Know thy shoppers

No retailer that makes an investment in own-brand product development wants to see the result of that investment gather dust on the store shelf. So it’s important to ensure new product development meshes with the wants and needs of the retailer’s specific shopper base.

To accomplish that feat, however, retailers must spend money to gather the right shopper insights — and understand how to leverage those insights in a way that maximizes its return on investment.

But before they move forward with any insights-gathering activity, retailers need to take a look at the overall architecture category by category so they can understand the choices currently available to shoppers, says Graeme McVie, vice president and general manager of business development for LoyaltyOne, with U.S. headquarters in Cincinnati.

“There should be size and value/quality options for shoppers with different needs, and often there are gaps that can be filled with private label products,” he says. “Having identified gaps, it is important to understand the profiles of the buyers for different parts of the architecture and determine if the profiles of the buyers line up with the positioning of the products within the architecture.”

And shopper insights are critical to being able to do so.

Many avenues to insights

Today’s retailers have myriad choices when it comes to gathering shopper insights. Options range from shopper loyalty cards and online surveys to focus groups, shop-a-longs and more.

Ultimately, the avenue to insights should be specific to the situation, says Giovanni DeMeo, vice president of global marketing and analytics for Interactions, the consumer experience marketing subsidiary of Stamford, Conn.-based Daymon Worldwide.

Sometimes, for example, it is appropriate for a retailer to conduct intercepts, where it asks individual shoppers very specific pointed questions, he explains. For other situations, masked or blind queries such as customer satisfaction (CSAT) surveys — electronic surveys printed out at the bottom of a receipt or accessible via a code that can be scanned — allow the retailer to glean insights while protecting shopper anonymity.

“And it also depends on what they’re going to do with the data,” DeMeo stresses. “It’s the right strategy and making sure that you know what you’re going to do with the information before you start to collect it. That helps you create that ideal instrument, a questionnaire or whatever it happens to be, that ideally collects the information that you want.”

A few collection pointers

McVie says retailers with customer IDs — usually via loyalty cards — can build buyer profiles by analyzing past purchases and scoring each customer along multiple lifestyle dimensions (e.g., time-starved) and life-stage dimensions (e.g., empty-nesters).

“It is then possible to understand which products appeal to which buyer dimensions and hence which private label products appeal to which buyer profiles,” he says.

But here it’s important to have a high number of transactions associated with each shopper ID, McVie notes. Incentives and rewards help to boost signup and usage numbers.

“Retailers also need to store data at the customer/transaction/item level,” he adds. “Too many retailers dispense with the item-level data, but to use an old adage, ‘You are what you buy,’ so if you don’t keep the item-level data, you’re reducing your ability to truly understand customers and their needs, especially as it relates to store brands.”

And retailers also will want to consider gleaning insights via a multichannel-collection process.

“Loyalty is too often thought about as just a loyalty card around what shoppers spend, says Irving Fain, CEO and founder of CrowdTwist, New York.

“Our programs ultimately incorporate every point of interaction with the brand,” he explains. “So they’re not only incorporating the shopper data, but they’re also incorporating survey data, social data, mobile data, e-mail data.”

Here, the retailer must be able to reconcile each shopper’s identity — the data collected via multiple channels — back to one person, Fain says.

“If a brand or a retailer isn’t able to reconcile [a shopper’s] identity back to one person, they have no real way to personalize an experience” to him or her, he notes, or “understand how one channel’s driving to another and really truly understand aggregate brand identity.”

Cut through the clutter

Too often, retailers invest in shopper insights only to be overwhelmed with large amounts of data they ultimately do not know how to use. Sometimes, the problem is tied to the data collection itself being the goal, Fain says, instead of the goal being the collection of specific actionable insights for the benefit of private brand programs.

McVie agrees, noting that “too many initiatives focus on the cool insights that can be generated” instead of “what decisions benefit from which consumer insights.” He advises retailers to adopt an integrated shopper-driven approach here.

“A centralized data and analytical platform should be used to drive consistent shopper insight development,” he says. “Shopper insights then should be aligned with the needs of the individual decision-makers in the organization, and they must be presented in an easy-to-use format so the decision-maker [can] leverage them in their daily decision-making.”

Challenges also come into play when the data being collected are not aggregated to a single individual, Fain says, or the retailer is not gathering information down to the individual level.

And the data must be in a format retailers can understand and use, DeMeo stresses. His company has a proprietary tool that can help here.

“Instead of just saying that 51 percent of your shoppers said this, it actually allows you to live-click on that 51 percent, and it distributes [the information] out in front of you,” he says. For example, “it might say in these geographic regions, this was the distribution of information, and based on how much information we have on the respondents, it could be broken down by gender, by ZIP Code, by income.”

Maximize ROI

In addition to setting goals, choosing the most appropriate data-collection approach or approaches, and “cutting through the clutter,” retailers could maximize their return on the shopper insights investment by ensuring they have the support of senior management.

“Support from senior management is one of the most important enablers to ensure shopper insights are adopted and used across the organization,” McVie notes. “Retailers need to take a holistic approach to leveraging shopper insights across their organization, and they need to tie those insights directly to decisions that are made on a day-to-day basis across marketing, merchandising and store operations.”