Customer Analytics Solutions in Retail, 2016

Predictive analytics in retail

Retail industry is backed by customer analytics. It is considered to be the force that unlocks the hidden value in the customer data. How true is that? Well, we need to find out the truth!

Customer analytics in retail has undergone drastic changes over the last few decades. Today, the challenges are too many and competition is increasing, especially in the online market. To meet the explosive market growth and harsh market environment the retailer needs to go through and analyze terabytes of data. This way a retailer can closely understand customer’s requirement and get through the possible difficulties in a better way. Using customer analytics, retailers can increase sales, improve overall business performance and can have an edge over the competitors.

During the process, the retailer has various issues cropping up like increase of margins at a product level; tailor-made customer offerings; best product pricing model; track online shopping patterns of customers and providing them with personalized offerings; plan an effective stock delivery in peak seasons; store specific promotions and offers; marketing strategies to be employed to get maximum benefits etc. All these issues need strategic planning that is generally provided by business analytics. This can help retailers break-down and incorporate information collected from different sources and provide a better perspective to customer needs and preferences.

For this, one needs to concentrate on customer analytics, custom-made offers and customer-centric merchandising. Let’s understand in detail each aspect of customer analytics solution in retail:

  •  Customer analytics

Customer analytics is a critical part of this entire process. It addresses customer segmentation and customer metrics. Retailers usually follow RFM (Recency, Frequency and Monetary) model to measure customer behaviour such as how recently the customer shopped, how often the customer shops, and how much is a customer’s spend and profitability. Segmentation of customer has several other methods too. Whichever way one measures customer needs and segments it, the main purpose of this insight model is to empower growth and profitability of business. If each aspect is measured correctly retail companies can take timely and informed decisions.

  • Custom-made offers

Ones you have segmented the customer, it is time to show your loyalty and concern towards him. Most of the online retailers design custom-made offers that not only attract a customer but retain them too. Using some mathematical techniques these offers in the form of special coupons are designed and distributed in order to earn loyalty of a customer. To find the best possible solution using the business rules or constraints retailers succeed in meeting customer demands, increase sale figures and finally, improves their business performance.

  • Customer-centric merchandising

Customer-centric merchandising is one such feature that greatly affects promotions and assortments. Generally, the merchandising teams associated with retailers do not have complete access to the marketing unit’s data. This step is critical for long term growth and profitability of a business. In designing custom-centric merchandising various aspects are considered such as store localization and clustering analysis, product pricing and elasticity analysis, assortment and shelf space optimization and out-of-stock analysis and management. If all these areas are analysed minutely – insights and impacts are significant.

This advanced customer analytics solution helps identify the set of profitable customers who can be converted into meaning clusters using segmentation method. Segmentation offers a dedicated set of customers who needs to be marketed hugely as they are most likely to purchase. Tapping of niche markets is a must. Furthermore, you need to work on your product quality so that customer needs get fulfilled. To figure out the best customer analytics solution in retail one needs data mining solutions from the experts. Only then a retailer can outperform their competitors.

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