The balancing act between business costs and customer experience is a tightrope that businesses have long walked. In times of financial pressure, leaders in retail must ask themselves: Where should the line be drawn between necessary cost cutting and protecting customer experience and engagement? And the balance isn’t easily struck, writes Rahul Arora, SVP and Head of Emerging Business Unit UK & Europe at EXL.
For example, major brands like Boots, Sainsburys, and Tesco recently announced huge cuts to the value of their respective loyalty schemes in favour of instant discounts. While there is a clear business case for this approach, brands have had to carefully navigate consumer dissatisfaction as a result. And they run the risk of losing customer engagement with the schemes themselves.
This presents a risk because loyalty schemes are a brilliant way to collect first-party data – the kind of data that fuels decision making on everything from sales promotions to personalised ads. So where points’ value cuts are necessary, retailers need to think carefully about the value they’re delivering to consumers instead.
If discounts are the route forward – be they Tesco’s instant discounts, personalised offers or something else – smart data will be nothing short of critical.
With this in mind, here are three steps for retailers to consider in the endeavour to make intelligent, data-driven decisions.
Maintaining customer engagement fuels improved CX
The rumour mill continues to spin regarding when exactly third-party cookies will end. Despite shifting deadlines, retailers cannot afford to be lax in their preparation. Supermarkets need to be equipped with bullet-proof first-party data collection strategies in order to generate the insights required to not only enhance their customer service, but to inform broader business strategies.
Loyalty programmes are a great way to collect customer data, but there are a myriad of other ways that it can be done – from user registration and the customer call centre to social media. With the right technology, retailers can examine customer conversations with speech-to-text analytics and social listening tools to understand customer satisfaction and identify areas of improvement. Tuning into all these sources of data means businesses gain a more accurate picture of their customer, with full visibility of their customer journey from start to finish.
And when a full and comprehensive data management strategy is employed, retailers will be able to serve a drastically improved customer experience. Understanding what is important to their customers and what their needs are is the crucial first step towards better targeting for marketing and discounts.
Relieving business pressures
Just having a rich pool of data isn’t enough, the next step is to translate that data into insights which inspire meaningful action, through all aspects of the business, be it customer experience or solving supply and demand issues.
For example, where retailers have surplus supply, smart data can reveal which consumers would be most interested in that product and target them with discounts to drive up purchases and profit. Utilising smart data this way can alleviate operational issues, whilst delivering a top quality customer experience, enabled by smart targeting.
When actioning data, execution is every bit as important as insight gathering. A structured approach and continuous learning are essential to ensure optimum decision making. A/B testing and cross-functional teams that sit across several processes are key to guiding and improving processes, as more data is collected.
Stock management is just one of many ways data can be used to streamline retail processes. Whether the pain points lie within the refund process, the loyalty scheme or in the customer call centre, investing in the tools – or expertise – to identify and eradicate those pain points will not only help reduce inefficiencies but reduce costs and increase customer retention.
The customer experience conundrum
Customers are more inclined to return to the retailer who understands them and their needs. With smart data analytics, businesses can target and engage with their customers more intelligently without resorting to generalisation.
Although it may be largely true that, during a cost-of-living crisis, customers are more motivated by cost when making purchasing decisions – this is not the only factor that plays into purchasing behaviours. While a customer may switch to the cheapest bread, they may have other ‘treat’ products that they don’t mind splashing out on.
In order to foster real lifetime loyalty, retailers can use data to create more sophisticated segmentations which differentiate between the types of shoppers and the way their behaviour changes through different economic situations, resulting in a tailored and targeted customer experience.
Data insights give retailers a better idea of how to steer engagement with each customer, from offering discounts on products they frequently buy to the best way to communicate marketing messages – these steps will be crucial in maintaining engagement, and customer retention.
In today’s challenging economic environment – where difficult decisions are being made every day – retailers must look to data to rebalance the cost versus customer experience conundrum, not only to survive this difficult season, but to thrive in the future.
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