Are you looking to increase your contactable Customer base? How much money are you losing on incorrectly identified Customer communications? Throughout our 30 years of big data experience working with clients across industries around the globe, we have found that maintaining contact through relevant Customer engagement is a crucial component of putting the Customer First.
Essential to preserving contact data is ensuring that you have the most up-to-date information from your Customers; not an easy task. On average, people in the United States will move an average of 12 times in their lifetime. United States Postal Service data indicates 14% of the population change addresses annually. As email contact has grown, it's important to note that, on average, 30% of people change their email addresses each year. This is driven by ISP or job changes, or just to stop being spammed. As people move away from home phones to primarily mobile devices, phone numbers are stabilizing as consumers maintain the same numbers through physical moves.
<p>
Contact data maintenance also includes an effective and trackable process for removing Customers who "opt out", unsubscribe or otherwise request to not be contacted. Beyond Customer fallout for not honoring their request, regulations such as GDPR and CCPA can deliver fines as high as €20 million, or up to 4% of the annual worldwide turnover of the preceding financial year (whichever is greater), for any violations.
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So, how are you collecting and managing sensitive, frequently changing Customer metadata? These three questions can help you perform a quick data health check for your business:
</p><ol class="ee-ol">
<li>How flexible are our Customer data platforms? Can multiple departments use the same Customer master data profile?</li>
<li>What are the accuracy requirements for each of our communication channels?</li>
<li>How unique is our Customer data asset and how valuable is it to our company?</li>
</ol><p>
Here are the most common data management options we encounter across industries:
</p>
1. Internal:
<p>Maintaining Customer information manually through an internal data team can be time-consuming and costly. It may require Customers to update their information online or through a call center, with an internal data team to validate the changes, and your Customer engagement team to be made aware of the changes so they can update their downstream systems. If you are in contact with your Customers on a weekly basis, this process will need to be on-going and thorough to accurately capture the data changes.</p>2. Third party:
<p>Many third-party CRM systems and databases exist, often removing the manual steps from this process and may even automatically update Customer address information via online sources. In many cases this information is based on publicly available data or the USPS' address tools. However, these updates can verge on being "creepy" to many Customers. Automated systems do remove many of the manual touch points for your teams, but the information is then strictly provided by the third-party databases and processes. Additionally, downstream systems often still require updates from these tools to maintain the most correct Customer information across your data landscape.</p><p>While there are some hybrid models of options, here are the main pros and cons we have identified for the primary methods:</p><table>
<tbody>
<tr>
<th>
Internal Pros
</th>
<th>
Internal Cons
</th>
</tr>
<tr>
<td>
The fastest method if you own and manage your data ingestion platform
</td>
<td>
Managing a metadata repository tied to your website or mobile platform may require significant improvements in your front-end systems and teams
</td>
</tr>
<tr>
<td>
Your internal security can ensure that personal data standards and protections are maintained
</td>
<td>
A true "Customer master" repository will require significant resources, a robust data governance structure and regular audits for both security and data accuracy
</td>
</tr>
<tr>
<td>
The easiest method for maintaining your Customer opt-outs and communication preferences
</td>
<td>
If there is a data breach from your systems, your company is 100% liable for the breach
</td>
</tr>
<tr>
<td>
Platform and tool agnostic. An internal "Customer master" repository can serve as a single source of truth for Customer data within your organization
</td>
<td>
</td>
</tr>
<tr>
<td>
Leverages the information provided from your Customers which in practice should be the most trusted
</td>
<td>
</td>
</tr>
</tbody>
</table><table>
<tbody>
<tr>
<th>
3rd Party Pros
</th>
<th>
3rd Party Cons
</th>
</tr>
<tr>
<td>
Removes significant pressure from your internal teams and systems as you are pushing the process to the 3rd party
</td>
<td>
May require you to maintain your own Customer opt-outs and communication preferences external to their platform
</td>
</tr>
<tr>
<td>
If the data resides on and is consumed from their systems, on-going security becomes less of a concern for your internal teams*
</td>
<td>
May not allow Customer provided information to be captured or maintained
</td>
</tr>
<tr>
<td>
Can be a very accurate source if they are leveraging governmental and legal databases
</td>
<td>
May require the use of their specific software and technology, limiting the ability for your organization to create an internal "Customer master" on your own databases and downstream systems
</td>
</tr>
<tr>
<td>
May be updated on a real-time basis from their systems
</td>
<td>
You are tied to the 3rd party data match and update process dependencies. Additionally, some companies limit the daily number of requests or queries
</td>
</tr>
<tr>
<td>
APIs and other data integration points with the 3rd party may be made available ensuring that all internal teams have the same "Customer master"
</td>
<td>
Are they consuming publicly available data (ex. mortgages and legal proceedings) or are they using some large unmanaged database to match Customer details and data?
