When knowing the customer isn't enough
Decision process automation is the key to delivering just the right offer to each retail consumer
"Know the customer” is a retailing mantra that’s been repeated ad nauseam since the dawn of the 21st century. Nonetheless, today’s successful retailers are only now beginning to achieve customer-centricity by replacing the product focus that dominated the 20th century with a deep understanding of the consumer.
How are these retailers getting there? They start by evaluating detailed consumer data from multiple sources to understand who the best customers are, then combine that information with what and how they like to buy.
Unfortunately, just knowing the customer isn’t enough in today’s retail world.
Retailers need to anticipate and shape future demand to come as close as possible to satisfying each customer’s unique needs. Achieving this at such a detailed level requires automated processes enabled by solutions with the latest in predictive analytics and optimization capabilities.
The ultimate goal is more than having the right product in stock at the right price; it’s about tailoring the entire shopping experience to create an emotional bond with the customer. In effect, this means turning today’s multichannel retail enterprise – in a consumer’s eyes – from “the store” to “my store.”
Understand customer segments
The first priority is for retailers to understand which customer segments matter and what is needed to provide a tailored shopping experience for those segments. Here are four steps that are critical to this process:
- Understand which customer segments matter through the use of intelligent clustering solutions.
- Conduct deeper analysis of market baskets, shopping patterns and lifecycle purchase histories.
- Select merchandise for each store that best matches the desires of local customers.
- Use detailed planning and forecasting to accurately anticipate demand for every store stocking location.
With this information, retailers understand who they are targeting and how to fulfill demand. The bigger question is how to execute this in a timely, cost-efficient manner for millions of customers and products.
Can you personalize customer communications, merchandise each store with the right assortment displayed effectively and optimize pricing in each individual store without hiring an army of analysts? With decision process automation (DPA), the answer is “yes.”
DPA includes both the full automation of manual processes and the integration of analytic and optimization routine results into process workflows that increase and speed decision-making capabilities. Business applications that enable DPA leverage sophisticated analytics to automatically execute decision processes.
Automation is the key
Automation is the key to enabling the delivery of just the right offer to each consumer, deploying exactly the right assortment to each store and optimizing the regular price for millions of SKUs. Examples include the latest marketing automation solutions that can target each consumer with relevant personalized messages or revenue optimization applications that determine optimal pricing for each item in every store.
Many DPA solutions are advanced versions of old stalwarts like merchandise planning, where the latest applications include automatic forecasting and recommended store assortment plans.
It is not just about the analytics; the analytics are the critical enabler and the “brains” behind the automated decisions, but they must be complemented by a configurable workflow that allows users to quickly evaluate exceptions and execute any remaining manual activities.
DPA allows the retailer to embrace a consumer-centric approach across all marketing and merchandising activities.
For instance, retailers can move away from exclusive use of mass media broadcasting focused on telling consumers what they should buy by shifting the marketing mix toward direct media that support the formation of the desired emotional bond.
Meanwhile, merchandisers can stop thinking in terms of what product “we should sell” and instead come closer to providing what each unique customer wants to buy in “her store.”
Originally published in STORES Magazine. Copyright 2008,
NRF Enterprises Inc. Used with permission.
Alexi Sarnevitz is the Senior Director of Global Retail Strategy for SAS.