Monday, May 04, 2015

Big Data Applied To Retail & CRM purposes

Big Data is obviously a big trend in our business world, but most of the time it is difficult to exactly understand how it could be used in a concrete environment. Big data has not a precised definition, it is rather a state of mind and/or a fact: Thanks to the information systems we have two facts that comes together:
  • We have on one hand a massive load of data, that could give us more than necessary details about supply chain, customers behavior, sales, marketing effectiveness..
  • But more importantly, tools that are able to analyze this data, and gives us a new vision of our business. Terry Leahy, former CEO of Tesco, explains in his book "Management in ten words" how its company had to wait for powerful computers to be available prior to launch their loyalty card, which allowed them to have customized messages and to have an hedge on their competition. Now the tools are available, we just need to know how to use them.

Target Uses Big Data To Redifine Its Merchandise Strategy by Clusters
When you are a nationwide retailer with a large network of stores the question of how to meet local demand is crucial and difficult. Hence, once you adopt a merchandising strategy, how could you have a plan that will both meet national strategy and local specificities?

First of all, you need to set the right data in order to adapt your merchandizes plan: Is it based on geographic data? Socio-demographics? Sales performance? Moreover, the history of the store may have a deep impact on its performance: Has the store be renovated? Is it obsolete? What kind of competition do you face?

Big data allowed Target to find the right mix of data in order to segment its store networks, in order to propose the right merchandising response. They found out the 3 most reliable data to set a predictive modell with a correlation rate of 73%. 

How Dannon Improved Its CRM Efficiency Thanks To Big Data
As one of the leading FMCG supplier, Dannon owns a large customers data base, which it uses for its CRM programs. It mails to its 4 million members a quaterly newsletter with coupons. The issue was the ROI: Each euro spent returned 3 euros...

Dannon worked on two items:
  1.  Work on the members that did not use the coupons. Some people are not responding to the trigger of coupons. Therefore they were left aside of the mailing.
  2. Mutualize the mailing with other FMCG suppliers that own the same CRM strategy. They hence partenered with P&G in order to mutualize the sending and save some costs.
Hence, Dannon was able to turn their 1for3 to a 1 for7 ratio.