How smart retailers turn customer data into gold dust

After sev­er­al tur­bu­lent, loss-mak­ing years Dixons Car­phone announced in the sum­mer that it was out of the red. While the com­pa­ny ben­e­fit­ed from a pan­dem­ic-induced tech boom, anoth­er fac­tor was key to its suc­cess: the smart use of cus­tomer data. 

In June, the elec­tri­cal goods sell­er – now known as Cur­rys after a sweep­ing group rebrand – announced a pre-tax prof­it of £33m, swing­ing from a huge loss of £140m in 2020. Speak­ing to investors, chief exec­u­tive Alex Bal­dock high­light­ed “excit­ing advances” in data and cus­tomer rela­tion­ship man­age­ment (CRM) as key to the suc­cess sto­ry.

The brand is among a new school of retail­ers using cus­tomer data to dri­ve loy­al­ty, deliv­er unique expe­ri­ences and boost rev­enues. These com­pa­nies aren’t blink­ered by the pur­suit of new cus­tomers; instead, they’re mak­ing the most of the ones they’ve got. 

The trend is only grow­ing, accord­ing to Ol Janus, glob­al head of data at Havas CX, which works with Star­bucks and Lacoste.

“The bur­geon­ing amount of data and mar­ket­ing tech­nol­o­gy at retail­ers’ fin­ger­tips rep­re­sents an oppor­tu­ni­ty to cre­ate a stronger, more rel­e­vant and more mean­ing­ful rela­tion­ship between a brand and a con­sumer than at any point in his­to­ry,” he says.

When com­bined with the grow­ing shift to online through­out the pan­dem­ic, this means cus­tomer engage­ment is no longer a “nice to have,” says Janus: it’s fun­da­men­tal.

“If you’re not doing this well, your com­peti­tors will be.”

Personalised experiences

Janus is right. In the last year, Sainsbury’s launched a per­son­alised pric­ing pro­gramme for its 19 mil­lion Nec­tar Card users. CEO Simon Roberts is also opti­mistic about the ear­ly accom­plish­ments of Nec­tar 360; the data plat­form gives 700 part­ner brands like eBay and Sky bet­ter insights into con­sumers, while offer­ing shop­pers tai­lored dis­counts and rewards.

Else­where, M&S has been invest­ing heav­i­ly in CRM to reach its 8.6 mil­lion Sparks card hold­ers through reg­u­lar email rec­om­men­da­tions and offers. These are prov­ing effec­tive, with ‘open rates’ of 60%, refer­ring to the pro­por­tion of logged in cus­tomers who open the email

Co-op has retooled its mem­ber­ship offer­ing over the last 18 months to intro­duce more tai­lored offers to new and exist­ing sign-ups. Since the begin­ning of 2020 it’s gar­nered 2 mil­lion app down­loads and a 400% increase in engage­ment across its par­tic­i­pa­tion chan­nels, which cov­er every­thing from mem­ber bereave­ment groups to wine tast­ing events and beyond.

All of these retail­ers have not­ed a jump in sales and prof­it over the past year. Their suc­cess­es are tes­ta­ment to the pow­er of strong CRM, under­scor­ing the poten­tial rewards of min­ing insights from exist­ing cus­tomers.

“Gath­er­ing high-qual­i­ty data from exist­ing cus­tomers is the only way you can make per­son­alised, time­ly offers, and the only way you can ensure every piece of engage­ment is as rel­e­vant and mean­ing­ful as pos­si­ble. With­out it, you’re prob­a­bly just spam­ming them,” says Janus. 

The val­ue of adopt­ing a data-dri­ven approach to cus­tomer engage­ment is clear. How­ev­er, many still face chal­lenges in imple­ment­ing such strate­gies.

Char­lene Char­i­ty, head of strat­e­gy at ad agency Dig­i­tas and a for­mer Ama­zon mar­keter, says it’s because they don’t know where to start. “Brands face a labyrinth of hur­dles. Their data is in a mess, and their inter­nal ways of work­ing don’t sup­port an easy path through it,” she says. 

Some organ­i­sa­tions have mil­lions of frag­ment­ed data records across dif­fer­ent plat­forms with mis­matched fields, she adds. “Their cur­rent mar­ket­ing tech­nol­o­gy stacks are mis­matched with lega­cy plat­forms, sys­tems and process­es that have left them ham­strung.”

The power of CRM

So how are the trail­blaz­ers over­com­ing these chal­lenges? In a results-dri­ven world, they’re invest­ing in the tools to ensure effec­tive data cap­ture in areas like research, trans­ac­tions, behav­iour and sen­ti­ment and more.

Com­pa­nies like Cur­rys have also armed them­selves with the tal­ent to under­stand these insights, enabling them to mea­sure their suc­cess against oper­a­tional and strate­gic objec­tives. They offer cus­tomers a val­ue exchange and recog­nise that data is a cur­ren­cy.

