BI Performers Take Long-Term View of Customer Data

To combat Wal-Mart's dominance, grocery chains are starting to merge, which could pose a problem for IT departments. According to a report from the IHL Consulting Group, grocery chains are struggling with the lackluster performance of many loyalty programs due to the extent of legacy hardware and software at the store level. The report says point-of-sale hardware is a good area for grocery IT spending. Read this article on how career intelligence could help in the way customer data is viewed.

Retail is an production where the antiquated 80/20 edict certainly applies. Bountiful retailers make most of their money from a relatively petite bundle of core customers. Loyalty programs were created as a way to make those customers feel more chief - and get them to spend more money.

Yet few retailers use such programs to their advantage, says Greg Buzek, head of the state of the IHL Consulting Group, in an August eWEEK article. Buzek says most stores simply offer customers discounts on products they already purchase instead of trying to analyze patterns in their buying behavior to find out new ways to appeal to them.

A desire to gain greater visibility into their customers' behavior is leading retailers to adopt business intelligence. Nearly 70 percent of retailers recently surveyed by the Aberdeen Body already use BI tools while another 26 percent plan to invest in BI. The ability to react quickly to changes in customer demand was the number-one actuation for adopting BI cited by survey respondents, according to a CIO.com article about the research.

Compared to their expanded average peers, the companies Aberdeen Assemblage identifies as best-in-class tend to use BI tools and technologies to obtain a more long-term outlook of their customers' behavior. From the Aberdeen report (which may be downloaded for free through the end of March) :

Best-in-Class retailers are almost twice as likely to focus efforts on improving the activity value of their customers as a business intelligence strategy. This involves understanding customer profitability, the offers and incentives that draw customers back for repeat business, and the comprehension to take supply of opportunities for cross-selling and up-selling customers on subsequent visits.

British retail chain Sainsbury's is one society that appears to want to move in a more proactive direction. As detailed in a Computerworld UK article, it is undertaking a multi-stage BI initiative with companion the Loyalty Management Group.

In phase one, Sainsbury's will analyse sales data from its stores to monitor the performance of selected brands and determine when and where sales are strongest. Analysis will too yield material on which products consumers purchase together and, if sales drop, which products shoppers buy instead. The second phase will suggestion information on how promotions affect sales and how well new products sell in stores. A proposed third folio would analyze data to determine which kinds of media are most effective for sales promotions.

According to LMG"s development and cooperate manager , the step can get absolutely granular with information from members of Sainsbury"s loyalty program. He says:

We"d be able to show information like: women aged 18-30 in a certain atom of the country are buying a piece of Diet Cola.

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27 Nov 2008 15:54:18

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