Are you collecting the kind of data that drives growth?
When talking with marketers about their challenges, many say that they feel they lack useful information to make relevant decisions that may actually create growth. In a world saturated with information this may seem out of place, but the data marketers have seems to be stalling the creation of powerful insights.
In general, most companies face the challenge of achieving growth in a profitable way with the additional pressure of doing so in ever-changing retail scenarios. Growth in sales revenue may come from increased size of customer base (more people choosing the brand) or from loyalty (higher rates of buying frequency or quantities).
In order to increase penetration, we need information regarding consumption gaps and in order to increase loyalty, we need data regarding accurate shopping habits of existing customers. If the data companies currently buy is not configured to identify consumption gaps, not matter how much analysis is put into creating actionable steps, foresights will be difficult to come across. Relevant information is needed in the first place in order to build significant insights.
Toby Desforges , co-author of “The shopper marketing revolution”, says that to define growth opportunities there are two questions to ask:
– Who currently uses the category and your brand, how often and in what quantities? Which of these consumer segments could be encouraged to use more?
– Who doesn’t use the category or your brand and why not? Which of these consumer segments would use your brand and how could they be encouraged to do so?
Of course, this means defining your consumer. Usage and attitude (U&A) surveys are infrequent and most times do not focus on the non-users so the second question will probably the most difficult one to gain insight from.
Whereas to realize growth opportunities the other two questions that need to be answered are:
– Who currently buys the category or brand for the consumer segments that could use more? What would make these people buy more frequently or in greater quantities?
– Who would buy for consumers who don’t currently use the brand but would? What would make these people buy your brand?
This helps identify your shoppers. This type of research is the one that has evolved the most with new tools that allow observing and tracking shopper behavior within stores. More structured shopper research is now available; marketers who realized this are working with tools like Shopperception that allows them to pin-point and unblock pinch points in the path to purchase.
Purposeful research for practical implementation
Sometimes marketers rely solely on the idea of increasing the size of customer base. There are other actions that could be included in the plan to tackle issues that may help overall growth.
If brands are losing 20% of their actual customers every year, research should also concentrate in finding more information regarding customer dissatisfaction. New insights on better services and updated relationship management could result in policies to stop half of them disappearing, which would be like getting an extra 10% of new customers the following year. With precise data that focus on why customers are leaving, improving retention rates may not be as expensive and challenging as attaining new customers.
Another way of increasing sales is by improving conversion. Conversion is usually calculated by the number of sales transactions divided by the number of shoppers who enter the store. Of course it is not an easy task, motivators to purchase vary from product to product and from shopper to shopper that is why the store has always been a very ambiguous place to get suitable predictions. In this case, Shopperception helps bringing new valuable insights by tracking shopper behavior in from of the shelf. Marketers should know (not guess) if shoppers grab and leave their products, how many shoppers stop in front of the shelf or just walk by, etc.
One of the most important things retailers can do to expand conversion rates is to understand why some visitors leave empty-handed. By observing customers as they move through the store, store managers should be able to identify some actions that may help turn more visitors into buyers. Also, analyze the relationship between traffic and conversion patterns in the store by day of the week and by hour, pay attention when conversion rates are sagging—these sags represent the times when sales are being lost. Usually, when the store is full of activity, checkout lines are longer and getting help from an associate becomes an ordeal and shoppers are more anxious.
Finally, with the increasing volume and variety of data, companies need to revisit their existing operating models of gathering and analyzing information. Data should be used not only to report but to become integrated in such organic way that more informed business decisions can be made using predictive analysis and scenario planning. Companies that leverage data analytics will become more agile, adaptive and innovative.