Being a Data-Driven Retailer: What’s in it for You?

Being a Data-Driven Retailer: What’s in it for You?


The short-answer to the above question is: ‘a lot.’ However, that’s not adequate to highlight the vital importance of adopting a data-driven approach to manage retail business activities ranging from supply chain management to pricing and demand planning. As such, this post will provide a detailed overview of the performance benefits retailers enjoy by laying the foundation to become truly data-driven.

Before we highlight all the reasons why you must become data-driven, first let’s define what we mean by the term. Data-driven retailers are organizations that exhibit a high-level of prowess in their data management activities, helping them convert multi-channel customer data into actionable insights. It’s these insights that allow them to ensure delivering seamless (consistent and personalized) messages across multiple channels, such as in-store, web, live chat, email and mobile applications.

Below is a chart from Aberdeen Group’s Data-Driven Retail study illustrating the wide performance gaps between savvy retailers with Best-in-Class data management practices and All Others — more immature retail organizations.

Figure 1: Effective Use of Data Powers Superior Results

Retailers that excel in converting data into insights reap the rewards of their efforts across three main categories:

Operational efficiency: This refers to organization’s ability to streamline their business activities to achieve desired outcomes with minimal errors, cost and effort. Performance metrics such as time-to-market of products and services as well as average order delivery time are among indicators of organizational success in operational excellence. Data-driven retailers enjoy significant annual improvements (decrease) in bringing products / services to the market, compared to All Others. Improvements in this metric validate an organization’s ability to use data to understand the bottlenecks and restrictions in providing customers with products / services, and using these insights to fine-tune existing activities.

Financial success: Operational excellence should be a core focus of all retailers, however it must be balanced by the pursuit to ensure financial health, as the ultimate success for firms is often correlated with its performance in driving top-line and bottom-line results. Effective use of data helps retailers enjoy an increase over twice greater in annual return on marketing investments (ROMI), compared to companies without Best-in-Class data management activities.  Using a data-driven approach to establish the right prices for the right products and ensuring item availability also helps savvy retailers enjoy far superior performance gains in product margins and return on inventory investments — both key measures tracked closely to ensure financial success.

Customer experiences: It’s important to note that the aforementioned results are closely linked with organization’s ability to address shopper needs and address them in a timely and relevant fashion. Companies that master making effective use of data once again excel in this area, and enjoy approximately three times greater annual increase in brand awareness, compared to All Others. This validates the benefits of utilizing data to identify unique consumer groups and target them with personalized messaging aimed at making them aware of the company brand as well as purchase its products / services.

About the author, Omer Minkara

Omer Minkara is the Research Director leading the Contact Center & Customer Experience Management research within Aberdeen Group.

In his research, Omer covers the Best-in-Class practices and emerging trends in the technologies and business processes used to enhance customer experience across multiple interaction channels (e.g. social, mobile, web, email and call center). Omer’s research is widely consumed by senior-level Customer Care, Marketing, Sales and Service executives. He has published numerous industry research papers, which are used by executives worldwide to build and nurture strategic customer engagement programs. Omer also speaks frequently with global decision makers to discuss their customer management activities.

Omer has a strong finance background with significant international experience. Prior to joining Aberdeen Group, he was an auditor at PricewaterhouseCoopers in the Europe region. Omer has an MBA degree from Babson College, where he participated in the launch of a technology company, creating a customer acquisition and engagement strategy, and developing all the operational and financial forecasts for the enterprise.

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