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In my last post, I posed five questions to retailers to help them determine whether they're ready for a customer-first mindset. Now, I'd like to challenge the retail basics that seasoned retailers were trained on, and suggest instead a new customer data science approach.

"Retail is detail" is common industry wisdom, and it means that achieving success is subtle and difficult. Success in any field demands practice and experience, and so it is little wonder that many senior retail and brand leaders and managers have vast years of involvement, and that most have grown up through the business in progressive steps.


Accordingly, business decisions are heavily based on experience, and more often on personal memory of choices and executions and how a thing has traditionally been done. As Chris Foltz, director of operations at Heinen's Fine Foods, told me, "Our industry, and our company, was very opinion-based, albeit expert opinions. We realized early on that we needed data on customer needs, customer satisfaction and customer buying behavior to improve our decision-making. As we adopted this metric-driven approach, I believe we prioritized our investments and effort to deliver a better customer experience."

These are a just few of the things that most retailers absolutely know for sure:

  • We must acquire new customers in order to grow our business.
  • Price-sensitive and "cherry picker" customers are not profitable. The competition is welcome to them.
  • Customers are different in every region of the country. There are also differences between urban and suburban shoppers.
  • Loyal customers are already giving retailers most of their spend in the categories offered.
  • Weekly flyers and promotions always drive footfall and sales.
  • After all these many years in the business, we know what customers want.

Why What We Know About Customers Just Ain’t So

The old axioms are no longer factual because customers themselves have dramatically changed, in their needs, expectations and experiences. Separating fact from fiction—and business truths from myths—will change how the business sees itself and how it will make decisions. The following are some of the new truths of retailing in the 21st century:

  • Expanding share of wallet from customers who are already "loyal" can better optimize growth.
  • Loyal customers need more love and investment than new customers.
  • Retaining loyal customers and reducing churn among "opportunity" customers can drive more growth than acquiring new customers.
  • Price-sensitive customers are often more profitable than other segments because their basket mix includes more private label products or higher-margin portion sizes.
  • Behavioral "buy-o-graphics" and intended trip missions matter much more than demographics or geographics.
  • Customer segments are typically distributed variably within geographic regions or zones, but all customer types exist in all stores.
  • Store clusters built upon customer dimensions are more useful to operations and execution than store groupings based on geographic zones or volumetrics.

What We Know for Sure Can Fit on a Post-It Note

Agility in retail can only be maintained by understanding customers and using data in all available quantitative and qualitative forms. Here's a personal story to illustrate:

A perception-based research tool measured one retailer's progress against factors that customers themselves had said are most important to them. Before the first customer perception report was published, I set out to learn how the customer ranking compared to the rankings that the senior decision-makers would assign.

The regular weekly senior team meeting brought together many of the wisest and most seasoned leaders in the business. After briefly introducing the research methodology, I asked the team to list what factors they thought customers would list as important, and in what order they thought customers would place them.

Not surprisingly, each merchant tended to rank factors in their department higher on the list than those for other parts of the store. Although little agreement was reached, a compromise ranking was eventually defined.

Comparing our list to the customers' list revealed spectacular differences; leaders had listed most of the same elements as did customers, but in completely the wrong order. That day, the team experienced a true epiphany—they realized that "we didn't know what we didn't know."

The lessons learned were:

  • Humility gained in discovering that "we don't know what we don't know" empowers the customer-first journey.
  • To become more relevant to customers, we must become fact-based deciders and activators.
  • Using customer data well creates true consensus and inclusive action.

In summary, “In God We Trust” ... all others must bring data.

David Ciancio is global customer strategist for Dunnhumby, a pioneer in customer data science, serving the world's most customer-centric brands in a number of industries, including retail. David has 48 years' experience in retail, 25 of which were in store management. He can be reached at david.ciancio@dunnhumby.com

Photo by Alex Motoc on Unsplash

Last March, when we realized the potential impact that COVID-19 might have on all aspects of our lives, dunnhumby launched a survey to understand how the virus would affect consumers food shopping habits. It was designed to help our clients better meet the needs of their Customers by seeing the impact of the virus through their customers eyes.

Little did we know at the time that one year later we would still be dealing with the impact Covid-19. This study presents the results of the sixth global wave of the study and the seventh wave for the United States. Other waves were conducted in March, April, May, July, September and November of 2020. This wave was conducted in February 2021.

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The Great Recession programmed lasting value-consciousness into the minds of consumers. How might COVID-19 rewire us again?

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Retail leaders must objectively understand how their business currently considers Customers before trying to set a more Customer-centric direction and focus. There are some formal assessment methodologies, like dunnhumby's Retail Preference Index (RPI) and Customer Centricity Assessment (CCA), which offer detailed evaluations of a business' capabilities, strengths and weaknesses based on Customer perceptions (RPI) or global best practices (CCA).

The approach outlined below is not intended to replace these formal tools; rather, these observations are intended as a kind of 'toe in the water' to help retail leaders form early hypotheses and points of views. These are rules of thumb, heuristics culled from global experience. Later, leaders might use these observations to informally check progress from time to time as a way of assessing whether the "program in the stores matches the program in our heads".

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In the first episode of Customer First Radio, Dave Clements, Global Head of Retail for dunnhumby and David Ciancio, Global Head of Grocery for dunnhumby kick off the series by discussing what it means to be a truly Customer First business, share which retailers and brands today embody a Customer First mindset, and examine how Customer First materialized during the pandemic with retailers.

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Photo by Will Francis on Unsplash

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In this series, dunnhumby tours the globe and speaks with some of the world's greatest brands, exploring their biggest challenges and how they are using customer data science to meet those challenges.