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Retail Data Insight

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The importance of creating a meaningful data insight strategy for retailers

IntroductionAs a data integration consultancy we spend a lot of our time working with existing and prospective clients talking about the importance of data management.

This article will look at two major data sources for retailers, product data and customer data. We will consider how investment in making improvements to both of these key data sources will improve customer insight and increase profitability. Firstly we look at why and how actionable insight can drive value for retailers.

Customer insight is not easyThere is so much information available to consumers and retailers. It is tough for customers to break through the barrage of content that they consume and find the item they want, where they want and at a price they are willing to pay. Customers expect retailers to understand them and they are willing to provide their personal data in exchange for a smart and seamless service.

Customer expectation presents many problems for the retailer. Ian Cray, seasoned data specialist from data management and integration consultancy KETL explains:

“To understand your customer you need to get a single version of the truth from your data. The complexity of how we interact with our favourite brands though makes this a tough gig for the retailers. For data geeks like us it creates lots of gnarly problems to untangle.

The first step is to unify your customer information from all the systems in which it may live e.g. loyalty scheme, CRM system or web store. This involves identifying and dealing with duplicates, cleaning the data and possibly enriching it. You also need to be able to track changes to this customer information as their names change or they move address.

To understand your customer you need to get a single version of the truth from your data.

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The second step is to match the transactional data from online and offline purchases to this customer profile to start to create a purchase history. The customer may then mix and match how they return items. So stock might be returned in-store having been bought online. Can the retailer match the returns behaviour to the customer profile? Can the merchandise teams look for patterns in returns to help them to identify product flaws? The local store manager will need to notify the central warehouse that they have returned stock. If the stock levels are managed centrally for online and offline purchases then the inventory will need to be updated in near real time. Overnight batch processing might not be good enough for stock management in a large volume retailer. And that is just for starters!”

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So what are the business benefits to retailers in customer insight?All retailers are measured in volume of sales and profit margin. There is no point offering free returns on products with a low price point. Equally for premium brands and products it is important to know when it is the optimal time to discount without devaluing the offer.

A retail business needs to develop its own intelligence about its shopper demographic. Online shopping cart abandonment decision pathways can link to site-specific issues and that is important for the business to understand. View Practicology survey of online retail sites Good product data is also essential to high volume retailers. A high return rate might show that there is something wrong with the product or that the product description is not clear to the customer. Cost savings in retail are as important as new sales.

Product DataThis case study looks at how to gain traction for your product data project at board level. Making sure that data is profiled and cleansed is an obvious foundation to most projects. But getting investment and enthusiasm from business teams in the retail industry to invest the necessary resources and budget can be a challenge.

Profit margins in retail are notoriously tight and pressure for instant return on investment is often seen as the priority. So it was refreshing to meet David Todd, Group Data Director at Travis Perkins plc and one of the winners of Talend’s Master Data Management awards 2015 and a passionate advocate of data quality.

Proving the business caseDavid joined Travis Perkins from the data management team at Tesco Direct to promote and improve data quality for the whole group, thus enabling growth in multi-channel retail opportunities. So who better to ask to give us an inside track on what it takes to get support for investment in data? David explained that he knew that it would take time to develop the business case for investing in data quality.

The Travis Perkins Group is very diverse with complex stock, warehousing and logistics; he felt that it was important to invest in improving their product data. This would create a valuable asset for the group – a data real estate portfolio. Also, the data sources for products are generated internally, or via suppliers, with a good opportunity to assign key performance indicators (KPIs) that could be closely monitored by the group Data Governance Board. David had very strong support from the Exec Board and he says that this was a vital part of the project’s success. The project maintained a laser-like focus on the value it would generate and the Product Information Management (PIM) project was launched.

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Travis Perkins plc is one of the UK’s leading suppliers of materials and professional services to the building and construction and home improvement markets. The Group operates 21 businesses from over 2,000 sites across the UK and employs nearly 30,000 people. With a proud heritage that can be traced back over 200 years, our employees are continuing that tradition by working with our customers to build better, together.

