Big data analytics is the key to identifying ‘breakthrough relationships’ and improving profit margins in retail

What practical and useful role does big data analytics play in a retail environment? Well, according to most experts the answer is a significant one. Retail executives are all acutely aware that because of the influence and proliferation of big data they have the power and sophistication to analyse the world around them and are now able to quickly identify new customers. Big data analytics helps businesses break down demographics and spending habits, so that they can better-target those consumers most likely to patronize their businesses.

However, according to Experian QAS, big data also plays another vital function: it helps businesses identify which customers are likely to stay true. Experian believes that it’s vitally important for retailers to use data to improve relationships with their existing patrons. Advanced data analytics can help companies work out which, of all their current customers, will remain most loyal? Identifying loyal shoppers can be incredibly beneficial for retailers: knowing which customers will likely spend the largest amounts over the longer term can help businesses refine their marketing strategies to maximise income. TechRepublic has claimed that the key to improving profit margins in retail is the concept of “breakthrough relationships.” TechRepublic argues that as not all customers are created equal: big data gives business the ability to quickly identify their biggest spenders.

John Weathington, president and CEO of management consulting firm, Excellent Management Systems, believes that the retail industry has finally come to two significant realisations: firstly, relationships are just as important as products and services, and secondly, companies can make “breakthrough” positions by dominating specific markets:

“The cultivation of a fiercely loyal market starts with an executive decision to offer breakthrough relationships,” Weathington said:
“Any decision that involves breakthrough positioning cannot be made capriciously – with it comes a commitment to install the key capabilities required to support it, which in this case, involves a sizable investment in big data analytics.”

However, he believes that it’s important that companies work to ensure data quality before they identify their loyal customers. If retailers proceed in these initiatives with incomplete or inaccurate information, they could be missing out on a significant portion of potential profits. He believes that before they begin to optimize their marketing approaches, vendors must start with only the purest information derived from the most reliable and robust data sets.