Business Intelligence in the consumer product sector has often focused on analyses of customer shopping baskets. Analysing customers' individual purchases is an extremely powerful tool. By doing so, companies are able to understand their customers' purchase patterns. When that information is linked to loyalty programmes and customer-specific information, it then becomes possible to streamline marketing even more accurately, making even better offers to customers.
But how can businesses use this information in a way that is both commercially tactical and yet still ethical?
There is a risk that an excessive use of tailor-made marketing can put off the very customers you want to attract unless your customers experience that there is obvious extra value in it for them. Customers will avoid loyalty programmes and card-linked benefits if their letter box, inbox and mobile are cluttered up with personal offers and strewn with customised offers that are of a varying degree of relevance to them.
The result will be that customers will become inactive and the number of purchases made within the loyalty programmes will go down.
Instead, companies must come up with digital solutions that create obvious added value for customers and companies: digital solutions that are not linked to mailings or cards, and loyalty programmes that are administrated individually via a credit cards, personal identity number or a mobile phone app.
Nowadays, customers are very aware that when they fill in a loyalty programme membership form, the company in question is given opportunities for analysis and business development. If companies do not use that digital information wisely, it will be counter-productive. Here, business analysis can contribute to and strengthen a company's position. If used wisely, customer loyalty programmes will not only provide valuable insights into the interaction between product range and customer; they will also improve individual offers even further.
The purchase patterns of all customers must be analysed, both loyalty customers and others, so as to understand how the whole product range interacts on the basis of the composition of individual purchases, revenues, margins, volumes, purchase time, channel, etc.
If customer shopping basket analyses are linked to information on driver-based profitability regarding the complete picture of the cost-built up of the customers' items, i.e. direct, indirect and customer-related costs calculated from individual customer items, the customer shopping basket analysis will then be given a profitability perspective. The company will gain valuable insight into:
- Customer profitability - loyalty customers in relation to other customers?
- Product profitability at item level?
- What are the purchase patterns of the profitable customers?
- How do profitable items interact with other items?
- How do campaigns and offers affect customer profitability?
- How profitable are our loyalty programme members?
The greatest effect is achieved through a comprehensive approach. This is where customer shopping basket analyses can be of use for tactical and strategic decision support.
Per Johannesson, Senior Consultant and Line Manager, Enfo Pointer