Why data insights will be more important than ever in the omnichannel ageby
We can order an item on Amazon.com while we are out shopping at BestBuy. We can buy a new pair of shoes on Walmart.com and have them returned in the store.
Barriers between channels are fading fast and the customer is getting a seamless experience across interfaces. Technology and data are enabling customers as well as companies be more informed than ever before and make better decisions.
Marketers are riding the Big Data wave, but…
Many retailers have developed analytical capabilities to capitalise on Big Data opportunity offered by the omnichannel technologies. Most of them use the data about who the customer is and what the customer does across channels to predict what the customer would need next and when, and incentivise her accordingly so she doesn’t purchase from the competitor.
For instance, if a college student with an adequate disposable income has recently bought a high-end DVD player, she is very likely to need DVDs in the near future. Marketers capitalise on this knowledge and work towards driving loyalty by offering the customer, say, a 5% discount on the newest movie or music releases.
While there is nothing wrong with this incentives-driven-by-first order-insights strategy, marketers are missing out on two crucial points. First, the competitors also have access to almost the same information about the customer (or eventually they will, since information barriers will cease to exist) and can offer a similar or better deal. Second, tech savvy, internet-enabled, mobile-toting customer is on the lookout for the best deals as well; she can compare your prices and offers with those of the competition, review feedback from fellow buyers on the go and choose the best offer.
So, with every marketer vying for the attention of the same customer base by resorting to similar multichannel approaches to woo the customer, what then differentiates a winner?
The answer lies in harnessing Big Data analytics the right way through an omnichannel strategy by developing a long-term synergistic relationship with the customer and using that to get a sustainable competitive advantage.
Why go the omnichannel way?
At the most fundamental level, omnichannel offers more synchronised and asynchronised touchpoints with the customers. It can be leveraged to not just get more signals from the customer, but also as an opportunity to influence the customer at each of these touchpoints.
This enables retailers to conduct more and more experiments to better understand the customer across many dimensions, including:
- What are her preferences (e.g. price, brand, quality, packsize, flavors, ethnic preference, etc)
- What and when would she purchase next
- What competing products / brands would she compare before purchasing
- Who she is (her demographics)
- What is her role in family, in her community and at work (e.g. only bread earner for the family)
In the omnichannel world, these insights can be harnessed by marketers to be constantly connected with the customer and provide the right experiences at every touchpoint.
Investing in customer relationship is the key
A true loyalty will develop if businesses manage to stay relevant to customers by empathising with them, appealing to their emotions and delivering a definite 'wow' factor. This is possible only by investing in customer relationship and providing real value that the customer cherishes.
For example, if a long standing customer – a middle aged female – has suddenly reduced her meat purchase, the first reaction of most marketers would be flood her with offers on meat and celebrate that they have leveraged big data. However, a more perceptive marketer will take a step back to analyse her behaviour holistically; a deep-dive analysis might reveal that she has actually increased her spend on fresh vegetables. Further analysis of her social media activity and browsing behaviour might elucidate that she has recently been diagnosed as diabetic.
These second order insights can empower marketers to act differently keeping the customer’s deeper needs in mind. The marketer could then send her relevant information on how other customers have coped with diabetes; the marketer can show how their store has inventory of diabetes friendly merchandise and a diabetes helpdesk, so the customers make right food choices. This kind of actions will take the relationship and perception to a new level. Loyalty will just be a byproduct of developing and sustaining such a relationship.
Empathy comes when businesses are able to look at the world from the customer’s lens. This requires a deeper understanding of the customer beyond her transactional data of 'this purchase' and 'next purchase'. It is important to get a perspective on what the customer really values, and why she does what she does. This should lead to second order insights about her unique personal, professional and social situation and what she would really want in the long run. These insights can go a long way in developing a long-term synergistic relationship in the world where there are no information barriers.
Today, with the lines blurring between online and offline marketing, marketers need to continuously up the ante in favour of the customer. While online players are increasingly foraying into the physical market, brick and mortar stores are opting for an online presence as well, all with the aim of providing the customer with a seamless and holistic experience. Thus, CRM plays a more critical role than ever before. Data is scalar and can offer point-insights. But human behaviour is vector, flowing from one point to the other. This flow needs to be understood in order to empathise with the person behind the data.
As retailing moves towards a Big Data empowered omnichannel world, information barriers and short-term incentives neither promote loyalty nor are sustainable. The only way to be a forerunner in the game is to invest in customer relationships rather than on incentive for next transaction. If the relationship becomes synergistic enough, incentives would not be required.
Srinidhi Rao is apprentice leader at Mu Sigma.