Retail executives are well aware that thanks to the rise of "big data," they now have the power to analyze the world around them and quickly identify new customers. By breaking down demographics and spending habits, companies can target the consumers most likely to patronize their businesses.
It's equally important that retailers use data to improve their relationships with existing patrons. Data analytics can help companies answer a salient question - of all their current customers, which are most loyal? Identifying loyal shoppers can be tremendously beneficial for stores. If customers have the potential to spend large sums of money over the long haul, it's worthwhile to analyze the marketing strategies that will best compel them to open their wallets.
According to TechRepublic, the key to improving profit margins in retail is the concept of "breakthrough relationships." Not all customers are created equal, and if stores can quickly identify their biggest spenders, they can make serious inroads financially. John Weathington, president and CEO of management consulting firm Excellent Management Systems, argues that the retail industry has recently come to two significant realizations. First, relationships are just as important as products and services, and second, companies can make "breakthrough" positions by dominating specific markets.
"The cultivation of a fiercely loyal market starts with an executive decision to offer breakthrough relationships," Weathington said. "Any decision that involves breakthrough positioning cannot be made capriciously - with it comes a commitment to install the key capabilities required to support it, which in this case, involves a sizable investment in big data analytics."
It's important that companies work to ensure data quality before they identify their loyal customers. If retailers proceed in these initiatives with incomplete or inaccurate information, they could leave significant profits on the table. Before they begin to optimize their marketing approaches, vendors must start with only the purest information.