Customer buying patterns, as well as evolving consumer behavior, lays the groundwork as to why the real-time monitoring of operations, promotions, and financial performance are mission critical to today’s modern retailer. These businesses, with numerous locations and large workforces, are challenged with the problem of ensuring that employees from the top to the bottom of their organization are aligned around the same goals and objectives. This alignment is especially important considering the need to address ever-changing objectives driven by customer, corporate, seasonal, and promotional mandates that impact their bottom line.
While there are endless initiatives that retailers can focus their energy on, we have found that adhering to “The Three Things” is the most informed method to channeling their transactional data. By focusing on optimizing sales, promotion performance and improving profits; a retailer can turn their available data into tangible action plans.
Sales Optimization: Streamline your revenue-generating activities
Every time a customer visits your store and interacts with a sales associate, your organization has the opportunity to not only make a sale but also increase the average order size. For example, a specialty apparel retailer can upsell belts with slacks, jewelry with a blouse, socks with shoes, etc. This is common knowledge but what isn’t always known is what upsell items are the most lucrative at a regional or district level. What we have found is that many retailers understand the right product mix to bundle but store management isn’t always convinced as to what should be the A, B or C option for the team on the floor to focus on. This can be solved by focusing what is already embedded in their enterprise-wide TLog data.
Driving more value from Omni-Channel
There are many times when an omni-channel sale could lead to an in-store upsell but this is rarely tracked…until now. For example, a customer buys a product online and then returns it to their local store. By focusing on historical omni-channel data, some retailers have found that a sales-eroding activity of a return can actually drive an additional sale if associates are trained properly. Because many online products are not part of a store’s inventory and are typically shipped back to distribution or sold as a one-off item, they can be viewed as a quick loss but in reality if you can isolate which items are being returned across your entire enterprise, you can have a complimentary offering made readily available to your sales associates as an upsell item. Now the loss of a return can strategically offset with the right training and offer.
Stopping Rewards Program Abuse
Some retailers may be surprised to know that some of their customers know their promotion activity better than their own marketing department does. For example, one retailer put a Rewards Points Program in place to reward loyal customers, and the retailer’s marketing department believed the program was very successful. However, the operational team analyzed components of the program in depth and made some startling discoveries.
When first rolled out, the Rewards Program had no limits on the points a customer could collect and noticed that some customers had racked up several hundred thousand points a year (versus the average customer who would get 2500 points a year). Using a data analytics system to analyze their transactional data, the retailer discovered that these high-reward “customers” were reselling the retailer’s merchandise on eBay and ordering the merchandise the eBay customers ordered on Mr. Rebates. This meant that the high-rewards customer (e.g., reseller) was getting cash back from Mr. Rebates, and as a rewards member, was eligible for free shipping as well, although the reseller still charged the eBay customer for shipping. The reseller carried no inventory and did not handle returns, making the reseller a fulfilment center.
Even though the retailer was recognizing revenues on this type of activity, the retailer’s margins were significantly impacted, and the resellers were wiping out the retailer’s inventory. Worst yet, the retailer’s true customers, who were expecting a good shopping experience, were denied that because the resellers were buying up the inventory.
Once the retailer identified this type of rewards program abuse, the organization decided to put a cap on the number of annual points a Rewards customer could earn to put a stop to this activity.
However, without data analysis, this retailer would have continued to believe that the program was successful when in fact it was eroding their margins and depleting their inventory.
About the Author
A veteran in the technology space, Russ Hawkins, the President and CEO of Agilence, has shouldered the responsibility of the company and spearheaded its overall strategy to lead it towards success. Formerly, Russ was the President and CEO of two early stage tech companies, SilverStorm Technologies and Paragon Networks. The Boston graduate also boasts 15 years of experience at Lucent Technologies, wherein he helmed various management positions.
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