For more information, please visit www.travisperkinsplc.co.uk

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Engaging the businessIt was important to show some quick gains. David and his team were able to do this by making it as easy as possible for the different product teams to make improvements. The data insight team created a studio to photograph the stock range and ensure that each picture conformed to new standardised formats. The product descriptions also underwent the auditing process to create group wide descriptions. The product teams were able to see instant results and reduced costs in PPC (pay per click) advertising now as SEO was improved and the products and categories were coming much higher up as non-paid items on Google searches.

The various product teams are judged on sales figures, so if their product is not looking its best on the website or other retail channels, it will impact on sales. By assigning data quality measures to the product descriptors the PIM team were able to score the data and assign it a bronze, silver, gold rating. Only data meeting a certain rating would be entered onto the sales systems.

The numbers don’t lieAs well as engaging and communicating well with colleagues across the Group, David and his team were also able to provide the Data Governance Boards with real-time reporting on data quality to show how each product team was doing. This is the kind of business intelligence that was easy to measure against performance targets. David made sure that his team was subject to the same real-time reporting and their targets for resolving data quality, once reported, were resolved in a given time frame. Now it was really clear to see which were the best performing product teams within each business, in terms of data quality, and those that needed more intervention.

The learning curve Now David reports directly to the CIO as Group Data Director with data being a department within IT but working directly with each Division and Business across Travis Perkins Group. It became clear that data governance meetings needed to be closer to the users within each constituent business. So now there is regular local oversight within governance meetings located within each business and a Group steering governance team that assists with strategic data issues. PIM took a year to implement and it has enabled David and his team to grow and develop its internal expertise. Further development has been outlined to the Exec Board in a five-year plan, which David feels is a realistic time frame, for further data quality improvement projects. View Talend customer case study for Travis Perkins Through illustrative and actionable reporting David was able to quantify the work and benefits received through improving data quality throughout the business. Giving both the board and business units direct access to the Product Information Management system greatly assisted in the understanding and importance of data within the organisation.

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Customer DataData is only valuable when it provides actionable insightRetailers and advertisers drive the race to customer insight. This is hardly surprising given that profit margins are tight and customer loyalty can no longer be relied upon.

Retailers must be able to identify the value of their customer too. As consumers, we want our retailers to recognise us when it suits us, but not to bombard us with irrelevant adverts. If I have bought a premium brand of boots from a department store there is no point that store sending me a voucher for a discounted version of the boots a few weeks later. This builds resentment. This is why stores, such as House of Fraser, have invested so much in understanding their customer. View Practicology case study

Retailers must be able to identify the value of their customer too.

The trickier data management for retailers is often their customer data.

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Product data quality really countsProduct data for retailers is a good place to start to improve its quality because the parameters can be controlled from within the retailer and external product suppliers can be given incentives to achieve standardised product information.

Once you have effective data quality systems in place to ensure that your data feeds are accurate you can be confident that the data models that you are creating are more accurate. As well as more accurate forecasting there is also the gain in time. Analysts can spend time doing analytics instead of searching out disparate and or inaccurate data sources. This case study from TIBCO Analytics highlights the way that Marks and Spencer were able to cut down the time it took to complete their stock analysis and make the findings more accessible to the business:

Why retailers need to identify the different types of customers they haveRetailers need to understand who is buying what, where they are buying it and how much they are prepared to pay for it at different times of the year. By implementing a customer journey map retailers will inevitably identify areas ripe for product innovation, examples of poor customer service, upselling and cross-selling opportunities and so on:

• As every retailer knows it is vital to monitor rates of customer retention by identifying high value, low volume buyers as well as the other way around. They need to make regular, good customers feel valued. They want good customers to return and to be brand advocates.