</td>
</tr>
<tr>
<td>
</td>
<td>
How often are they confirming the accuracy of their data? Example "John Smith" may simply be a typo from years ago or it could be correct. How do they confirm accuracy?
</td>
</tr>
<tr>
<td>
</td>
<td>
*If the 3rd party or their associated processors breach your Customer information, you may still suffer reputational and financial consequences
</td>
</tr>
</tbody>
</table>
<p>
Regardless of your chosen data mastering methodology, the Customer's preferred data should always be treated as the "most trusted," as this is the data your Customer is asking you to use. We recommend prioritizing Customer-provided data over other sources, only falling back on alternate sources if there are issues with Customer communications.
</p><p>
dunnhumby can help your company develop a comprehensive Customer mastering solution, regardless of your existing CRM process, technology or vendor. We have spent the last 30 years working with Customer data in many different stages of maturity and complexity. Through this process, we have developed proven best practices to collect and maintain your Customer metadata. If you are interested in discussing Customer mastering or Data Consulting, please reach out to your dunnhumby client representative or <a href="https://www.dunnhumby.com/contact/" target="_blank">Contact Us</a>.
</p>
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FOR RETAILERS
Smarter operations and sustainable growth, powered by Customer Data Science.
FOR BRANDS
Better understand and activate your Shoppers to grow sales.
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.
<p>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."</p><p>These are a just few of the things that most retailers absolutely know for sure:</p><ul class="ee-ul"><li>We must acquire new customers in order to grow our business.</li><li>Price-sensitive and "cherry picker" customers are not profitable. The competition is welcome to them.</li><li>Customers are different in every region of the country. There are also differences between urban and suburban shoppers.</li><li>Loyal customers are already giving retailers most of their spend in the categories offered.</li><li>Weekly flyers and promotions always drive footfall and sales.</li><li>After all these many years in the business, we know what customers want.</li></ul>
Why What We Know About Customers Just Ain’t So
<p>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:</p><ul><li>Expanding share of wallet from customers who are already "loyal" can better optimize growth.</li><li>Loyal customers need more love and investment than new customers.</li><li>Retaining loyal customers and reducing churn among "opportunity" customers can drive more growth than acquiring new customers.</li><li>Price-sensitive customers are often more profitable than other segments because their basket mix includes more private label products or higher-margin portion sizes.</li><li>Behavioral "buy-o-graphics" and intended trip missions matter much more than demographics or geographics.</li><li>Customer segments are typically distributed variably within geographic regions or zones, but all customer types exist in all stores.</li><li>Store clusters built upon customer dimensions are more useful to operations and execution than store groupings based on geographic zones or volumetrics.</li></ul>What We Know for Sure Can Fit on a Post-It Note
<p>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:</p><p>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.</p><p>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.</p><p>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.</p><p>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."</p><p>The lessons learned were:</p><ul><li>Humility gained in discovering that "we don't know what we don't know" empowers the customer-first journey.</li><li>To become more relevant to customers, we must become fact-based deciders and activators.</li><li>Using customer data well creates true consensus and inclusive action.</li></ul>In summary, “In God We Trust” ... all others must bring data.
