to action that data effectively.
Valid concerns, all. For that reason, I believe that it’s important not to treat data monetization as something that can be solved overnight. Rather, as one purchasing director explained to our study panel, data monetization is “a journey”, one in which you need to “invest time and resources to really understand it and to get everybody… on the same route”.
Data-led businesses will dominate retail’s next decade
Navigating that journey successfully, says Forrester, requires grocery retailers to align their efforts behind four pillars: technology, people, processes and strategy. Combined, these factors can give retailers the bedrock upon which they can build a culture in which data-led customer strategies are the rule rather than the exception.
And those strategies do need to be data-led. Data-driven companies, those that use customer data to reaffirm and support decisions that have already been made, will increasingly find themselves lapped by those that use that data to shape those decisions from the ground up. The distinction may be subtle, but the implications are not.
The good news is that even small improvements to your capabilities in each of those areas can reap great dividends. Testing, learning and iteration should be the watchwords for anyone looking to harness the true value of their customer data.
And there can be little doubt that the time to realize that value is now. Obstacles may stand in your way, but they are hurdles your customers cannot – and should not – see. Overcoming those challenges will define your ability not just to survive, but to thrive in an insights-driven future.
Because, as we enter a new decade, first class CX will be defined not by the channels we use but by the connections we build. Data, and only data, gives us the power to embrace that change.