Smart Data Smart Decisions Smart Profits

G category store new training systematic training on

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Unformatted text preview: by business area (e.g., category, store). • New training – systematic training on how to incorporate data into existing retail decisions throughout the organization (e.g., category management, marketing planning, store planning, selling strategies). • New decision support systems – flexible tools that automate tracking and analysis of customer behavior patterns and metrics; supporting systems that provide for timely, efficient access to customer behavioral data within and across channels. 4 ©McKinsey & Company 2000 MCKI29 - Ret. Smart Des.7 8/9/00 11:08 AM Page 5 The Value of Customer Data • Connect customer behaviors to sales and profits – by focusing on the behaviors that drive sales and profits, retailers can define actionable segments and shape tactics that will directly improve both top- and bottom-line results. Perhaps more important, they can take a customer approach to budgeting, P&L management, and performance tracking, all of which are critical to sustaining customer focus across the business over time. • Develop compelling customer profiles and patterns – as data sources expand, the challenge is to develop robust profiles that combine insights into customers’ shopping, payment, and channel usage behaviors with targeted lifestage demographics. The most successful players develop a shared vision of the logical development stages across key segments to focus management on the benefits and key levers to influence customer behavior patterns. • Target customer migration patterns for superior returns – managing how customers migrate within and across categories and channels generally offers the largest value creation opportunity. For most retailers, the biggest value comes from taking proactive steps to stem downward migration within their top customer segments. In addition, migration data allow retailers to track and assess the need to reshape channel value propositions and economics as consumer shopping patterns evolve. • Focus on top customers for early wins – mining insights into the most profitable customers nearly always provides the biggest opportunities for near-term customer wins. Top customers tend to be the most responsive to tailored strategies, given their demonstrated commitment to and interest in the store; most companies underestimate the available wallet-share potential here. Most multi-category retailers can achieve 30 to 40 percent increases in spending from sustained, tailored programs focused on top customers. Smart data, smart decisions, smart profits 5 MCKI29 - Ret. Smart Des.7 8/9/00 11:08 AM Page 6 Creatively managing customer loyalty for sales and profit gains Bolstering customer loyalty1 can deliver very attractive returns. A leading multi-category retailer, for example, found that its customer base had eight distinct segments with very different sales, profit, and shopping profiles. The retailer also learned that over 70 percent of sales and profits were generated by 40 percent of...
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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.

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