• It is vital for retailers to know when and when not to offer free delivery; to identify online customers for whom delivery options and savings are a key part of the decision-making process of when to buy and from which retailer. For some retailers it is important to identify opportunities for sales that are contingent on payment plans.

• Once a retailer has implemented a strategy of engagement they can ensure that every touch point that a customer has with them is valuable to both parties.

• Merging information between the different departments that are customer facing will enable a good retailer to improve sales, ensure that product is on the shelves when it is needed and priced competitively.

• Customer service data is often free form data and might be more complex to process. But the value to colleagues in logistics, sales and product development/buying may well offset the investment in making that data freely accessible.

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So what is holding retail technologists back?Most retail technology leaders will tell you it is cost. But interestingly it is nearly always a costly problem that prompts a decision to invest in customer insight. Often there is a particular business issue that turns critical that then necessitates a data management project. Here are some of the issues that we have come across for retailers:

• Legacy systems can no longer cope with the volumes of data

• Failed negotiations in relicensing arrangements for existing software and hardware

• Some kind of customer data breach

• Poor quality customer data

• High levels of customer complaints via customer services

• Significant drop in sales of a particular product group

• A direct competitor has invested in better data management and their sales are improving as a result of an improved single customer view

• Critical failure of e-commerce systems

• Inconsistency of product pricing

• Poor stock level management

Customer data project interview: Sarita Harrison PMP at KETL Sarita is our dynamic project manager at KETL and joined the team having worked in the Media and Advertising industry. In one of Sarita’s PM roles she managed the project that was designed to create an intelligent targeted advertising solution for a major satellite broadcaster. So with over 14 years of project implementations under her belt Sarita was the perfect person to manage ‘Project Customer’ forward for international retailer Monsoon Accessorize.

I asked Sarita what she feels is the single biggest factor for determining success in managing a customer data project.

Often there is a particular business issue that turns critical that then necessitates a data management project.

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TechnologyIT teams may need to start evaluating and sourcing suitable technology platforms, the components that will help the business to fulfil their vision.

This could involve a full tender process with a proof of concept/feasibility (PoC) phase of the project. During that phase, there also needs to be consideration of the systems that will be providing the data relating to customers and that may bring into play the whole area of data protection and compliance.

The other aspect of this phase is data volumes and traffic. Picking the right technology solutions to enable the business to grow their data volumes will be critical. The technology needs to be able to scale to respond to increasing demands. Most projects start with a set of core requirements, but they may well change over time and the solutions need to be able to respond to those changes.

Sarita’s tip: Throughout the PoC phase it is vital to keep communication open and regular with all of the senior business stakeholders. One of the common mistakes that technologists can make is to disappear into ‘radio-silence’ while they’re working through a busy PoC!

Data migrationOnce a solution is selected then companies will generally need to plan how they are going to migrate historical data on to the new solution, how they are going to take in new data sources and then how all of the data relates to each other to help meet the business requirements. Depending on the retailer and the existing technology they have in place, this can either be quick, or it can be a relatively long process!

“The key for any retailer before they even start planning their project is to really understand what questions they are trying to answer about their customers. What insights are they trying to obtain? Customer data is integral to the whole business so the project cannot operate in isolation. This high level thinking produces the best results when there is engagement from across the whole retail business with all areas being involved in defining the vision for customer insight and the customer journey.

Once that ultimate high-level goal is set then the visionaries within the company need to challenge themselves beyond that and think about what they would like future phases of the project to deliver – effectively building a road map centred around the customer. Start with one key objective but don’t let that limit your creativity about how you want to engage with the customer. Examine your core objectives and then challenge and or extend them!

Companies often have aging architecture or out of date business processes and so to achieve the vision will require investment, both in terms of capital and resource time. Having senior stakeholder agreement and support is critical to the success of the project, but also having champions that are prepared to promote the vision across the business is really important.”

