Insight: Data-rich retailers lack customer identity capabilities

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By: RickFerguson |

Posted on September 21, 2016

UK's Retail Times reports on a new study by technology consultant Amido that reveals a core retail challenge: retailers are awash in customer data but still struggle to capture insight from it due to inadequate integration of siloed data and inability to unite that data into a single-customer view. It's an insight that perhaps points to an obvious if not especially novel solution to the challenge: the presence of a customer identifier such as a loyalty programme membership number appended to every customer interaction.

Here's the money quote from Retail Times:

"Of all the retailers interviewed by Amido, only one believed it had a single view of the customer. Nevertheless, the research clearly reveals the issues in the way organisations deploy identity management technologies to capture customer identity information � be it through developing a direct-to-customer business model or having to improve information and services to retailers/intermediaries; all agreed that creating the holy grail of a single customer view is of the most importance to business development, customer retention and loyalty."

The Amido study pointed at a focus on internal operations and business processes at the expense of a customer-focused business strategy as the primary culprit in retailers' inability to leverage customer data. Money quote #2 from Amido CEO Alan Walsh:

�To maximise the value of customer data, organisations need to integrate their systems in order to get a complete and holistic view of their customers. This builds on the basic customer knowledge to get a deeper understanding. The creation of a single customer view informs decision-making and allows organisations to target more effectively. It makes marketing activity more focused and increases revenue from existing customers."

Granted, there are many options, tools, and platforms now available to retailers who hope to capture that elusive single-customer view. In addition to integrating multi-channel data into that view, retailers must now link search data, programmatic advertising data, social and mobile data as well. The advent of AI and machine learning means that retailers who successfully integrate that data can now deliver the right message to the right customer at the right time to increase personalisation and relevance in a way that strengthens the customer relationship.

If the tools are available, then how is it that so many retailers continue to struggle? Central to the success of data integration efforts is the need for a common customer identifier- a way to tie every interaction, transaction, and touch point to the behavior of a single customer. Many retailers rely on such limited options as social sign-in or email linkage to connect the dots - but such options leave large gaps at best and leave out those customers who see little upside in linking every brand relationship they have to their Facebook or email account.

There is another option, however - one that's so old that it may be new again. By linking those interactions to a common customer identifier such as a loyalty programme membership number, retailers can ensure that they're capturing customer behavior at every stage of the purchase journey. Let's take a hypothetical example of a retailer who uses the loyalty programme as a hub for every customer data source:

Step one: The retailer uses programmatic ads to entice customers into the programme with a healthy sign-up bonus. Now programmatic ad response can be tied to an individual customer.

Step two: The retailer uses targeted bonuses to encourage members to link their loyalty IDs to their in-store, online, and mobile purchases, as well as to their social media accounts.

Step three: The retailer provides incentive to members to link customer service interactions to their loyalty IDs through a tiered soft benefits package that provides a dedicated customer service line and a more liberal returns policy to top-tier programme members.

Viola! Through the simple mechanism of a loyalty programme ID, the retailer has now linked every customer data source to a unique view of each individual member. What's more, the retailer also has a proprietary view of the value of each member to the enterprise - with ability to focus marketing dollars, reward dollars, and CRM activities around best customers to encourage incremental behavior and increase the value of each customer relationship. The common denominator that makes it all happen? The loyalty programme ID.

Is the loyalty ID the only way to accomplish this goal? Of course not - but it may be one of the best options available to retailers who don't live at top tier of global revenues. At the end of the day, all it takes is a step back to realise that capturing a single-customer view isn't necessarily rocket science. The most critical first step is instituting a C-suite philosophy that orients the enterprise toward a customer view rather than an inwardly-focused operational view. That's the message that lies at the heart of the Amido study - and we would all do well to heed it.

-Rick Ferguson

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