What the typical merchant wouldn’t give to be able to read a customer’s mind. The next wave of retail technology will focus on offering merchants more insight into the customer’s considerations and preferences while shopping. Data-driven intelligence will ultimately enable retailers to cater to customer needs in a more individualized and sophisticated manner, without expending excessive effort, expense, and resources.
Simply put, data-driven technologies leverage specific parameters provided in the path to purchase, and apply or create rules based on these details. For instance, if the technology detects a consumer paying in-store in Russia with a Chinese mobile wallet, the business could automatically send the consumer promotions for the local Chinese store. Or, if the brand is based in Russia with an online presence, the company can send online offers timed for local Chinese holidays, such as Single’s Day.
There are just a few of the many ways that retailers can leverage their data and optimize customer experiences without compromising data security or operational efficiency. Read on to learn how some retailers are analyzing consumer data to better understand and meet customer needs.
Understanding Various Paths to Purchase
The objectives behind most data-driven technologies are two-fold: to answer customer needs and meet customer preferences. These technologies are used to discover what customers need by identifying where customers are wavering or abandoning the path to purchase, and, conversely, those elements which most encourage customer conversions.
Many merchants struggle to pinpoint the exact reasons consumers abandon their purchases. While a merchant can easily retarget customers with e-mail marketing and encourage them to complete their purchases, this does not always translate into a conversion and, more often, does not address the original problem deterring the consumer from abandoning their cart in the first place.
On the other hand, better data enables merchants to identify the most successful factors of their websites, offerings, and checkouts and utilize this data to boost conversions and make improvements. When retailers see the positive impact of a particular call to action, campaign, or color used on the website, they can leverage this information to encourage more sales and bolster future efforts.
Identifying and Solving Problems
Better data resources can help merchants identify the specific point in the customer journey where customers abandon the purchase, and cross-reference this information with other parameters to deduce why customers are not converting.
For example, the merchant might analyze the customer journey on its website and discover that customers are abandoning their carts when they reach the checkout process. This could be a hint that the checkout process is too long or complicated, and should be simplified. The data enables the retailer to identify the problem and strategize the best solution.
One parameter that greatly impacts the customer service that retailers can offer is the geo-location or IP address of the consumer. By simply knowing where a consumer is based, the retailer can offer targeted promotions, share relevant information about its brand in that locality, and provide a consumer experience tailored for the cultural conventions of that location.
Maximizing Payments Rules
Many consumers will abandon their checkout at the payment stage. Sometimes this is because the payment methods they prefer to use are not available to them on the merchant’s website. Other times, back-end inefficiency prevents consumers from actively checking out.
This problem can easily be solved with data. Merchants can analyze when and where certain credit cards are declined and create customized rules to prevent factors causing the declines, such as imprecise fraud protocols that automatically decline specific card schemes, currencies, or customer locations.
Intelligent Transaction Routing
Better data can also save merchants money when it comes to processing customer payments. Merchants pay fees when their customers pay by credit card or alternative payment methods, but with better data about the financial institutions with which they are partnered, they can create more intelligent rules to decrease transaction costs.
Many payment providers now offer solutions that route payments between financial institutions to save merchants’ money. For example, a retailer based in the United States can decide to route all payments from European credit cards to payment providers in Europe and all local transactions to its local provider in order to reduce cross-border and currency conversion fees, as well as credit card decline rates.
Globalization and Personalization
Merchants are starting to expand their customer bases to include international consumers. As they reach new regions, they are starting to learn just how cultural consumerism is. Without insight into the international customer journey, retailers are at a loss when it comes to the products different nationalities want to buy abroad and the payment methods international consumers prefer to use.
The ability to analyze what consumers are buying, where in the checkout process they are getting stuck, and the sections of the website that best convert, enables merchants to better the customer experience based on data parameters.
Enabling Omnichannel Retail
Many of today’s major retailers strive to offer customers an omnichannel experience and maintain both online and brick and mortar stores. With more transparency into their consumer data, merchants can better understand customer interactions at each channel and optimize performance for each platform accordingly.
Today’s sophisticated data technologies enable retailers to analyze data per retail channel, but also to see the bigger picture and understand shopping patterns across all channels. Having a broader view of operations enables retailers to better maintain brand consistency across channels as they incorporate improvements to the consumer experience at each channel.
Empowering Marketing Initiatives
Access to data has utility beyond the in-store or online shopping experience. Retailers can leverage data to bolster retargeting and marketing efforts across channels, to encourage future shopping experiences and attract new customers.
Detecting Fraud and Securing Data
While merchants often associate the benefits of accessing customer data with the risk of increased fraud and data breaches, oftentimes data can be leveraged to provide a more secure shopping experience. Today, retailers can integrate data tools that learn customer behavior, detect anomalous behavior, and flag it as potentially fraudulent.
For example, if a loyal customer has always shopped with the brand from an IP address in California, but suddenly is shopping from an IP address in a region in China associated with fraud, the fraud engine can either decline the transaction or flag it for manual review by a company fraud expert. The ability to detect fraud early on and protect consumers from data breaches is yet another way retailers can encourage brand loyalty and customer satisfaction.
Challenges of Big Data
Although data-driven technologies have many benefits for retailers, using and storing data is not without its risks and challenges. To store customer data, merchants are required to comply with a number of regulations and security protocols, many of which are time-consuming and vary by country. Keeping track of all the requirements and maintaining compliance for a company can become a full time job.
There are, however, many third-party services which offer data storage capabilities and maintain compliance and security standards for the retailer, while still providing visibility to customer data.
One method by which a third-party product can collect, store, and secure data is by providing the merchant with hosted fields in the payment page. This means that the merchant creates a branded payment page, but all the required fields for completing the payment are actually hosted by the third-party service. When a customer inserts payment information into each field, the information is captured by the data technology and securely stored for the merchant.
Possibilities of Big Data
Big Data is changing the retail experience – even in its early stages. For years, merchants have been leveraging saved customer data to enable one click checkout. In the future, we can expect even more data-driven technologies and better capabilities:
- Automating processes – Data will enable merchants to automate business processes that involve a lot of time and resources, by creating rules.
- Decreasing fees & declines – Merchants can cut costs by analyzing payment information and routing transactions to local payment providers globally.
- Increasing revenues – Not only will data save merchants money; it will help them increase profitability by addressing customer needs and preferences.
- Efficiency through knowledge – Better visibility leads to better operations by helping retailers see inefficiencies and make improvements through analysis.
Oren Levy is the CEO of Zooz.