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Pass the P’s and the big data please

Big data is no longer an advantage for only the big guys. Just ask Heinen's.

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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

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.

"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." – Tom Heinen

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.

The paradox of disrupted retail is that the big companies must think small, and the small must think big. Those bigger to become more local and personal, and those smaller to embrace the advantages of big data.

Speedboats vs. cruise ships

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."

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:

  • Loyalty = Trust + Value. Customers define what 'trust' and 'value' mean to them, personally. This loyalty is a thing earned, not expected
  • Relevance is everything
  • Customers leave for a reason – they are usually pushed, not pulled away
  • Those most adaptable to change are those most likely to survive

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".

3 P's of Customer Engagement

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.

People: 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.

Personal: 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.

Place: 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.

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.

Implications for retail leaders

  • You don't have to be big to benefit from big data
  • The principles of earning loyalty from your customers apply regardless of the number of stores, or of format
  • Retail art must be informed by customer science if you want to win in the age of Amazon
  • In the age of artificial intelligence, it's the human intelligence that wins customer engagement
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.


white and blue magnetic card

Photo by Avery Evans on Unsplash

Most companies attempting to drive customer loyalty fail miserably—and few so-called customer-centric companies generate sustainable customer loyalty that drives measurable business results. Why? Because they get three key principles completely wrong, right from the start:

  1. Loyalty is about the company acting loyally to its customers, not vice versa.
  2. It is about a loyalty approach, not a loyalty program.
  3. Loyalty is about the store, not only about the CRM.

1. Loyal to Customers

We start to act loyally to customers when we understand them to a level of detail that ensures that we remain responsive to changes in their behavior, relevant to ever-changing customer needs and rewarding in the way we treat customers.


Acting loyally is about adopting a loyalty mind set of managing customer segments as strategic business units (aligning with how we think about a category management strategy as managing categories as strategic business units). This context demands change that is both incremental and transformational—evolution, but with a bit of manageable revolution.

What customer loyalty is, and is not:

  • Acting loyally (responsive, relevant, rewarding) to our customers; not about customers being loyal to us
  • An overall approach throughout our business; not a proposition or program
  • Earning customer loyalty; not thinking that customers should become loyal
  • Collaborative partnerships to win customers together; not tolerant of internal conflict between areas of the business or with suppliers
  • Transparent; not opaque
  • Driving sales and cash margin; not customers being responsible for percent margin

2. Loyalty Approach vs. Loyalty Program

We demonstrate loyalty to our customers by taking a loyalty approach wherein we commit to rewarding and delighting our customers with products and experiences that meet their wants and needs.

  • We call this putting customers first—when we decide on priorities and actions based on insights from our customer data.
  • By doing so, a retailer becomes an even more prominent choice in the customer's consideration set. This is not a tactic; it is a long-term strategy that makes the customer the focal point of our business decisions and objectives.

The loyalty program is an important element within a loyalty approach, as the key source of the data that enables customer intelligence, and as the channel that enables us to talk to our customers personally. I call the loyalty program the "little l" in loyalty, with the loyalty approach as the "big L."

But a loyalty program is not required to act in a loyal way to customers. Here's how to think of "big L" loyalty:

A loyalty approach, simply put, embeds customer insight throughout the retail organization to enable better, faster decisions and thereby increase sales and profit sustainably. Best-in-class practitioners have seen an incremental sales uplift in the early stages of a loyalty approach of between 1% and 2% and later stages between 3% and 4%, quarter over quarter and year over year.

3. Loyalty Is About the Store, Not Just the CRM

As I used to say to my retail colleagues, "If the store is lousy but we deliver brilliant targeted CRM, the store will still be lousy."

Even if the personalized CRM is perfect, customers need to perceive that tangible changes have been made in the store itself before they will respond by giving more of their custom. We must put customer insights into action within the "hardwiring" of retail practices—pricing, promotion, assortment, adjacencies, new products, the checkout experience and so on.

In a previous article, I shared several examples of being loyal to customers in store by simply making the shopping experience easier—setting the yogurt section by customer need rather than by brand blocks, for example, and by setting product adjacencies according to how customers shop, rather than by how items are sourced in the supply chain.

3 Ways to Activate a True Loyalty Approach

  1. Make better business decision by putting the customer first. Everything is better when you start with the customer. Start with the data you hold on customers—understanding how they shop and behave, what is important to them and how they engage with your business. This insight will identify a number of opportunities for better decisions using the data.
  2. Improve the customer experience by using data-driven insights to improve your retail offering, such as assortment, pricing and promotions. Use insights to connect you to your customer through the store. Think of the mantra "data to insights to actions"—this is how improved like-for-like sales growth and customer loyalty is delivered.
  3. Transform the organization using customer-driven insight to help you better understand, anticipate, measure and continually respond to your customers. This is realized through empowering, aligning and equipping your people with relevant insights, values, goals, strategies and actions.


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[This is the fourth in a series of articles advocating the voice of the Customer in the highly competitive food-retail industry. 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].

Treating Customers differently based on their 'profitability' is counter-productive to building loyalty and toward creating a healthy retail Customer Experience.


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