By Vinod Kumar
At the recent Demandware XChange Conference, I had the pleasure of sitting in a fascinating session that covered the evolving usage of analytics within a retail organization. The speakers (Greg Girard of IDC Retail Insights, John Esquire of eCommera and Cortney Easterwood of Demandware) all come from different perspectives, but shared their view on how the role of analytics is rapidly transforming. I wanted to share a few points that were made by this group that may change the way you look at your numbers every day as online retailers:
- Due to the fact that consumers are interacting with a brand across a multitude of modes & channels, the new analytics paradigm is becoming more customer-centric from the previously product-centric model.
- With this customer-centric model, any measurement is also naturally omni-channel as well. For example, according to IDC Retail Insights’ consumer survey, an estimated 48 million “showrooming” shoppers spent $68 billion during the 2012 holiday season. Smart retailers are starting to acknowledge this as an irreversible trend and are making plans to embrace as part of their overall consumer engagement strategy instead of creating resistance within their organizations.
- Retailers will need to take multiple sources of data into consideration to build a comprehensive picture of consumer engagement, including – Store Analytics, Customer Analytics, Campaign & Offer Analytics and Web Analytics. This is what Greg is terming as the new value opportunity – the Omni-channel Next Best Action (NBA) Cycle.
- The Next Best Action cycle forces people to measure consumer interaction with a brand beyond the traditional ‘recency’ and ‘frequency’ measures, and include the ‘how’ and the ‘where’ of these measures.
- The speakers also talked about the importance of segmenting metrics, and that segmentation is key for analyzing conversion because viewing it as one giant indicator of performance may not be sufficient. Retailers need to think about segmenting ‘conversion’ by product category, traffic segments, consumer demographics, etc.
- To illustrate this point and to avoid “The Misery of Averages,” John shared his experience working with the launch of the London Olympic store. He discussed how a particular product was selling well due to the overall popularity of the site, but if you looked deeper into the numbers, you would find that the product was not categorized correctly and that conversion was very low.
There was a LOT covered in this session and I know the audience got a ton out of the discussion. If I had to focus on 3 key takeaways, they would be:
- All speakers reiterated the need to make analytics ‘action oriented’ and encouraged merchants to constantly ask the question: What’s my next best action given the story the numbers are painting?
- More data doesn’t necessarily equate to more or better insights. Chances are, the data that you need to make insightful decisions already exist in your systems. It is up to internal teams to identify data that may exist in various silos and bring the information together.
- Where possible, go beyond measuring performance in averages to avoid the “misery of averages.” Segmenting your metrics is a great place to get started.