Off the Shelf: The Retail & CPG Blog

As consumers, we look forward to the day when we go to our favorite Web sites and see only content and marketing that is interesting to us, not to John Q. Public.  Religious people should see ads for trips to the Holy Land, not to Club Med.  Football fans will be presented with football tickets, apparel and souvenirs not golf clubs.  Soccer fans will see soccer stuff not cookware.  Home decorating will see window treatments, but their spouses will see table saws instead.  Some of this is happening now on the Web, as everyone who shops Amazon.com can attest.  This is not generally true on other eCommerce sites, and even less in stores.  A few luxury stores keep records of what their store customers are buying and looking for, but by and large the retail store visit is still an anonymous shopping experience.

There are two primary reasons for this lack of information, one historical and the other systems-related.  The historical reason is that retail started as a transactional business.  Customers walk in, pick up merchandise and go to the checkout line.  This has worked well as evidenced by the amount of merchandise sold this way, but it is far from the best way to interact with customer.  The second, the systems reason is that it is difficult to know who is shopping with you at all times.  You can know that someone is browsing you Web store, but you don’t always know who it is.    She can order goods by phone based on your catalog, but is this the same person who was on your site.  You can see people in your brick and mortar store, but you probably don’t know who they are.  You can check someone out and capture the order but who is the buyer?  What you need for customer intimacy is to know every time your organization touches the customer.  A customer can call you on the phone with an customer service request.

Today, a customer walks into your store and buys a skirt.  She goes home and buys shoes on you Web Store.  Later she calls the catalog order center and orders a blouse. After they arrive, she calls customer service about a black mark on the shoe.  In the ideal world, every one of these touch points would be recorded and linked to the customer profile.  In the real world, each transaction is recorded separately with little or no accompanying info about who the customer was.

The key to obtaining this total view is customer identification at the transaction.  How can you get a store customer to provide you with her identity without annoying them? How can you know when someone is on your Web store prior to logging in?  When a phone order is placed, how do you record the identity of the buyer in a useful way.

One way to do this is by matching credit card numbers.  If two transactions are paid using the same credit card, it is likely, but far from certain that they were created for the same customer.  Husbands and wives often share a card, and older children often use the parents’ card, especially for online purchases.  A better way is by using a loyalty program.

Loyalty programs are often thought of as marketing tools.  That is true, but only part of the value.  A well-designed loyalty program will incentivize a customer to provide their loyalty card or number for every transaction. Airlines, rental car companies and some grocery stores are very successful at getting me to provide this data.  Free flights, free car rentals, and meaningful discounts on groceries and gasoline are all the incentive that I need to identify myself.  Without the free stuff, my compliance is sparse.  Online stores and catalog sales could also use a loyalty card for checkout.

Another online tool for discovering identity is the Web cookie.  A cookie is a small data file that browsers store between visits to your site.  Initially, users were afraid of cookies and would disable or delete them as a habit.  Over time, this fear has subsided and they are now left enabled and rarely deleted.  When an online customer arrives at the site, your code can examine the contents of the cookie to determine their identity and record any interesting or important behavior for later use.

Once all this data is gathered, it needs to be collated.  In the ideal world, a customer management system would be at the center of your system architecture. This system would contain every single contact between your customer and your organization would be recorded here.  The marketing analysis would be straightforward and the target customers for any campaign easy to identify.

 If that is not in place, then a data warehouse can be designed to aggregate this data from transactional feeds. This is less convenient but can accomplish the same thing; segmenting customers based on their buying behavior.  This insight might be the differential that causes your firm to slowly gain a clear advantage over the competition.  Alternatively, it may allow you to survive if the competition for your customers becomes fierce.