payments - Retail Systems

Imagine the scenario – a young female
shopper takes a handful of new clothes
into the changing room of a High Street
retailer to try on. They look good, but her
mood is not quite right. Just then, her
phone sounds with an SMS suggesting
some music that might suit her outfit.
A quick listen and download and her
decision is made – the clothes are going
to be bought after all.
But this scene is not imaginary – it has
already been trialled by a number of High
Street brands working with mobile phone
network O2. Using a combination of RFID
tags in swing tickets, profiling music
tracks to match certain clothes, and
location-based advertising, the clothesbuying
experience is transformed into
a mood-enhancing multi-channel event.
Something similar is happening in
Andrew Collinge’s hair salons. Customers
can receive a loyalty card that links
their visit with their Facebook profile
when they tap on a special device
during their visit. Both parties get the
benefit of profile updates and loyalty
across the retail space as well as the social
network. Both of these solutions require
the same things – a recognition that
the new customer wants more than just
the standard shop visit, an understanding
that data is the new asset to support
these multi-channel interactions, and an
investment in data management. Without
spending money to get the product, sales
and customer data right, retailers risk
losing those precious customers who are
still actively transacting in their outlets.
In a cash-constrained era like the
present, however, making the case for
putting more of the budget into loyalty
systems and data management can look
difficult. Many retailers already have
some form of customer database in place
and may be using the information they
have captured to run loyalty marketing
programmes.
Times change, however, and data
changes, too. At the simplest level, a
retailer that wants to stay in a dialogue
with its customers must make sure it is
maintaining their personal information
and keeping it up-to-date. In 2011, there
were nearly one million house sales
completed, so any retailer with a national,
mass market could find one in 23 address
records that were correct at the start of
the year but not by the end.
Spending money on managing that
address data makes simple business
sense, especially if it is used to send out
physical messages in direct mail, and even
more so if it is relied on for deliveries.
IMRG has calculated that a failed delivery
costs an average of £4.25 (and losing
a customer as a result costs £91.34 on
average). The total cost to the e-tail
industry each year is put at between
£790 million and £1 billion, or 70p for
every parcel dispatched in the UK.
Recognising the underlying costs
to the business from poor data
management is at the heart of data
governance. Identifying where they
result from poor processes – such
as customer data being incorrectly
entered the first time they are given a
loyalty card – or simple demographic
shifts – such as social mobility – is the
basis of a robust business case for
further investment.
The Data Governance Forum has
developed a business case whitepaper
for its members that works through
six of the most typical dimensions on
which a compelling argument for more
investment into data management can
be made. These range from the highly
CFO-friendly (revenue generation, cost
mitigation) through to the more arcane
(risk mitigation, asset creation), but all
provide clear reasons for investment
that can be linked to a positive ROI.
Most retailers already know the
comment
Closing the sale for data investment
David Reed, founder of the Data Governance Forum, explores how the correct use
of data can transform the buying experience
impact that data can have, not least
because of the large-scale and bestin-class
examples in this sector. Tesco
Clubcard is a well-rehearsed case
study in transforming a business by
applying customer data to everything
from product assortment through to
loyalty marketing.
The success Tesco found with its
scheme may be assumed to be a
fixed and mature example. Yet the
experience of Christmas 2011 is very
telling, when the retailer moved away
from its key customer asset (the loyalty
card) by cutting its points allocation. It
allowed Sainsbury’s to make up ground
by leveraging its own well-established
Nectar card database to drive highly
targeted and tactical promotional activity.
Both of these supermarket giants
spend hundreds of millions of pounds on
their data every year, accepting it as a
simple cost of business. Other retailers do
not have to spend such large sums – the
Andrew Collinge scheme will be running
at a fraction of that cost. But the return
on investment from any spend on data
is invariably positive. Now how many
other aspects of retailing can you say
that about?
David Reed founded The Data
Governance Forum to represent, inform
and connect end-user organisations
which manage personal information
RS
June - July 2012 RS 49