Matt Keylock, Global Head of Data for dunnhumby, spoke at the Big Data for Media conference about his company's and Tesco's work in developing a customer strategy behind Tesco's club card. dunnhumby is a global customer science company owned by Tesco.
Traditionally there were financial metrics for keeping scores and population profiles for marketing in the retail business, but it gave only very superficial view to the customer, he says at the Big Data for Media conference on May 8 in London, sponsored by World Newsmedia Network and Reuters Institute for the Study of Journalism,
Customer behavior is the key and knowing the best customers, because 4 percent of customers bring in 41 percent of the sales. So one super premium customer corresponds 351 uncommitted customers.
"If you don't engage with your best customers, they stop being your customers," Matt Keylock says.
The second thing to do is understanding the customer's needs, which dunnhumby has been doing for 15 years for their retail customers. The customer can be profiled through different attributes, e.g. price sensitive, promotion sensitive, adventurous, pre-packed, convenience, fresh, kids, fuel, calorie counter, coupon redeemer, finest and luxury, foreign, fair trade, long life, early adopter, big box and own brand label.
When you know your customers needs, you can build better strategy and create better measures.
The consumer data enables smarter actions than just analyzing the traditional sales figures. E.g. customer's product loyalty compared to product sales.
Customer data powers also personalized communications. E.g. the overall response for the Tesco's personalized campaign 4 times a year is 70% and the sales goes up during it.
When Tesco launched club card, it was the second in the retail business after Sainsbury's with 15% share, now it has a 30% share.
Digital is changing also the retail business and the shopping trip is becoming iterative and non-linear, where there are many different actors influencing each other.
The Big Data journey begins from many different data silos, where the information is separate, but we need to enrich that data and insights.
"Data silos create more complexity, but retailers need to connect all that data. Big data allows for a 360 degree view about behavior, motivations and influences and enables the step to fully personalized service," Keylock says.
To know and have the perfect customer data does not mean, that you should always use it, e.g. when it is a very personal issue.
Keylock says that doing this kind of customer analysis is also possible in media business.
Some important questions for the media companies:
1. Do I know my audience as individuals?
2. Is my media measured right? What's the ROI?
3. Which content attracts niche customer groups? How should I price and sell my channel better?
4. Why is my media not personalized yet? etc.
The process starts by measuring the effectiveness of each media channel.
Major opportunities for media industry:
1. Loyalty approach for your own audience
2. Benefit from other data
3. Drive targeting and measurement
4. Use your data to influence beyond your existing business
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