The (Old) Rules Do Not Apply

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Out with the old, in with the new, advises Forrester Research. In a recent report, Five Foundational Requirements for Retail Customer Intelligence, the analyst firm notes that retailers that provide strategic customer intelligence in their marketing plans experience higher customer satisfaction and retention. 

The report details five core competencies that would allow companies to increase customer loyalty. “During the course of our research, it became very clear that retailers by and large don’t even have any of these five foundational basics,” explains Fatemeh Khatibloo, senior analyst at Forrester and the study’s lead author. “You’ve got to 

be able to do these five things well before considering yourself a customer-intelligent firm.”

1. A Consolidated View of the Customer: According to the report, a good chunk of customer data “still lives in disparate, non-standard sources and formats.” As a result, information from the call center, social interactions online, and Web site click-stream data are absent from the retailers’ marketing database. The result is an incomplete view of the customer. “The 360-degree view of the customer is a fallacy,” Khatibloo says. “Any company that says they have a 360-degree view—it’s probably a 320-degree view. We don’t have the capability to do that anymore, given how fragmented and differentiated the customer experience is and what customers are doing.” Forrester advises retailers to integrate their data across sales channels, lines of business, and inbound and outbound communication touch points to have a centrally located, comprehensive report of the customer.  

2. One-to-One Targeting: The report states that one-to-one marketing involves more than merely collecting and implying transactional data; preference management and contact strategy must be incorporated. Forrester recommends that retailers follow Netflix’s model by targeting email messages based on predictive analytics and customer preferences and integrating real-time customer intelligence (CI)–driven targeting in store and on their Web sites. 

3. Life Cycle Management: According to Khatibloo, many retailers make the mistake of rarely going beyond basic segmentation strategies for managing customer life cycles. The report recommends combining data with market insight and customer intelligence from vendor and manufacturer partners so that retail CI professionals can “dramatically improve loyalty and repurchase rates.” Khatibloo writes, “For example, a grocery chain could deploy a triggered step-up campaign by identifying when it’s time for a new mom to start purchasing the next size of diapers, while a sporting goods retailer can ensure customers are replacing running shoes at an appropriate interval by comparing the style of shoe with past transaction history.” 

4. Campaign Management: Though consistency and coordination are vital in today’s retail market, many big names are failing to deliver, the report states. Forrester cites Starbucks as a recognizable rule-breaker with its mobile app that allows customers to pay for drinks yet fails to allow them to redeem rewards on the same device. “While the right campaign management tool is the functional engine of the ‘right place, right time, right message’ mandate, retail CI professionals must also develop business processes that support dynamic, contextually appropriate, channel-agnostic communications, triggered by consumer behavior and CI best practice,” the report states.  

5. Analytics and Insights: Just using operational metrics and analytics to measure retailer success is not enough, the report states. “We aren’t seeing anyone using any kind of customer intelligence to create a very customized digital experience,” Khatibloo explains. “Customer-based metrics, such as segment migration and advanced lifetime value, trump reporting on campaign promotion metrics. These should replace old key performance indicators and become the foundation for the organization.”

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