Unformatted text preview: hat underlie sales and
profits. Once early customer efforts are proven, these fast-start systems
can be scaled up into more extensive data warehouses.
Using these basics, retailers can move a long way toward making smarter
business decisions. The key is to hire sufficient programmers and analysts
within their marketing and strategy teams to provide timely and
consistent customer data access and insights critical for prioritizing the
most attractive areas for action. Using Smart Customer Data to Generate
Superior Sales and Profit Growth
The smartest retailers will use customer insights to secure gains in two
areas. First, insights will help them to take action to influence how customers behave, leading to superior sales and profits. Second, insights will
lead to smarter business decisions, from marketing spend effectiveness to Smart data, smart decisions, smart profits 11 MCKI29 - Ret. Smart Des.7 8/9/00 11:08 AM Page 12 merchandising to store management, which also deliver significant sales
and profit increases. Retailers who look for opportunities in both areas
can expect the most impact from their customer data.
Creating Behavior-Changing Customer Relationships Winning retailers are using data to build behavior-changing customer
relationships to attract and retain their valued customers, sharpen their
customers’ shopping experiences, and strengthen their loyalty programs.
Boost spending levels among high-value segments When retailers understand customer behaviors and preferences, they can
create compelling dialogues with high-value customer segments. This
approach is far more effective than the conventional tactic of
sending generic “best customer” messages and offers. Winning players
tailor their communications based on specific insights into how individual
customers shop their stores or visit their Web site, for example, the
frequency of buying trips, departments preferred, relative spending levels,
and lifestyle demographics. From our experience, the greatest impact
emerges from tailored, ongoing (e.g., 12 month) communications
programs. These programs can include a mix of information (such as sales
promotions, new product arrivals, and new services), as well as special
offers and exclusive events.
To drive the greatest loyalty and spend increases, the key is sustained
contact with a branded theme and personalized messaging. In addition,
as Internet penetration grows, a number of multi-channel retailers are
beginning to weave their Internet sites into their customer programs to
provide more timely interactive contacts at very attractive delivery costs.
Beyond greater spending levels, these efforts, as we saw in Exhibit 2, can
also help lower attrition – the risk of top customers reducing spending
and making fewer shopping trips. Retailers thus maintain sales and profits
by keeping high-profit, at-risk consumers from migrating downward. 12 ©McKinsey & Company 2000 MCKI29 - Ret. Smart Des.7 8/9/00 11:08 AM Page 13 Draw repeat visits with distinctive in-store and on-line experiences Retailers can also build deeper relationships by improving in-store or
on-line experiences based on data about what makes certain stores or...
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