Claritas - Retail Analytics Create 'Actionable' Customer Insights

Claritas in the News

Claritas Staff

Perhaps more than most industries, retail revolves around understanding the customer. Insights into customer tastes, buying patterns, and points of purchase help boost profits, market share and customer loyalty. In previous decades, identifying these insights has proved frustratingly elusive. However, smart retailers are now rapidly expanding their ability to mine customer and demographic information from a variety of transactional and analytic sources, and turn that customer data into actionable market insights.

Large retail chains are setting the pace by improving product forecasting, targeting of customers and products, merchandising and promotions. They look for general trends and geographic clustering in purchases that are not easily visible in massive volumes of products and sales data.

Here, we’ll discuss three successful analyses that most any retailer can implement today – whether they are a Fortune 500 player with a massive enterprise data warehouse, or a smaller retailer with access to customer or market data, a spreadsheet and some good thinkers.

1. Customer and Scanner Data for Site Location

Retail loyalty programs are designed to anticipate and meet customer needs more effectively by using customer data to target products, which ultimately, provides a sharper focus on winning loyalty.

One growing, upscale beverage retailer wanted to build loyalty by locating new stores near affluent segments with consumer behaviors compatible with their product. Using customer loyalty card data and scanner data from the ACNielsen Homescan panel, they identified a “gourmet market basket” of goods more likely to be bought by their target customer than the average consumer. This included specialty food products like Grey Poupon mustard and Haagen Dazs ice cream. Analysis of the propensity to buy the “gourmet market basket” measured against beverage demand showed a strong connection and, in subsequent testing, store sales analysis proved this factor was one of the best differentiators of site performance.

2. Customer Data for Patronage Analysis

Another beverage retailer wanted to understand the trip patterns of its customers. Market research indicated that good customers transacted three to four times per week and some highly loyal customers transacted as much as two or three times per day. By analyzing a sample of transaction data from their loyalty card program, they were able to identify “trip chains.” or patronage patterns, that were typical of their most profitable customers. The information was used to gain insight into applying more relevant loyalty rewards across stores and day parts, determining optimal site locations for different segments, and adjusting menus that would appeal to the segments across day parts and trip segments (i.e., commute to work, family outings, shopping, and business meetings).

3. Lifestage Data for Customer Targeting

Customer targeting is one of the ideal uses of retail analytics. A financial services provider wanted a better way to target neighborhoods for a home equity line of credit. Through analysis of credit data, they determined, surprisingly, that the presence of a high balance on student loans indicated substantially greater potential for the loan and reduced the risk of defaulting. Follow-up research showed that consumers with these profiles tended to be physicians, dentists, and other professionals whose income easily offset their educational loan obligations.

Yet another reason to use customer and transaction data is to improve event-triggered promotions. Appliance manufacturers and major retailers have developed durable goods replacement models to help anticipate when customers will begin shopping for new appliances. Based on product type, product ownership, and lifestyle-lifestage demographics, they are able to anticipate three major types of appliance shopping – replacement of broken goods, upgrades, and new purchases for new family units or new homes. Targeting promotions to these different segments and needs states delivers more relevant messages and improves responsiveness.

About Claritas

Since 1971, San Diego-based Claritas has been the pre-eminent source of accurate, up-to-date marketing information about people, households and businesses within any geographic area in the United States. Its target marketing services are aimed at reducing the cost of customer acquisition and growing customer value. Claritas offers industry-leading consumer segmentation systems, consulting services and software applications for site analysis, advertising sales and customer targeting. Claritas is a Nielsen company. The Nielsen Company is a world-leading information and media company that includes ACNielsen, Nielsen Media Research, Spectra Marketing Systems, and Scarborough Research, among others. To learn more about Claritas and Nielsen products and services visit their web sites at www.claritas.com and www.nielsen.com.