<img lazy-loadable="true" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yNDYyMjA4MS9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTYyMzA2MzY0MX0.IONHl7U4GvV1SELtCU05-gSd24MuhErJw9fkohPlDJU/img.jpg?width=980" id="0a481" class="rm-shortcode" data-rm-shortcode-id="acf695ac2df738141d48aee28b7b9861" data-rm-shortcode-name="rebelmouse-image" data-width="600" data-height="988" /><p><em>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</em></p>
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assorted fruits at the market
In the decade since Richard Thaler and Cass Sunstein's Nudge: Improving Decisions About Health, Wealth and Happiness was published, nudge theory has enjoyed unprecedented success.
Predicated on the idea that individuals respond better to indirect suggestion than outright commands, nudge theory is commonly used as a way of subtly influencing our behaviour towards positive choices. The idea has gained such traction, in fact, that many governments around the world have created "nudge units" in a bid to tackle thorny issues like obesity and the climate emergency.
<p>Just as governments are exploring how nudge theory can be used to tackle real-world challenges, retailers have a similar opportunity with regard to their customers' dietary choices. With even a few small changes, retailers can help to nudge shoppers in the direction of healthier food decisions.</p><p>What follows are some of my favourite nudges that grocery retailers could easily implement to aid customer health.</p><p><br/></p>
Tackle the temptation of treats
<p>In 2018[1], scientists published their findings from a seminal experiment in which some of the UK's leading retailers removed snacks and confectionery from the checkout. Purchases of sweets, chocolate, and crisps subsequently fell by 76% when compared to supermarkets that kept those items in place. In other words, just changing the location of products can nudge shoppers into healthier decision making.</p>Give healthier goods more space in-store
<p>In 2012[2], scientists investigated whether the sale of healthy snacks next to the checkout in a hospital canteen could be influenced by the amount of shelf space they were allocated. Healthy products were given a quarter of the shelf space in the first test, and three-quarters in the second, with sales rising from just 14% to 44% as a result. Visible availability of healthier options clearly plays a big role in pushing us towards them.</p>Create dedicated “fruit and vegetable” partitions in trolleys
<p>One particularly innovative nudge was discovered by a group of US scientists in 2017[3], who found that introducing an area in a trolley specifically for fruit and vegetables led to higher sales of those items. As with the previous example, the amount of space dedicated also had a role to play. In one study, increasing the size of the partition from 35% to 50% of the trolley increased customer spend on fruit and veg from $14.97 to $17.54.</p>Normalising fruit and veg purchases
<p>Change4Life is a campaign run by the UK's Department of Health, aimed at nurturing healthier lifestyles. A 2015 study[4] commissioned as part of the campaign suggests that "normalising" the purchase of fruit and veg goes a long way towards influencing shoppers. When trolleys used statistics showing how many other shoppers purchased fruit and veg, spend in those categories rose by 12.4%. Social norm communications like this are a classic form of nudge that exploits our deep-seated concept of conformity (in this case in a very positive way!).</p>Use cartoon characters to encourage healthy eating amongst children
<p>Obesity isn't just a problem for adults. To help tackle childhood obesity, the Food Dudes[5] programme put cartoon role models at the centre of its in-school campaigns. One London-based study found that fruit consumption amongst the poorest eaters increased from 4% to 68%, while an unexposed control group showed no change. Whilst this may not show increased consumption in a retail context, the concept of using accessible and entertaining imagery and characters to promote healthy eating out of store should be equally applicable in-store.</p>The new nudge on the block
