Over the past few years, we’ve helped a few retail clients design and implement data strategies that have centered around two business outcomes: increase sales (Psst! ask us how we generated a 292% Return On Investment from a single campaign) and improve customer service (which eventually flows back into higher sales).
In our quest to make companies like Himalayan Java, the largest coffee chain in Nepal, more data-driven, we’ve learnt a thing or two about what retailers need to know when it comes to leveraging data to achieve their business goals. For the benefit of other retailers considering a move into more data-driven operations, we thought we’d list out the lessons we’ve learnt the hard way; so you won’t have to.
Say you’re a small-medium size retailer that operates physical stores. You probably have a Point of Sale (POS) system like Square. If you’re an e-commerce company, you might use Shopify. These tools make it super easy for you to manage your transactions, customer details and the like which is essentially data about your business. What retailers need to understand is that at their core, these systems are databases that automate or simplify the data-entry process, which means they also need to make it easy for you to access the data, your data, that you’ve entered. After all, it’s your data – data that you own and should have total access to without any additional cost. Surprisingly, not every software vendor provides easy access, which is a problem if you ever want to become more data-driven.
To know whether your software vendor has planned to give you ownership over your data, check if they:
a) Allow you to download your data as CSVs (Excel files).
b) Provide APIs that allow you to get the data you need. This is the route most modern companies take.
c) Allow direct access to the database. This one is rarely ever allowed but we’ve found it to be the case in Nepal, at least.
PS – If your vendor doesn’t allow you any of these options, and that too for free, change vendors immediately!
Once you have ownership over your data, the first thing you want to do with it is to convert it into something that can help you generate insights that will help you make informed decisions and achieve your business goals. The best way to do so, in our opinion, is to build a KPI dashboard(s). Read our guide on how to do dashboards right to understand why KPIs dashboards matter and how to build something that works for your business.
Once you have your KPI dashboard up and running, you can now start taking some data-driven decisions. At this point, it’s important for you to understand something that is perhaps obvious to most: dashboards help you generate insights, which inform decisions, rather than make those decisions for you. What this means is that having a dashboard implies that you must have a human – with deep knowledge of the business – using its insights to inform their decisions.
Sometimes however, and especially in retail, you can use statistical analysis help make the decisions for you. Say for example you operate a restaurant and want to come up with Combo menus for your customers. You can rely on techniques like affinity analysis (market basket analysis) to mine your data for potential combination of items that sell together more often than they sell individually. You’re probably going to need someone with a good understanding of these methods, like, ahem, xabit, to do the analysis and help you interpret the results. In this case however, you’ll only have to implement the Combo menu(s) that the analysis suggests.
Finally, what’s important is that you take your business decisions off of data-driven insights. Data is just a tool, available at your disposal, to help you achieve your business goals – be it better sales, better customer service or better understanding of the business itself.
Of course, each of the above 3 steps are riddled with complications with regards to data cleanliness, integration, analysis, interpretation etc. but that’s a topic for another article. For now, please start by taking ownership over your data and maybe give us a call if you want us to turn them into insights, and, eventually, decisions.
Keep Data. Decisions. Repeat-ing,