Managing the Enormity of Shopper Data… by knocking off a few gas stations on the way to the perfect crime
By Mark Heckman / July 2017Insights
Much has been written and pontificated relating to database marketing, customer segmentation schema and related strategies. We all know that there are many ways to slice and dice shoppers, whether it be their spending behavior, their demographic profile or life stage or lifestyle mandates. Of course, once you have segmented the shopper base, you should be able to connect with them with more relevance. Makes sense, right?
As someone who has spent the majority of his career on the retail marketing side of things, when I talk to brand people, especially the ones who are relatively new to the food industry, one of the first questions they have pertaining to retailers is,
“Why are so many doing so little with so much customer data?”
Here is the short, slightly glib answer. Most retailers, being basically not equipped with sufficient database marketing talent to leverage the data they have. In their defense, these are smart people, but they are typically immersed with the blocking and tackling activities necessary to run stores and make a few pennies at the end of the day. Budgets also keep them from adding inherently expensive staff needed for such endeavors. In short, they have little time or even acumen for complex customer segmentation theories and programs.
In fact, many retailers that have assembled some fairly impressive customer databases over the years, still struggle to leverage these data efficiently and effectively. I counted myself among this group.
Mass Marketing Remains the Standard
Despite progress among few, most retailers still rely on the tried and true mass marketing methods of yesteryear, i.e., the weekly circular, TV and radio advertising and other mass modes of reaching their shopper base.
This is not to say that the future holds no place for mass marketing. Mass will and should continue to play a role in any communications strategy. More accurately, it is incumbent upon retailers and brands to attain a more productive balance between mass and targeted going forward. The question remains:
“How do retailers make the necessary, meaningful transition from mass to targeted customization?”
Scars of experience have led me to the painful conclusion that “great is indeed the enemy of good”, when it comes to retailer customer strategies. A significant number of options that are possible from a platform perspective today are too complex for novices and time starved retailers to execute and maintain. These complex strategies also require content and funding that can only come from the buckets of dollars retailers use for mass marketing programs. To be blunt, retailers and brands remain all too entrenched in traditional mass programs to divert funding to targeted customer specific initiatives.
So that leaves us with starting simple, building incremental credibility and subtly diverting dollars and human capital to a more targeted marketing approach. I call it “knocking off a few gas stations on the way to the perfect crime”.
It Begins with Access
Many retailers I talk with are still struggling with accessing their data. While this situation has improved over the years, early entrants into database marketing were guided by the IT department and their general disposition that the system requirements needed to far exceed the retailer’s ability to use that system. All well intended, but yet that decision left many retailers with expensive, impractical platforms.
On the other hand, a significant few retailers, that stumbled early-on with expensive platforms, have discovered that new third-party report writing platforms can now easily integrate into most relational databases and are providing an affordable way to produce useable reports and track and segment shopper behavior. However, even those that are making good progress with data access, still struggle with maintaining consistent communication with the shopper base.
Keep it Simple at First Before Venturing into Expensive Complexity
Tracking this discussion to its logical conclusion, here is a quick “bridge” plan, one that gets the CRM retailer in the game, but does not tax the entire enterprise to change the way it does business overnight.
- Step One: Identify your best shopper base. Track them, reward them, and make certain best shoppers know that YOU know they are special.
- Step Two: Devise a way to recognize first time customers. Develop a ‘mechanized’ bounce back reward or message at the point of the very first engagement that incentivizes a second trip. If there is a second engagement, recognize that as well. If, after a reasonable period of time, if there is no second engagement, devise a plan for that scenario.
- Step Three: Track defection and attrition. Devise intelligent ways to understand how to allocate resources to mitigate the pace of losing shoppers or share of shopper’s wallets.
Focusing on just these three aspects of Customer Relationship Management will enable retailers to smartly use their customer database in a measured, reasonably affordable way. Once “wins” are gained in these three areas, more specific strategies can be employed, hopefully with funding from brands and other sources that are convinced your CRM program works and delivers results.
Author’s note: I original wrote this piece in 2012 and stumbled upon it a few weeks back. My first reaction was that many of the issues outlined then, still hold true five years later, albeit progress has been made by forward -thinking retailers. The theme of this article remains, however, it’s better to do simple things correctly before you stub your toes and budgets on grandiose, complex initiatives. I would also add, that title of this article is not meant in any way to condone robbing gas stations!!
Contributed by Mark Heckman, CEO – Accelerated Merchandising, LLC. Mark is a retail industry veteran that leverages over 25 years of executive level experience based in retail marketing, brand partnerships, category management practices and consumer research. Mark has worked with a number of highly reputable organizations within the retail supermarket industry. He has served as Director of Marketing Research at Marsh Supermarkets, VP of Marketing for Randall’s Food Markets, MARC Advertising, and Valassis Relationship Marketing Systems. Mark has previously served as both member and chairman of the Food Marketing Institute’s Consumer Research Committee and is currently the CEO of Accelerated Merchandising, LLC. a research-based merchandising company co-founded with Dr. Herb Sorensen. Connect with Mark Heckman or @markaheckman