There was a time when the corner store knew their customers by name and knew what their customers wanted and when. In these days of big box stores and a myriad of convenience stores, not even the individually owned corner stores can get by with paper tracking. Tracking new and returning customers and their buying behaviors is a necessity.
But what data do you collect? And when should you collect it? How much data is too much data?
How much data is too much data?
To answer the last question first, it is nearly impossible to collect too much data from the retailer’s perspective. Name, address, phone number(s), email address, income, gender, age, race – the list is almost endless. The more data that can be obtained from each customer and tying those customer to every transaction gives retailers a clear picture of customer buying behavior that can be used for inventory management, pricing models, and product placement on the shelves.
However, from the customer’s perspective, there is a point where data collection is too troublesome. In high-end retail establishments, where it may take hours to close a sale, asking for this information may be possible over the period of a sale. But in rapid transactions, such as grocery and convenience stores, asking for any personal data may be too cumbersome for customers and cashiers alike.
Retailers have to choose levels of detail in the data they are willing to collect from their customers, and the appropriate time to collect that data.
What data to collect?
Detailed information from customers is difficult to obtain unless there is an incentive to do so – typically in the form of discounts or loyalty programs. Here, the customer applies for a loyalty card using a form that lists all the data of interest. Then the customer presents the loyalty card at the point of sale (POS). Each transaction can then be tied to each customer through the loyalty card.
In situations where the customer does not have a loyalty card, requiring detailed information is usually prohibitive. Asking for a single piece of data that is quick, does not compromise the customer’s identity when spoken in a checkout line, and offers enough information that the retailer can glean some value from the exchange. Zip codes, telephone numbers, or email addresses are often used; each have some value.
Zip codes offer a general area that can identify general demographics, but hardly specific. Zip codes are most readily offered verbally.
Telephone numbers can identify a household, but not always individuals. Mobile phone numbers are hard to isolate to a geographical area because of number portability, but it can be used to track individuals.
Email addresses may take a little longer to obtain, but can identify specific individuals and allow retailers to communicate directly with customers after the sale with discounts and special promotions.
The goal in all these methods is to make it as easy and as enticing as possible for the customer to offer information and still allow them to move through the checkout line quickly.
When should data be collected?
Most data is collected at the point of sale. When tying transactions to customers, it should be gathered first. When it is tied to promotions related to specific purchases, the point of sale device should prompt the cashier at the moment the particular item is scanned (for example, offering accessories for a large ticket item, such as cables for a sound system).
If information such as age or gender is important, the cashier can enter that data based on observation, resulting in very little friction to the customer but allowing for some basic data analysis, such as which items are popular with 20-30 year old males.
How should data be stored?
Each POS register only contains transaction history for that particular register. All the registers in a store tie together and show the transaction history for that store. For retailers with multiple store locations, all these transaction histories must be collected into one system for analysis. For omni-channel retailers, this includes internet orders.
All this data and the associated customer demographic data must be accessible from a single point - usually either the ERP system or an associated CRM system.
Retailers must decide for themselves which data is most important for their business and how they intend to collect that data. The data should be accessible from the ERP system or other central data repository tied to the ERP system to allow management to analyze the data for buying patterns important to the business.
All retailers benefit from collecting customer data. However, collecting customer data should be made as transparent as possible for customers, and customers must be offered incentives to provide more than basic information such as ZIP code or phone numbers. POS systems should be able to provide data entry for cashiers so that each transaction can be associated with customer demographics. Management should also have the opportunity to analyze their transactions across all their stores to be able to identify buying trends among their customers.
by Archer Point