While traditional models for garnering consumer insight have focused on the relationship between company and customer, typically based on transaction and loyalty programme data, tomorrow's major retail players will also be collaborating with new industry partners to create collective insights, according to a white paper from UK-based strategy consultancy BeyondAnalysis.
In their paper, the authors argue that the retail, communications, banking, and content provision sectors could all benefit from industry collaboration when gathering information to build consumer insights that drive more meaningful consumer relationships.
Frequency of transactions
Successful retail loyalty programmes such as Nectar, Tesco Clubcard and the Boots Advantage Card have shown that the traditional insight model works well for organisations with a relatively high frequency of visits or repeat transactions.
But those that don't enjoy the same high transaction frequency find it much more difficult to gain meaningful or accurate insights into consumers' lives, and therefore find it harder to adapt their value proposition accordingly. In other words, fewer transactions provide fewer reference points to help them understand what works and what doesn't work for the consumer.
Finding the reasoning
This problem is compounded by not knowing the reasons why consumers choose to transact with a company. Consumers' reasoning often extends beyond any existing relationship they have with a company, being driven instead by very practical, product-focused needs. If you need a hammer, you go to a hardware store. If you want better TV shows to watch, you subscribe to a cable or satellite TV network.
But it is important for companies to understand that those needs are product driven, and do not necessarily imply any kind of loyalty or desire for a deep relationship. So the insight a company can gain from a business relationship with a consumer in such sectors is therefore likely to provide very limited insight into the rest of the consumer's life - and this is the very insight they need to better understand how to differentiate their propositions.
This is where industry collaboration can change the whole picture. For example, Tesco uses its data to develop a collaborative relationship with its suppliers, and shared consumer data helps to bring about more productive negotiations and planning between the retailer and its suppliers.
BeyondAnalysis believes that other sectors can also take this approach as a way of developing a collective understanding of the consumer to help alleviate their lack of relevant insight. This would mean seeking out complementary businesses with a view to working collaboratively and creating shared consumer data points and insights. But, as with even the most basic of customer loyalty programmes, the key to the success of such an approach is the development of a compelling proposition that the consumer is happy to sign up for.
BeyondAnalysis is a data and consumer strategy consultancy that helps clients understand their customer data and use it to drive sustainable growth and value. The company identifies new opportunities and consumer propositions in customer data, as well as implementation and incubation services.