The one-time boss of music chain Fopp has launched a new data analytics consultancy, dubbed Big Data for Humans, with a warning that most retailers are failing to respond to changes in customer behaviour and are ignoring their high-value “hidden customers”.
Peter Ellen was chief executive of Fopp for five years before going on to co-found marketing intelligence specialist Maxymizer (now owned by Oracle). He “soft-launched” Big Data for Humans last year.
The company has spent the past few months testing its algorithm on hundreds of millions of sales transactions from a range of clients across the retail, travel and consumer brandsfor companies, with the aim of helping them to better understand and monetise their customer-base.
One major trend to appear out of the 950 million sales transactions it analysed during this time was that of “hidden customers” – high-value segments of customers who were not being effectively marketed to and retained.
This often included those customers who shopped both online and in-store, using different channels for different needs. These high-value hidden customers provided a 5% uplift in revenue on average to Big Data for Humans’ client-base, after being targeted via bespoke marketing campaigns that span online and offline.
Although John Lewis experienced a 5.1% rise in sales in December by recognising the majority of its customers preferred online ordering through tablets and mobiles – and channelled customers online through its iconic advertising – the vast majority of the high street suffered lacklustre performance.
Most notably, M&S and Next saw falls of 5.8% and 0.5% in revenue respectively. M&S focused on marketing its instore product lines instead of online channels, while Next experienced stock issues as it was unable to respond rapidly to changing customer choice due to warm weather.
Based on its current client base, Big Data for Humans found nearly two-thirds (63%) of customer-facing companies had unrecognised high-value hidden customers in 2015.
Ellen said: “What we see from the UK’s disappointing Christmas sales figures is a clear disconnect between retailers’ C-suite executives and their customers, with businesses focusing on products and channels and not the individuals that buy them.
“A large factor in this is the lack of effective segmentation, that works across online and offline behaviour, based on sales transactions. There is also a dearth of readily-available intelligence on what people are buying, how and when. The result is retailers are playing catch-up on customer buying patterns and not even realising some incredibly valuable segments of customers exist.
“The pulse of the customer could once be gained by ‘floor-walking’. Now it’s about executing on big data across channels. Hidden customer segments can start as a missed sales opportunity, but are often the canary in the coal mine, where problems can lead to a serious retention issue and a dramatic effect on profits.”
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