Partner Article

How to make each penny the consumer spends truly count

From Blockbuster to Jessops, the struggle that the biggest names in retail have endured during the last two years has dominated the news agenda. What’s more, try as they might, the collective minds of the country’s leading industry figures from George Osborne to Mary Portas have failed to find a solution to safeguard the future of Britain’s retail industry. In truth, the reality is that we now operate in an increasingly competitive environment, where consumers are driven by a desire to extract value from each and every purchase.

The question for many is just how they go about maximising the return from existing and prospective consumers to prosper? The truth is that there is no quick fix or easy route to achieving this but using the right method at the right time to deliver targeted offers that encourage spending is key. What’s more, there are five steps that any retailer can apply to truly maximise the value gained from existing customers and help acquire new ones.

1. Make sure you market to your competitors’ customers

This represents the most popular way for any retailer to drive incremental sales and it is perfectly natural that many retailers pour their marketing budgets into enticing consumers away from their competitors. However, there is a real risk that each pound spent on implementing this strategy will be done so wastefully. That is, unless the retailer ensures that the chosen method and channel to deliver an offer resonates with customers that they know shop with a competitor.

The trick here is to issue an offer using a platform that provides a 360 degree view of a customer’s spend and ensures that the promotion is delivered only to prospective customers rather than existing ones. A complete picture of how, when, and where a consumer chooses to spend their money can only be developed with any confidence by combining social, geo-demographic, geo-location, search and transactional data. Once these five elements are brought together then a retailer can build a complete picture and embark on a truly targeted outreach, identifying the consumers with the highest propensity to spend and ensuring their communications match this.

2. Don’t discount the guaranteed sale

All too often retailers undermine the effectiveness of their promotional marketing activity by making their objective to encourage both loyal and prospective consumers to part with their money. However, by delivering a money-off deal to a loyal customer, the retailer is unlikely to increase their propensity to buy and simply reduces the value they get from the recipient of the offer. It would be far more sensible for a retailer to use the information they should already have on that individual to identify a value that will encourage them to spend and then incentivise the resultant offer to increase the frequency with which they buy.

3. Identify the purchase triggers from other retail sectors

Too many retailers fail to recognise the way that one sector impacts on the consumer’s propensity to purchase in their own industry. For instance, a customer that makes a high-value purchase with a DIY chain becomes a more likely prospect for electronic and home furnishing outlets, as the chance is greater that they making renovations and further spending is planned.

The key to leveraging this opportunity for any outlet is to ensure that they have the data capabilities to analyse the purchase behaviours of the consumer across different sectors and then make sure they monitor and learn from the campaigns that take place. From here any retailer can begin to isolate specific purchase behaviours and predict when consumers are more likely to make a purchase across any given sector, and then target them with a promotion or piece of marketing accordingly.

4. Adopt an ’always-on’ strategy

The value of busy trading periods is there for all to see. One only need look at the festive season to find a period of time that is awash with marketing messages, and then followed by cut-price sales to help trigger a supplementary uplift in sales from existing stock. Where an outlet can really begin to prosper is through the effective targeting of promotional offers outside these busy periods. This is where access to, and analysis of, transactional data over a sustained period can be used to develop a calendar that tracks the peaks and troughs across these different trading windows and ensure that cashback offers are delivered at the optimum time. In order to do this though each retailer needs to invest in its data analytics capability and infrastructure to make sure they deliver offers to either enhance their existing promotional activity, or to launch an entirely new campaign.

5. Invest in the power of the analyst

The truth is that retailers already have part of the answer to enhancing their promotional strategies in their possession through the SKU data from each transaction that takes place. However, in most cases they fail to truly realise its potential by investing in the resources required to build a complete 360 view of the consumer. This is where an internal resource or an external provider to track and analyse the customer’s purchasing habits is vital. The brands that stand to prosper in the long-term are those that develop comprehensive methodologies that allow them to meet consumer demand for personalised services and offers.

Gavin Dein is the founder and chief executive of data monetisation experts Reward, the company behind RBS Group’s Cashback Plus scheme.

This was posted in Bdaily's Members' News section by Gavin Dein .