By Richard Higginbotham, head of marketing at Transactis.
The retail industry is a complicated industry to track and measure – especially over the last couple of years when online shopping has boomed as consumers have shopped around, using various media channels in their search for bargains during the recession.
However, the consumer journey is a complex path to track and increasingly retailers of all types need to gain a real insight into the behaviour of each individual customer across all touch points if they are to get their marketing communications right.
1. Track customer behaviour
Different customers behave differently online – someone who has browsed through a catalogue and then logged on to make a purchase behaves differently to someone who has gone straight to the website without knowing what they are going to buy.
Individuals also behave differently online than they do offline. Some may find themselves spending more online as it is easy to click a button, but they may shop in a more organised and careful fashion if they are using a catalogue. Others may spend more frequently online but when shopping through a catalogue they may place a bulk order but less often.
Retailers need to use their own data to track the different ways in which customers interact with their business. This involves bringing all data within the organisation together to form a central resource that can provide a single customer view. Firms can then understand how behaviour differs from customer to customer – and then tailor their communications based on that insight.
2. Pool transactional data
Organisations can pool their transactional data so that each member has access to the data owned by other members. This means that consumer behaviour can be tracked across multiple retailers.
Each retailer can analyse frequency of spend, value, the type of products being bought, and share of wallet in order to target customers with relevant incentives and communicate via relevant channels.
If a retailer notices that a customer who only spends with them once or twice a year is buying more frequently from another retailer, they can adjust their communications accordingly in order to encourage the customer to buy more from them.
3. Don’t put all your eggs in one basket
Transactis’ Home and Fashion Online Retail Index found that, overall, spend in the home shopping sector was down slightly in 2009, but online shopping thrived. Of the total home shoppers in 2008, 38% shopped on the web. In 2009, the percentage soared to 47% and total web spend was up 12%.
But companies analysing such figures need to beware of drawing too broad a conclusion. They could mistakenly deduce that traditional all investments should go into the web. But when age profiles and shopping categories are studied in more detail it is easy to see that some customers still prefer to use traditional mail order.
This is particularly the case with older generations – but even then 7% of home shopping spend by the over 75s is conducted online. However, even amongst the tech-savvy 25 to 34-year-olds a significant proportion (26%) still choose traditional mail order over online.
Individuals within an age group should not be treated according to the tendencies of the majority but need to be treated specifically according to their own behaviour.
4. Don’t make assumptions
Traditionally middle-aged customers have been seen as safe and reliable, but home shopping firms that make this assumption risk losing out on sales.
Recent research by one of Transactis’ clients into the behaviour of their customers when it comes to multichannel home shopping has uncovered a marked change in dynamics for this profile – consumers who are not necessarily seen as high value but are usually seen as reliably loyal customers.
However, further research into these customers identified that when they go online to shop they become very commercially promiscuous and shop around for the best deals. This kind of insight indicates the need to continually track changes in customer behaviour in order to adjust retention and acquisition strategies.
5. Direct vs digital
Getting the communication channel right is essential. Many home shopping retailers that switch off what they perceive to be expensive and outdated catalogues and other direct mail communications have to go back as they realise the importance of combining channels.
Informed use of multiple channels is key in today’s retail environment, and one particular Transactis client has found through its own research that customers who receive a catalogue as well as trading online are actually 40% more valuable.
With the decision-making process that leads to a purchase much more complex thanks to the advent of the digital age, it is rare that a customer will use just one channel when choosing what to buy and how to buy it.
Rather, most consumers use a mix of channels nowadays, and retailers need to remain mindful of this as they develop a dialogue with a customer.
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