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Unformatted text preview: nced that retailers need to find the
value of smart customer data in their organization, build smart customer
databases, and use smart information to create strong customer
relationships and to make better business decisions. Then they will be able
to nurture and protect customers and reap smart profits as their reward. 2 ©McKinsey & Company 2000 MCKI29 - Ret. Smart Des.7 8/9/00 11:08 AM Page 3 Finding the Value of Smart Customer Data
While retailers have a great deal to gain from a deep understanding of
their customers’ behavior, many are still struggling to get and use
customer data to pursue profit growth opportunities. Historically,
many retailers have been stymied by a traditional focus on mass
marketing – reinforced by financial market valuations derived mainly
from top-line sales and comparative-store sales growth. These pressures
tend to place customer-centered data acquisition and strategies low
on the corporate investment agenda. Some also have lacked access to
enough customer-level data to gain insights to make smarter decisions.
And, even when data were available, many have underinvested in
the new analytic talent and tools necessary to turn their customer data
into actionable insights that could drive increased sales and profits
(see “Building the Customer Organization”).
Still, there is good news for retailers who are seeking to get smart about
their customers and to make smarter business decisions: both the sources
of data and the technology to mine it have improved rapidly over the last
few years. Through well-penetrated loyalty programs, growth in the
number and traffic levels of retail Web sites, proprietary credit databases,
and "reverse appends" of third-party credit cards, U.S. and European
retailers can amass a treasure trove of customer data – the essential
material that retailers can use to make innovative decisions to outperform
their competitors (see “The Value of Customer Data”). From these
kinds of data, retailers can make smart decisions to, for example, increase
customer loyalty and influence cross-channel behavior. Smart data, smart decisions, smart profits 3 MCKI29 - Ret. Smart Des.7 8/9/00 11:08 AM Page 4 Building the Customer Organization Successful use of customer data requires new capabilities
within the marketing and merchandising teams, as well as
among store managers and staff.
• Customer mind-set – the organization needs to recognize that some
customers are more important than others and make the appropriate
trade-offs to capture value, from marketing investment reallocation
to changes in category management store and tailoring. • Top management champions – they will ask the tough questions about
how key customer segments are performing over time and what actions
are needed to leverage customer insights to improve decisions across
the business. • New metrics – customer segment-level reports that highlight key
performance trends (e.g., downward migration, attrition) overall and
key improvement levers...
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This note was uploaded on 02/08/2014 for the course RCS 391 taught by Professor Jeanielim during the Fall '14 term at University of Tennessee.
- Fall '14