<p>Some of these techniques came together last year when the Royal Society for Public Health showcased Nudge, a pop-up at The People's Supermarket in London[6]. While the store was only open for two days, the purchase of sugary drinks was halved according to customer feedback. There are plans to make Nudge a permanent feature of the store, and to use data from every purchase to help identify further opportunities to influence customers towards healthier choices.</p><p>And new nudges are always popping up. In November 2019 a new DnaNudge shop opened in London. Combining a wristband and app, DnaNudge aims to help users make better food shopping choices based on their DNA and lifestyle. Food is scanned using the wristband, which will then flash red or green based on its suitability for the owner's biological profile. A product with high salt content will flash red for a user with high blood pressure, for instance. DnaNudge, which recently showcased at CES 2020, is collaborating with Waitrose to study the effects of this approach on pre-diabetic customers.</p>Keeping up with the PACE
<p>Food labels themselves can be also used to encourage healthy eating, by translating calories into walking time to nudge people into healthier choices. This approach is often called Physical Activity Calorie Equivalent, or 'PACE' labelling, and has shown promise in reducing the number of calories and the amount of food consumed by the public[7]. Some results in the UK have been so promising that the Royal Society for Public Health has called for PACE labelling to be introduced. Despite further research needed to assess its real-world impact, this nudge is likely to receive more attention in the near future.</p>Nudging us towards a healthier future
<p>It's a sad fact that non-communicable diseases (such as heart disease, cancer and diabetes) still account for around 70%[8] of global deaths. Furthermore, many of these deaths are due to factors that the victim may be able to influence, with tobacco use, alcohol abuse, diet, and inactivity all contributing to that number.</p><p>While grocery retailers might not have a direct responsibility for commanding their customers to eat better, they do have the opportunity to play a huge role. As behavioural science becomes better-known around the world and savvy customers expect retailers to make it easier for them to make healthier choices, expect a tipping point soon at which the nascent nudge becomes the new normal.</p><h5>References</h5><ol><li><em>Supermarket policies on less-healthy food at checkouts, </em>PLoS Med (2018)</li><li><em>Healthy snacks at the checkout counter,</em> BMC Public Health (2012)</li><li><em>Larger partitions lead to larger sales</em> Journal of Business Research (2017)</li><li><em>Shopper marketing nutrition interventions</em> Prev Med Rep (2015)</li><li><em>'Food Dudes': Increasing Children's Fruit and Vegetable Consumption.</em> Cases in Public Health Communication & Marketing (2009)</li><li><em>Health on the Shelf report</em>, Royal Society for Public Health (2019)</li><li><a href="https://www.lboro.ac.uk/media-centre/press-releases/2019/december/labelling-foods-amount-of-physical-activity-needed/" target="_blank" rel="noopener noreferrer">https://www.lboro.ac.uk/media-centre/press-releases/2019/december/labelling-foods-amount-of-physical-activity-needed/</a></li><li><a href="https://www.who.int/news-room/fact-sheets/detail/noncommunicable-diseases" target="_blank" rel="noopener noreferrer">https://www.who.int/news-room/fact-sheets/detail/noncommunicable-diseases</a></li></ol>
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Big data is no longer an advantage for only the big guys. Just ask Heinen's.
As I wrote in my previous article, being truly loyal to customers is, above all else, about creating a better store experience. Naturally then, the role of big data analytics (customer science) must be to improve the traditional '4 P's of marketing – so that customers better find the right products, at prices that shout better value for money, and in promotions that more clearly deliver exciting value.
Typically, the costs and complexities of harvesting insights from big data to improve the 4 P's have shut out smaller retailers. But today's cheaper cloud computing and open source technologies can now enable big data advantages to small companies. Data has been 'democratized' in a way that size of retailer no longer matters. To wit: leading the application of big insights in small spaces is Heinen's, a 23-store chain headquartered in Cleveland, Ohio.
If you want to see an amazing store experience born from inspired retail art together with applied customer science, you've got to see the Heinen's store in downtown Cleveland. You are sure to notice that Heinen's have transcended the traditional 4 P's to add 3 new P's of Customer Engagement – People, Place, and Personal – and have thereby become even more loyal to their customers. There's a link to a special video feature about this incredible store at the end of this article.
