By Gary Sankary, Summer 2019
Customer engagement is the number one issue for businesses today. Being relevant, timely, and genuine is how best-in-class companies are making sure that their customers remain loyal and immune to the competition. Retail, banking, manufacturing, and insurance companies are going after the same pool of customers in increasingly competitive markets. It's critical to quickly understand what your customers expect from you and how they respond to your value proposition.
Take the steps to build a holistic, data-driven customer engagement strategy based on what you know your customers like about your business. This will ensure that they continue to think of you first for the services that your company delivers.
1. Leverage your CRM.
Customer relationship management (CRM) is at the core of any customer engagement strategy. It's how best-in-class companies gather and analyze data in order to provide the products and services their customers demand. In my work, I have the opportunity to speak to a lot of retailers, and the way I see CRM strategies executed is wildly inconsistent. Some companies have mastered the capability, using it not only to gather and analyze data but also to predict behaviors and create compelling offers. Others are rudimentary in their execution of CRM, sometimes collecting little more than a customer name and address.
Even with minimal data, CRM can unlock critical insights about who your customers are and what they want. For example, with just their home addresses, it's possible to know the sorts of neighborhoods customers live in, the lifestyle choices they make, and their spending habits. By adding just a little bit more data—sales, for example—it's possible to correlate customer location with actual buying behavior.
2. Use location intelligence to help explain your best- and worst-performing locations.
Location technology allows you to bring disparate types of data from a number of sources into one tool for analysis and interrogation. It gives context to business performance. For example, you may find that your best-performing stores are close to suburban shopping centers with dining and entertainment options. Or maybe your most profitable service branches are next to transportation hubs or along high-traffic pedestrian walkways. Geographic attributes reveal the why behind activities and transactions. And when you add data like demographics, human movement, traffic patterns, and competitive presence, to name a few examples, the influence on a location's performance is significant. Location technology, such as a geographic information system (GIS), provides the capability to connect your customers and their activities through location. Once you understand the geographic attributes that are influencing store performance, you can correlate those attributes with other locations to predict success or mitigate poor performance. This is really the secret of location intelligence and geography. You can find data-driven correlations in your customer transactions and store performance that just aren't available with any other technology.
3. Create customer profiles from data, not gut feelings.
A successful customer engagement strategy requires alignment with who your ideal customer is. The most powerful way to achieve this is to create a customer profile that helps you envision your customers when they're making their product and strategy decisions. You can now create detailed and highly segmented customer profiles based on a deep understanding of who your ideal customers are and where to find them. Using geographic data that's appended to home addresses and store locations, it's possible to create just such a profile.
4. Perform a gap analysis.
Once you understand who your best customers are and where your best locations are, you can start to perform gap analysis of your best- and worst-performing locations to figure out what's driving performance. Create a simple x,y chart with one axis describing forecasted high-performing and low-performing locations based on neighborhood, and the other axis describing the actual performance of each location.
Through this analysis you'll be able to sort locations into the following groups:
- High-performing locations in high-performing neighborhoods—For locations that are doing well and are in neighborhoods where the geographic attributes would indicate that they should do well, keep doing what you're doing. The strategy here is to engage the neighbors of your best customers who currently are shopping with you, but the offers and products that you present don't require any change.
- Low-performing locations in low-performing neighborhoods—Some locations perform poorly and are in neighborhoods you wouldn't expect to succeed. For those locations, you have to decide whether it's worthwhile to keep them open. As you are evaluating their performance, it's important to keep in mind the return on investment (ROI) that those locations generate. If possible, consider changing your offerings or messaging to better engage with those markets.
- Low-performing locations in high-performing neighborhoods—This is an outlier worth investigating. Something about the locations or this marketplace is hampering your expected performance. It could be a competition issue, a location problem, or something else. For this quadrant, an investigation is worthwhile—try to understand why your store is not performing as you expect. The good news is that if you can find and fix the problem, the potential for incremental sales growth is significant.
- High-performing locations in low-performing neighborhoods—This category is the most interesting and perhaps holds the most opportunity. Here you have locations that you would not expect to do well, based on geographical attributes and location, but something is contributing to high performance. This could be a new opportunity, like a new hot trending category. It could be that your products are resonating with a customer segment that you have not considered before. It could be that in this particular location, your brand has relevance in a way that you did not expect. Or it could be that you are drawing customers from another part of town who are willing to travel to this particular location. If you can understand what's driving this anomaly, you have a real opportunity for market growth by then reconsidering other markets that you've previously ruled out.
About the Author
Gary Sankary joined Esri in 2014 as a subject matter expert in retail after spending 30 years in the industry. Gary’s retail career started in his parents' family business more than 40 years ago. Along the way he had an opportunity to work with Cost Plus Imports, Mervyn’s and Target Corp. where he led a number of cross-functional teams developing technology and business process strategies to support store and digital merchandising initiatives.
5. Formulate your strategy.
The gap analysis has allowed you to uncover opportunities you haven't considered before, and your enhanced customer profiles have given you the tools you need to realize those opportunities. Now you're ready to apply that knowledge to engage with your ideal customers in more genuine ways. A holistic understanding of who they are and what motivates them—before, during, and after a purchase decision—can help you make sure they have all the support they need and feel understood by your brand. You can create assortments and highly targeted messaging to reach those customers in a way that's relevant and genuine.
It's been said that if your business is not oriented around your customer, you will not be successful. The digital transformation that businesses are experiencing today has made this particular statement more important than ever. The battle for mindshare and market share has become very precise, often happening at the individual customer level, as consumers are bombarded with highly targeted messaging and personalized offers across multiple channels. Customer engagement strategies are at the heart of business, with the power to take your brand beyond being a provider of products and transform it into a strategic partner and a valuable part of your customers' lives.