Big data for retail is about understanding MONEY.. which is the reason retailers are there.
To ensure we are on the same page. Money comes from customers.. some of it we give away to suppliers, marketers, tax men and some for ourselves. The rest is PROFIT. And profit is the money we as business people are interested in.
Now to work out profit isnt hard, we pay an acquisition costs for each customer, say $10. Then that customer buys something from us.. say on average $20 and we make say $5 (profit)... some customers come back again and spend some more... maybe $50 a year so the profit grows for each purchase (as we dont need to acquire them again - we just need to retain them, which is cheaper). And then some stop coming - so to grow we need to pay to acquire more customers... and the cycle continues.
Now - imagine if your competitor had a few years of data on their customers... they knew their addresses, ages, average spend, churn by segment and more... and from that data they worked out the magic formula of which customers were the most PROFITABLE and exactly WHERE they acquired them. Then they focussed all their energy on getting and keeping more of those specific customers. Their profits would grow.... and they could scale and refine the process.
Unfortunately they would likely be taking some of those customers from you.... being your most profitable customers. Without data (big data) its very hard to compete with that.
So - our advice... (smartly) and morally) collect more data. Then get some help to understand it... and spot the opportunities and threats. Before your competitors do.
Big data and digital marketing are two of the fastest growing sectors in the world - for good reason.
Simon is passionate about helping businesses leverage technology to outstrip industry growth norms.
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