February 23, 2011

Understanding the customer; is this on the agenda the top table in your organisation?

3 minute read

Understanding the customer has always been the mark of a successful marketing campaign, product launch or sales promotion activity. But it was pretty much limited to insights from market research as that was a language that most people across the business understood. All too often research was used to justify a business decision that had already been taken by the board.

And then came the age of cheap computing power which has helped to revolutionise the potential for all organisations to understand their customers. And with this understanding allow their business to prosper. In spite of the growing number customer programmes and commitments to CRM, customer data remains locked within in the Marketing department and is not seen as a core business driver.

I know that Tesco’s is an example that is often used but that’s for a good reason, just take a look at their performance in the run up to Christmas.

  • Tesco’s Double Clubcard Points offer and the additional Clubcard voucher mailing in December, resulted in customers redeeming £34m more vouchers than in the same period last year. This contributed 0.7% to UK like-for-like sales growth.
  • The UK supermarket giant also reported strong growth in its online business. Total sales of 20% across both food and non-food led the retailer to deliver to almost 1.5 million customers in the run up to Christmas. (Marketing 12 January 2011)

Many a retailer has looked on in awe at Tesco’s supremacy and either been jealous of their card holding customer base or been more cynical and steadfastly stuck to ‘we don’t need one of those’ to drive our retail business.

But look at the other retailers who have benefited from gathering and using customer data.

  • Sainsbury’s posted a 6.2% rise in total sales for the 13 weeks to 2 January 2010 and in the seven days leading up to 25 December, it attracted 24 million customers to its stores in its busiest Christmas on record. (Marketing 12 January 2011)
  • For the year ending 31 March, Boots’ profits increased by 13% with revenue up 9.6% to £22.5bn, an increase of £2bn on the previous year. (Marketing 17 May 2010)

In Andy Hornby’s (Boots CEO) last annual retail address he put a lot of the success down to the focus on the consumer and personal service and employee engagement with little mention of the power of the Advantage Card (Fresh Minds, May 24th, 2010). But it is clear that the Advantage Card has done a lot to engage customers and get them to buy more from the store. So much so that Superdrug is set to launch their own loyalty card later this year.

“There will be a big difference between the haves and have-nots, with data. Those with loyalty data can see what customers are doing. If they are going elsewhere for a certain product, we can incentivise them to buy it with us.” (Justin King, Chief Executive of Sainsbury’s – The Times January 8, 2010)

But those believing in the power of data and what it can tell you have worked hard to gain this position. “Tesco has also invested millions of pounds in IT platforms” (Telegraph, January 2010). If you want to use data you need the right infrastructure. There are still many big brands who might have a lot of data (the high street banks are a good example) but don’t necessarily know how to organise it and then use it. And data often isn’t at top table in these organisations.

“Technology is a huge enabler. It can help you become more efficient, agile, rigorous and automated in what you do. Marketers don’t need to know how it works if you go under the hood, but we need to understand what technology can do to help us achieve high performance”. (Nick Smith Managing Director, Global Marketing Transformation, Accenture.)

And the only way to do this is to invest, the beauty is now that this needn’t be that expensive, to have a system that can easily show you what customers are doing and when. A system that the marketing team can access and see themselves and therefore use to create customer growth and in turn business success.

The data enables us to look at what we offer customers and how we can improve it which surely is the way to gain competitive advantage and business growth. But unless data is at top table in your organisation, it will always belong to the back room boys.

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Understanding the customer; is this on the agenda the top table in your organisation?