As the Christmas season comes to a close and millions of consumers everywhere finish their shopping, retailers are wrapping up their efforts to collect data on their many customers. How have their habits changed from last holiday season to this one? Are they buying different goods? Are they choosing different purchasing strategies, such as e-commerce or mobile retailers?
As technology tools rapidly improve, companies are stepping up their game. According to The Globe and Mail, every large retailer is embracing data mining and customer tracking practices to some degree. The market for consumer data is ballooning - analytics firm Wikibon has forecast that the value of the "big data" market will reach $50 billion by 2017, as reported by Forbes.
Marc Fischli, chief operating officer of customer science firm Dunnhumby France, told The Globe and Mail that retail data is stronger than ever today.
"The amount of data being produced today is an exponential multitude of what we've had in the past," Fischli said. "Now you can literally personalize the shopping experience of a household or person."
Retailers at this point have a threefold process for improving their sales practices through analytics. They need to collect information efficiently, verify it for data quality and, finally, analyze it to make adjustments to their approach.
Finding new insights
There's a fine line between being insightful and overly invasive, so companies are treading carefully. But they do want to gain more knowledge of each individual customer in order to fine-tune their practices.
Retailers can learn a lot from examining past sales patterns. Fischli explained that whatever you shop for this holiday season is closely correlated with what you'll buy next year and the year after.
"Is it a family that buys a lot of books as presents?" he said. "Is it a family that buys a lot of toys? Is it a family that likes to indulge for Christmas with a huge feast? You can start to create what we call a customer or household's DNA."
Aside from invading people's privacy, there are other concerns that companies need to worry about - not the last of which is the accuracy of their data. Those who practice analytics need to make sure they have address management strategies in place - if they have contact information for their customers that's inaccurate or out of date, their marketing initiatives will all be for naught. Data quality is therefore vital, especially during a busy holiday season.