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Understand Customer Behavior to Win at Retail

By Robert Hetu | January 27, 2015 | 0 Comments

Retail TrendsRetail AnalyticsCustomer Analytics

Providing every existing or potential customer with one view of the retailer, where the customer sees no observable difference between experiences across the retailer’s channels, is pivotal for success within the consumerized retail environment. However, facilitating a consistent experience for millions of customers across thousands of retailer touchpoints is proving to be almost insurmountable for many larger retailers. One of the biggest opportunities is maintaining the high quality and security of customer data. In this recently published research entitled How to Achieve One View of the Retailer Through Behavioral Segmentation, Kelsie Welch and I describe the chain of custody that oversees and protects gathering, cleansing and maintaining customer data and the resulting application of segmentation. This chain of custody that tracks customer information from inception of a relationship through all physical or digital interactions is the lifeblood of visionary retailers.

We also delve into the complexities of behavior segmentation in an effort to cut through the hype and get down to what matters when trying to understand your customer’s personas, motivators and the resulting behavior segments essential for effective personalization strategies. Understanding behavioral segmentation requires retailers to move along the analytics maturity spectrum from descriptive and diagnostic to predictive and ultimately prescriptive analytics. Descriptive analytics includes the use of reporting and dashboards to track what has happened. Diagnostic analytics includes the use of exception reporting, data mining and other types of discovery to find current business opportunities and is reflective of most Tier 1 multichannel retailer’s capabilities.

Behavioral Segmentation
Gartner January 2015


For example online grocery retailer FreshDirect uses prescriptive analytics across marketing, merchandising, supply chain and transportation to create an in-depth understanding of its customers and identify business opportunities. Using tools provided by SAS, it developed customer behavior patterns that allowed it to identify areas for expansion into the Philadelphia market. Becoming prescriptive, a state where retailers can actively determine future direction is even more challenging and requires an extensive period of predictive analytics to validate the behavioral segmentation cycle.

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