The “relational gap” in the Australian retail sector

An IBM study found that 90% of customers want better personalisation, and are willing to spend 20 minutes to set up their information to help retailers give them a better experience. However, the same study discovered that less than a third of retailers are able to make the most of this.

Interestingly, a recent survey conducted by Capgemini reveals a thorny truth that many Australian retailers won’t like to hear. Few excerpts:

Relationship building (Relational aspects) is the most under-utilised dimension. The potential for generating customer intimacy and brand loyalty is currently unexploited by Australian retailers and has created a Relational Gap.

The true power of relational digital commerce lies in combining established web personalisation techniques with advanced big data analytics to create effective, scalable solutions.

Since it is impossible to scale a business model that relies on one-to-one human contact, digital mass personalisation aims to both individualise the customer experience and to raise the cost and likelihood of customers to switch to a competitor offering:

·        By way of individualising their offering, e.g. via useful product recommendations, retailers can make their digital service less comparable and raise customer net benefit. This creates opportunity cost and decreases the likelihood of customers switching over.

·        By way of using customer data to provide useful services, e.g. via user search or transaction history data, the usefulness of the digital service grows over time.

End quote. Interestingly, one business capability that is painfully lacking in the Australian market is product information management (PIM) and master data management (MDM). I argue that these two disciplines combined can enable a better personalization strategy. Admittedly, their scope is much broader but properly tuned (and integrated with big data analytics) they can deliver effective and scalable personalization solutions.

Let’s briefly look at each in greater details.

Product Information Management

PIM provides business application functionality enabling product managers, merchandisers, purchasing staff, supplier and partner organizations, and others to create and maintain trusted product data by authoring and managing all types of structured and unstructured product data, including product attributes, images, videos, promotional bundles, cross-sell/upsell relationships, pricing data and channel- and localization-specific information.

At the heart, PIM is all about slicing and dicing product information to serve an increasingly and varied audience. For instance, a hammer can have few attributes when sold to someone who just needs to hammer while carrying a wealth of information when sold to a technician who is also interested in the material, resistance, shape of the handle, etc.

Master Data Management

Fast, accurate, reliable information is the lifeblood of retail companies. It is vital for every aspect of the business, from merchandise planning to store replenishment, from supply chain management to forecasting. Not least, personalization.  Accurate and meaningfully data relationships result in better personalization. In fact, MDM is all about creating complete and authoritative business views, including customer views. If you need to fully understand the value of each customer, MDM enables this by tracking key attributes and resolving data conflicts across data sources. If you want to ensure a consistent customer experience or engage in customer segmentation, MDM enables this as well by helping improve the quality of data and by synchronizing data across all its sources to eliminate inconsistencies.

Final Thoughts

It is my conviction that wise retailers should start leveraging the vast pile of customer purchasing data and behavioral details, and use the proper technology such as PIM, MDM, BI, etc. to deliver a superior customer experience in terms of engagement and personalization. The results won't be disappointing. 

Retailers push fastest and hardest on personalisation efforts. NOW!

*Picture source: http://thecontentwrangler.com/2009/05/03/first_things_first_localization_should_start_at_home1/