Cur­rys first began its tran­si­tion away from dis­count-heavy pro­mo­tions towards a more cus­tomer-cen­tric CRM strat­e­gy in late 2018, poach­ing Saul Lopes from Vir­gin Hol­i­days to head up CRM. Sim­ple ear­ly changes includ­ed the use of AI to draft email sub­ject lines and copy to exist­ing cus­tomers, which led to an imme­di­ate uptick in open rates. 

Lopes also intro­duced a tool to improve per­son­al­i­sa­tion and con­tent automa­tion. In the 12 months to May 2021, Cur­rys tripled its num­ber of active and con­tactable cus­tomers from 3.5 mil­lion to 9.6 mil­lion – a boost of 174%.

Co-op is tak­ing a slight­ly dif­fer­ent approach to unlock the pow­er of cus­tomer data. The retail group relaunched its mem­ber­ship propo­si­tion mid-pan­dem­ic with a focus on val­ue for mem­bers and giv­ing back to local com­mu­ni­ties.

Under the scheme, 2p for every £1 spent goes back into indi­vid­u­als’ Co-op Mem­ber­ship account. The same amount is then gift­ed to com­mu­ni­ty organ­i­sa­tions and local caus­es. Cus­tomers also receive tai­lored offers in-store and on ser­vices like insur­ance and funer­al plan­ning. 

“We also recog­nised the need to mod­ernise our propo­si­tion, make it more data-dri­ven and dig­i­tal­ly enabled, which result­ed in the launch of a mem­ber app and dig­i­tal card through which each mem­ber gets a per­son­al expe­ri­ence,” explains the retailer’s data and loy­al­ty direc­tor Char­lotte Lock.

Mem­bers are the Co-op’s “most valu­able cus­tomers”, with greater com­mer­cial and emo­tion­al loy­al­ty to the brand, she says. Spend per mem­ber across the Co-op’s food arm is four times that of non-reg­is­tered cus­tomers, while they also spend more fre­quent­ly.

In a post-cook­ie, post-GDPR world, it’s crit­i­cal that retail­ers try to under­stand and man­age con­sent, Lock says, earn­ing per­mis­sion to con­tact cus­tomers across chan­nels. It’s also vital to invest in the under­pin­ning data plat­form, she notes, ensur­ing that con­tact is informed by con­sent and a sin­gle ana­lyt­i­cal view of mem­ber pref­er­ences. 

“Doing this has let us get the right mes­sage to the right audi­ence through the right chan­nels at the right moment,” she adds. “It’s a more effi­cient approach to mar­ket­ing invest­ment, too.”

Measuring success

The Co-op knows that no brand can tru­ly own a cus­tomer. On the retail front it’s com­pet­ing with Tesco, One Stop, M&S, Sainsbury’s, Lidl, Asda and the rest. In its oth­er busi­ness lines, cus­tomers have a choice of funer­al providers and a pletho­ra of insur­ance and legal ser­vices options. 

How­ev­er, the busi­ness has found that a renewed focus on exist­ing cus­tomers has proved the most “effi­cient way to dri­ve engage­ment and val­ue”, rather than chas­ing new shop­pers via first-time dis­counts only for them nev­er to return, Lock says.

For retail brands start­ing out on this jour­ney, Janus says, the key is to clar­i­fy how you define and mea­sure suc­cess. They should set strate­gic and oper­a­tional key per­for­mance indi­ca­tors (KPIs), define the met­rics to mea­sure these and source and organ­ise the data need­ed to mea­sure accu­rate­ly. 

“It’s not all about sales – it’s about push­ing con­sumers through the engage­ment fun­nel. Each step of that requires focus and invest­ment.”

For Lock, under­stand­ing and suc­cess­ful­ly apply­ing con­sumer data isn’t just essen­tial for mar­ket­ing and cus­tomer expe­ri­ence; it also dri­ves cru­cial deci­sions on prod­ucts, pric­ing and pro­mo­tions.

“The real val­ue exchange is in under­stand­ing pref­er­ence through pur­chase and design­ing prod­ucts, ser­vices and expe­ri­ences that exceed expec­ta­tions and solve real cus­tomer prob­lems – do that and cus­tomers are hap­py and stick with you.”

What’s her advice for retail­ers that want to emu­late the suc­cess of brands like the Co-op and Cur­rys? Invest in a strong data plat­form, a sin­gle ana­lyt­i­cal and oper­a­tional cus­tomer view and the tools to deploy rel­e­vant mes­sages across chan­nels.

“It’s the foun­da­tion of any suc­cess­ful loy­al­ty strat­e­gy and keeps your inter­ac­tions real-time and rel­e­vant,” she says.