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Project methodologySarita says that in her opinion, it doesn’t matter what type of delivery methodology is chosen – it depends on the nature of the organisation, the team, and the complexity of the project. What is important is whether you’re working in a waterfall method, or in a more iterative/agile approach, the technology deliverables go through some element of planning, design, development and testing, before being released.

As a PM it is important to understand what the best approach is for the retailer and to understand and respond to the strength and character of your team – the key is to pick an approach and then be consistent.

Requirements gatheringAgain, as with defining the goals, defining requirements isn’t done in isolation. A good Business Analyst is worth their weight in gold and every team should have one! The BA should be able to effectively translate the needs of the business into something that a developer can understand and deliver and something that is testable.

TestingThese stages are vital to a successful project. Sufficiently robust testing is often an area that companies skimp on. Sarita explains, “I’ve worked with some companies that deploy changes from a development team and send them straight out to the business users for acceptance, without going through any real system testing or performance testing and then they are surprised when things don’t work as expected!”

So invest in testing, ideally with an experienced test lead overseeing all the different stages, such as:

• Functional testing

• Non-functional testing

• Integration testing

• User acceptance testing

It’s also helpful to know what your quality thresholds are likely to be before a system / platform goes live. Can you live with workarounds at go-live and then have time and resources to go back to improve those workarounds at a later date?

Implementation of the serviceSpend some time with your operational teams to understand how they are going to monitor and support the platform post implementation and include these as part of testing. The vendors may well offer some of these services or a retailer may have their own operational monitoring teams.

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Parallel developmentDoes it make sense for an organisation to run their old platform in parallel with the new one for a set time? If the retailer is reconciling orders or feeding data to finance systems it might make sense to run in parallel for at least 3 months, for example.

Project resourcingIs the retailer expecting the project to be delivered by existing team members that already have day jobs? Is it realistic or should they consider back filling and secondments to the project? This can make a big difference to the quality and timing of the project delivery, but may cost more.

Time scalesSarita recommends that you do spend some time working out your implementation plan and technical designs before committing to a go live date. This isn’t always possible because of pressures outside of the project (e.g. business driven deadlines, or aging technology), but as a general rule it is a sensible approach.

BudgetingRegardless if you are sticking with existing tech, or going with something new, there will need to be some investment. Capital investment will be required if new technology is needed, but don’t forget to investigate whether incumbent technology products are still suitable, or can be upgraded. Companies may also need to consider the on-going operational costs as these can impact the bottom line, (e.g. maintenance and support are not one-off costs and generally cannot be capitalised).

Sarita’s tip: Try to elicit as many requirements as you can at the start of a project (even if only high level). Late additions of requirements may impact the budget as well as the time scales and could result in delays and disappointment.

CommunicationCommunication and transparency is the key. It is important that information such as time scales, progress and risks to the project is shared with stakeholders regularly in order for the project to be successful. People need to feel that it is ok for them to raise bad news so that the project team can take appropriate action to safeguard the project delivery.

TrainingA training plan will need to consider the training requirements for the core team delivery team to deliver the solution as well as for end user training. Some investment might be needed, but some suppliers do include it as a part of their contractual offering, so it is worth checking. What will the approach to training be? Is it a train-the-trainer approach, or will you require consultants and/or vendors to provide the training?

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ConsultancyThird party consultants can really help to supplement a project delivery team. This kind of additional help can enable the retailer to get to the end phase of project delivery quicker than just using in house teams. They bring a level of expertise that may not exist within a retailer because they have often been involved in similar projects before.

Project cohesionIf a project team is made up of resources from lots of different departments there can sometimes be pre-existing perceptions that could cause challenges within a team under the pressure of delivery. So a PM or a project sponsor needs to ensure that there is a good team dynamic and a working environment where there is mutual respect and a positive attitude so conflicts are quickly resolved.

Author

Helen Woodcock Business Development Manager at www.ketl.co.uk

Ketl13-14 Orchard StreetBristol BS1 5EHinfo@ketl.co.uk+44 (0)117 905 5323

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