Driving Consumer Satisfaction Through Business Analytics

Retailers recognize the need to improve operational efficiencies and cut costs if they want to survive the current market turbulence.

Smarter retailers are going one step further, preparing themselves to be in the strongest position when the economy improves. These retailers are focusing on their customers – understanding what appeals most to their loyal advocates, attracting new shoppers and determining what is important to consumers looking to shift their loyalties. These chains will be the ones that capture the lion's share of the diminishing consumer wallet.

A recent IBM Institute for Business Value (IBV) survey of 30,000 U.S.
consumers revealed that shoppers anxious due to economic conditions rely on retailers they trust. These advocates have nearly doubled from 21 percent in 2007 to 38 percent in 2008. Advocates are more likely to recommend preferred retailers to friends and family, and remain loyal even if other retailers offer competitive value. In fact, 31 percent of advocates even increased spend with their primary retailer over the past year.

The survey shows that a satisfied customer is more likely to be loyal, buy more and generate more repeat business. The care and feeding of loyal customers, therefore, is extremely important – and the IBV study reveals that consumers will change retailers after only 3.1 negative experiences. This is why smart chains need to ensure customers experience value at each visit.

Common barriers
So how do you get there? Through timely access to accurate business information that can provide trusted insights into customer service performance, consumer behavior and shopper motivations. This is easier said than done, due to three common barriers:

Insufficient insight into the detail of customer shopping perceptions, needs and expectations. Generating detailed customer insights often comes at a cost, specifically IT investment and staff resources. In mature markets where competition is intense, however, the need to target more profitable customer segments is a critical success requirement.

Insufficient visibility of the risks and benefits of a poor/good customer experience. A successful retailer needs to understand how customer service levels affect its key and most profitable customer segments. Overstating the risk leads to an inefficient allocation of resources; understating the risk can be even worse, leading to the loss of your most valuable customers.

The absence of direct accountability. Ideally, a retailer has common customer experience and service performance goals that are backed up with accountability and incentives, especially when the drivers of those goals span different functions. Without these incentives, the retailer creates a barrier to achieving a better customer experience.

Critical decision areas
Business analytics and optimization give retail managers the tools they need to develop company-wide strategies, put plans into place and track performance against objectives. Retailers can identify shoppers, understand patterns, diligently measure performance and connect with customers. By building intelligence into the system, retailers, manufacturers and suppliers can eliminate inefficiency and waste at every step of the chain.

Critical decision areas where smarter retailers can engage include:
Basket analysis: What is driving the typical shopping trip, buying decisions and product affinity?

Customer segmentation: How do different customer segments vary in shopping motivations?

Targeted marketing: What is the best way to reach and communicate with targeted customer groups?

Service value: What is driving the service cost and benefit? How can service levels be maintained while controlling staffing costs?

Information, complaints and claims: What is driving customer concerns and service responsiveness?

The new economy can be an opportunity for retailers to work smarter to deepen relationships with their most loyal (and profitable) customers and to leapfrog other chains to attract shoppers. Now more than ever, the customer is king.

Building trust, understanding consumer needs and ensuring the best shopping experience are critical to growth, and business analytics is the bridge. It is the enabling technology that lets retailers see both the big picture and the trends and details so that they can make informed decisions and improve the overall shopping experience.

Business analytics allows retailers to truly understand what motivates different consumers to shop, and what turns shifters into shoppers, and shoppers into advocates.