Digital disruption over the last decade has significantly impacted how retailers communicate with their customers. Most retailers acknowledge a shift to more technology-enabled consumers. As a result, retailers are adjusting their business strategies and refocusing their marketing so it is more consumer-centric.
Roxanne Austin, a member of Target’s Board of Directors, says their decision to appoint Brian Cornell as Chairman of the Board and CEO was driven by the growing importance of data and analytics and for their brand to catch up digitally. “As we sought to aggressively move Target forward and establish the company as a top omnichannel retailer, we focused on identifying a leader who could bring vision, focus and a wealth of experience to Target’s digital transformation.”
Austin said that the Target board had determined that “Target would not grow if they weren’t relevant to our customers.” As part of this change, she says they now view smartphones as their storefront. This step has liberated them to increasingly turn stores into fulfillment centers.
Target’s CIO, Mike McNamara, clearly agrees with his board member. He claims the trick now is to make their physical stores add value to a digital strategy and not the other way around. Part of delivering this in the digital era is creating, “an adaptable architecture and agile processes.” Doing this, McNamara says, involves creating a business philosophy of “test and learn.” McNamara says that he has for this reason brought all software development back in house, asking “how can you outsource your IP?”
Retailers like Target understand that it is critical to use data to build direct relationships with customers. Their goal is to create great experiences with their brands and products by empowering consumers with knowledge. This requires a better understanding of consumer needs as well as the removal of purchasing barriers. Strategically this means managing customer, product and supply chain data, and proactively identifying the relationships among them. Doing this in a way that does not damage customer trust and goodwill is essential.
Consumer, product, partner, supply chain and external data should be proactively managed to ensure a complete picture of consumers. Without accurate and complete data on next-generation customers, neither the systems nor the resulting marketing campaigns will function as intended. Retailers with inaccurate targeting will end up frustrating consumers with irrelevant messages and offers which will be ignored or lead to a complete shutdown in communications.
Typically, the above data is highly fragmented which creates problems for the sales, marketing and even service teams who use data to develop approaches for local markets, products, brands or campaigns. Marketing costs are driven upward by the inability of these teams to leverage common resources and the duplication of their efforts across programs. A patchwork approach is at odds with corporate initiatives to create a single view of customers and products, reduce costs and increase profit margins.
Fragmented consumer information leads to data privacy and security concerns, and companies collecting data about customers need to ensure this sensitive and valuable data is protected holistically. Data protection regulations, including Payment Card Industry Data Security Standards (PCI DSS), carry hefty costs for data breaches. Privacy International counts over 100 countries with comprehensive data protection legislation and several other countries in the process of passing such laws. Data protection is not just about risk aversion and avoiding fines, it is about protecting your corporate brand.
A Deloitte study found that the primary reason consumers choose to purchase higher-priced products is because they are from a trusted brand. Importantly, the study found that for 59 percent of consumers just a single data breach would negatively impact the likelihood of them purchasing from a particular company. Deloitte found that with confidence in an organization’s ability to protect their data, consumers are more inclined to share information. Without data protection assurance, retailers will be limited in the information they can collect – and allow competitors (or trading partners) to win their customers’ loyalty instead.
Information security drives customer experience
University CIO Stephen Landry argues information security is an essential part of customer experience, as he says Target now knows this. Healthcare CIO David Chou says that unfortunately, “once the trust is gone, forget about all of the digital and innovative experience you have put forth.”
Isaac Sacolick, a former financial services CIO, adds “you can compete on overall customer experience, innovation, performance, service, design and a big yes to security and trust.” Cynthia Stoddard, CIO of Adobe, says that “data is the new currency for organizations driving insights, customer engagement and ultimately financials.” Ann Cavoukian, Director of the Privacy and Big Data Institute, agrees with them and says, “you can't afford to leave security out of the equation: must have both privacy and security, ideally by design!”
Your CIO gets it. The question is what are you doing to help bring data stewardship to the forefront?
As we have said throughout this post, it is essential that retailers get their data act together. This means that they put together a complete picture of consumers and at the same time become better data stewards. Without the latter all the intimacy sought can be lost in an instant. To give you more information, please take a look at more detailed brief on this topic: "Customer-Centric Retailers Win Based Upon Customer Data"