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The seven data insights of highly effective retailers

Posted 11/3/2014

If only you knew what you know.......the data your company already collects can tell you much more about your sales performance and customer behaviour than you might think.

Retail performance insights, Category / Product insights and customer insights can all be derived from data most retailers collect.

To find out more, read on.....

Seven insights to growing your customersSeven insights to growing your customers

Background

Data is collected by businesses of any size, but particularly in retail. The potential for revenue and profit growth enabled by owning and curating this data can be game changing – you only need to look at the likes of companies such as Tesco, Sainsburys and Amazon to see how customer data is driving their businesses forward.

In the last 5 years though, technology and software developments have levelled the playing field between large and smaller retailers and customer data has been propelled into the mainstream, such that no retail organisation should ignore. 

“The seven data insights of highly effective retailers”

Retail performance – Most computer based till systems will provide the raw data, but even the most basic sales ledger could be used to access this insight

1/  Sales – I know this is a bit obvious but, given it is so easy to see, how often do you look at this information? How does it compare to last week, to a year ago or to your forecast for this week?

2/ What is driving sales changes?  Following on from the first point, if there is a change, Why? Do you simply have more transactions, or are your customers spending more in each transaction? If so, is this caused by the number of items they are purchasing or the price of the items they buy? Rest assured it’s likely to be a combination of several factors, but do you know which one contributes most to changes in your top or bottom line?

Product or category insights – EPOS systems, where basket sales are recorded by item, will open further insight to you:

3/ What is your mix of sales by category - does this change over time and if so, why? This category or product level overview can be invaluable in understanding seasonality in your sales or spotting growth categories or product lines.

4/ Promotional Mechanics - It is essential when planning promotions to understand how a product is already purchased. Do you know how many baskets contain a given product, or how frequently it is purchased?  Indeed, on average, how many are purchased per transaction?  These are all key metrics when planning a successful promotion.

Customer Insights – These are potentially the most powerful insights which will help you to increase your profits through growing and attracting the most profitable customers, but they can be the hardest to curate.

5/ Growing your existing customers – Divide and conquer! Segmenting your customers into relevant groupings can unveil crucial insight to help manage your time and budgets.  It’s the 80:20 rule, where 80% of your turnover comes from 20% of your customers. So spend your time on satisfying your best customers and developing prospects rather than on the bottom 50% who contribute much less to your revenue. I’m not saying ignore them, but you should consider apportioning your time and budgets based on revenue potential rather than number of customers.

6/ Targeted promotions - the simplest thing you can do to grow sales is get existing customers to buy more.  If one of your customers doesn’t already buy your top selling item, then it could be very quick gain and expand their range. You might also look at the purchasing behaviour of customers for a product you are considering promoting – it will make you consider whether the promotion is going to have impact with all your segments.

7/ Attracting profitable new customers. If you understand the profile and behaviour of your most profitable customers, you can target your marketing spend, ensuring less is wasted – a snipers rifle uses much less ammo than a machine gun, but can still have deadly impact.

The simple magnificence of the seven insights is that they are derived from data you already collect in your organisation. As such this significant potential benefit can be reaped for no extra cost, to those who can access the rich insights – if only you knew what you know!.

If you are missing any of the first four insights then you may be missing crucial cues that will help you grow your business and stay ahead of the competition.

The last three consumer insights are key to ensuring you remain relevant to your customers, so they remain loyal to you.

If you want to discuss the “Seven data insights of highly effective retailers” or how to apply them in your organisation then please get in contact, or comment below.

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