In the age of Amazon, it pays to think big when you’re small
<p>These are dangerous times of disruption and of tectonic shifts in structures, formats, and channels for both retailers and brands. A new epoch of retail has arrived, wherein, once again, only those most agile / most adaptable to change will survive. The challenge is even more acute for smaller retailers.</p><p><em>"The brick and mortar solution won't survive very well unless we up our game and create an even better experience for customers than we have in the past." </em>– Tom Heinen</p><p>And the way to create an even better experience? Use Customer Data Science to understand customers better than in the past, and apply insights to improve the store itself. I contend that deeper, truer loyalty can be better earned by responsive regional and smaller operators because they have a natural head start as 'local' puts them inherently closer to their customers.</p><p><strong><em>The paradox of disrupted retail is that the big companies must think small, and the small must think big.</em></strong> Those bigger to become more local and personal, and those smaller to embrace the advantages of big data.</p>Speedboats vs. cruise ships
<p>As the saying goes, it's about the size of the fight in the dog (and not the size of the dog in the fight). In Tom's words, "Being small when you deal with data is actually an advantage. Big companies are like driving a cruise ship; we're a speedboat. What levels the playing field for smaller companies is, in fact, good data-driven decisions."</p><p>The principles around using customer data to better engage customers are applicable regardless the size of your business, and no matter the channel – convenience, traditional offline, online, e-m-or v-commerce. These are the universal customer principles of retail:</p><ul><li>Loyalty = Trust + Value. Customers define what 'trust' and 'value' mean to them, personally. This loyalty is a thing earned, not expected</li><li>Relevance is everything</li><li>Customers leave for a reason – they are usually pushed, not pulled away</li><li>Those most adaptable to change are those most likely to survive</li></ul><p>To Chris Foltz, Heinen's Director of Operations, survival today is about investing in data science, and the benefits thereof are simple; "…to find insights that enable us to engage customers differently. We need to better change to meet their changing needs and find new ways to delight them".</p><p><strong>3 P's of Customer Engagement</strong></p><p>Chris and Heinen's understand – and practice perhaps better than anyone – that engaging and delighting customers goes far beyond executing on only 4 P's. I see three more P's in their brilliant operating model; the human P's, if you will – People, Place (in the sense of Ray Oldenburg's Third Places) and Personal.</p><p><strong>People:</strong> Heinen's have energised and empowered staff by giving them ownership of the customer and the superpower of trust to satisfy customers using their own best judgement. Upskilling is not only about how to do a task, but also about the applications of good judgement and warm behaviours of empathy, dignity, and respect for shoppers. One store, one person can make a big difference for customers.</p><p><strong>Personal:</strong> Treating all employees with dignity and remembering that each employee is an individual with different needs and aspirations teaches employees that all customers deserve to be treated with respect and individuality (what I call true 'personalisation'). Heinen's employees, following the example of their leaders, learn how to build up relational bank accounts with customers – earning credits for giving recognition, appreciation, thanks, kindness, dignity and respect to shoppers as individuals. When it comes to empathy and respect, the apple doesn't fall far from the tree at Heinen's.</p><p><strong>Place: </strong>Oldenburg describes spaces at the heart of a community's social vitality a "third place". In contrast to first places (home) and second places (work), third places allow people to put aside their concerns and simply enjoy other people and the space around them. Heinen's downtown Cleveland store stands as a model for grocers to create this very human and psychologically important third space, and demonstrates again how Tom and Jeff Heinen are loyal to their customers and to their community.</p><p>For a look at this amazing place and the loyal application of the 4 P's to enhance the customer experience, please watch the below video.</p><iframe src="https://player.vimeo.com/video/264110962" width="100%" height="480" frameborder="0" scrolling="no" class="rm-shortcode" data-rm-shortcode-id="dc16cbb21ad7b3ed183eca5f13382ae7"></iframe>
Implications for retail leaders
<ul><li>You don't have to be big to benefit from big data</li><li>The principles of earning loyalty from your customers apply regardless of the number of stores, or of format</li><li>Retail art must be informed by customer science if you want to win in the age of Amazon</li><li>In the age of artificial intelligence, it's the human intelligence that wins customer engagement</li></ul><div><em>This is the sixth in a series of LinkedIn articles from David Ciancio, advocating the voice of the customer in the highly competitive food-retail industry.</em></div>
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