With great customer data comes great opportunity. Today's retailers have access to more data than they've ever had before, and smart use of it can give them an invaluable competitive edge in challenging conditions.
But if you're thinking of developing a new data monetisation strategy, or overhauling an existing one, it's worth assessing your starting point first. Understanding the critical components of good data monetisation can make all the difference to the success of your strategy.
You'll also need to understand how your data will support the decisions you want to make and execute against, plus the role of CPGs in key decisions like ranging, promotions planning and in-store and online media.
The most effective data monetisation strategies are built on four key pillars. Get these in place and you can move forward with confidence.
The best strategies are driven by insights into customer behaviour, not just sales data. Everything from how often they're shopping and how much they're buying, to how many premium products they're opting for. The more you know about what your customers are doing in-store and online, the more customer-centric the resulting recommendations will be. You can't build a data monetisation strategy that will transform your business on transactional sales data alone.
This means that the first thing you've really got to get in place is the right data. Ideally this will have been collected through a CRM programme, such as a loyalty card with a coverage of at least 50% of customer base.
Once collected, you'll get the most from your data by merging it into a single database. This means information from different categories and locations can be analysed together, creating a consistent data-driven customer language. You and your CPGs can then use this consistent language when talking about category and brand performance, and use consistent KPIs to track and measure success.
Used correctly, your data will provide a framework for shared workstreams to better meet the needs of your customers.
As we've discussed previously, the retailers competing most strongly at the moment are those who are putting customer needs first. If you have a customer-centric culture embedded from the top of your organisation to the bottom, you'll find it significantly easier to get the most out of data monetisation. This is because your whole organisation – including buyers, category management and insight teams, and merchandisers – needs to focus on understanding customers, not just sales and margins. It can't just be the responsibility of one team.
Monetisation strategies are successful when they equip the retailer and their suppliers with the insights to work together to achieve category level objectives. As a retailer, if your working relationship with your suppliers is already based on trust, transparency and collaboration, rather than the traditional 'them vs us' dynamic, you'll find this comes easily.
Some retailers have concerns about transparency – not wanting to share category insights with CPGs or fearing that doing so reduces their power in the relationships. But at dunnhumby, we always argue that the CPG needs to see the insights for the whole category, not just their product. This enables them to really understand how they can support the performance of the category and align their brand portfolio to meet this objective.
Together, you can collaborate to:
- Ensure trade planning focuses on promoting products that generate sales uplift for the category, instead of negotiating the funding of promotions
- Ensure range planning meets the needs of customers, rather than focussing on increasing space for margin-driving SKUs for a single brand
Processes are another area where retailers can give themselves a head-start. If you have a properly documented category management process in place that's compliant and used across your category teams, the tools of data monetisation will be much easier to use.
If you also bring CPGs into the process, you'll benefit from an external view, category expertise and a competitor retail perspective. Empowering one or two key suppliers in the category as 'category captains' can ensure you're making full use of their experience, resource and knowledge. When customer data is embedded into a work plan supported by an end-to-end, 'insight to execution' process, your successful customer-led category strategy will be easier to realise.
Is someone in your organisation leading the commercial workstreams related to your customer data? Your chances of success will be greatly helped by having people dedicated to the workstream.
Within retailers with successful data monetisation strategies, we're increasingly seeing Heads of Marketing Strategy or Heads of Monetisation being appointed to lead the initiatives. Whatever their title, to drive a successful strategy you need someone in charge who is less focused on getting product to shelf and more aligned with innovative revenue streams.
Once your monetisation strategy has been defined, it's crucial this is led by the head of buying or category management and executed by every category buying and management team. It's here that the day-to-day working relationships with CPGs will be formed, shared work plans created, KPIs for success defined and the insight to activation executed.
You may also need to look at your skillset within data management. Customer data is much more sophisticated than sales data. Your staff may not have the skills right now – but upskilling them will help you cut through the noise in the data and ensure the right insights are used.
Assessing your organisation's technology against a few key questions will decide whether you are better off bringing in an external specialist:
- Have I made the right investments, in CRM or loyalty programmes, to generate the data I'm going to need? Am I therefore collecting the right data?
- Am I managing the data I've collected effectively by storing it centrally and enabling analysis and other value-add insights?
- Is my business able to access the data and output of analysis, and use it to make better business decisions?
If you're not confident that your in-house technology meets these criteria, outsourcing to a specialist can save you considerable time and money. That way, you'll also benefit from the best-in-class tools.
When you're building a monetisation strategy and assessing your capabilities against these four pillars, it's crucial you keep your CPGs in mind. How will you embed them into the process? Which insight solutions will you make available to them? And what decisions would you like your CPGs to be involved with?
Having a clear understanding of who your customers are and how they behave doesn't just support better in-store execution of category and promotional workstreams. With this knowledge, you'll be able to activate more relevant, personalised and timely media, both in-store and online, to support your new in-store execution. This means your customers will experience more personalised, relevant offers, your CPGs will benefit from highly targeted, clearly measured campaigns and you'll benefit from the category sales uplift generated from a seamless coordinated multi-channel campaign.
The events of the past six months have had huge repercussions for grocery retail.
But despite reporting record revenues, many retailers are struggling to convert sales into profits. With higher running costs, changes in Customer behaviour, stock shortages, social distancing, and growing price sensitivity, there is little doubt that this will continue for some time to come.
There's never been more value in being able to track how Customers are influenced by the changes going on around them and respond to future trends before they even materialise. Doing this effectively, however, requires Retailers and CPGs to come together, pool their insights, and work out how best to meet those future Customer needs.
In this webinar, we'll explore how to overcome the barriers that are holding many Retailers and CPGs back, what needs to change, and how both parties can benefit from Customer-First Insight Activation.
Join experts from dunnhumby as we:
- Explore how to launch a new data and media insight activation during these uncertain times
- Learn how companies around the world have recently done so successfully
- Demonstrate how it can be done effectively while teams work remotely
- Show the importance of design consultancy ahead of execution