McKinsey recently opened a store called Modern Retail Collective at the Mall of America. They don’t expect to make a profit. Instead, they expect to learn a lot about smart ways to collect customer data. Savvy new brands including ThirdLove, a D2C bra company, and Kendra Scott, a jewelry brand, are partners that want to learn too.
The lofty retail experiment touches on a sore point that a lot of brands have in today’s world of big data: The quest for customer data is expensive and filled with frustration. How many brands are truly ready to invest in wild new experiments like those at the McKinsey store to collect more customer data when they can’t even access what they already have?
Separating the Big from the Smart
A report by travel data company Adara found that 64% of travel marketers are prioritizing getting more customer data and insights in the coming year, by far the highest priority on their list.
Our research shows that marketers’ top barriers to better personalization all have to do with customer data. Brands cite a lack of adequate IT support for data extraction as the top issue stopping them from advancing their efforts.
It seems that there are two different data goals working in tandem for most brands. The first is to get their big data houses in order so that they can extract more value from the data they have. The second is to collect new insights to stay relevant and competitive. The first goal cannot get in the way of the second if brands want to succeed.
Salesforce recently announced Customer 360 Truth, a unified single source of CRM data that the company will “connect, authenticate and govern.” That sounds promising, but it’s likely that any brand that migrates to the new offering is in for a nine-month process, at best. A brand could be wiped out by a new competitor in that time.
How Smart is Your Data?
“Smart data” is a movement that is taking off. Also called “lean data”, it makes the most of limited access to data now, without sacrificing innovation and advancement over the long term. A smart data approach asks the question “What’s the least amount of data I need to solve a particular problem?”
With smart data, the answer could come from many places. Perhaps a website offers easily accessible data when POS data is buried in the CRM. Or data from the shipping and returns team can take the place of sales data that’s difficult to aggregate across several systems.
The smart data approach frees marketers to move quickly today as they wait for more or better customer data to be available tomorrow. Take intent as a relevant example. Brands that are able to identify customers with high intent to purchase can use this insight to personalize marketing tactics or offer well-timed promotions. The big data way to measure intent is to analyze all recent behavioral data on a customer journey using AI and use that insight across all marketing channels.
To connect this back to McKinsey’s grand experiment, surely few brands would ever employ smart screens, wearables QR codes and facial recognition in a single store experience. Each of these elements needs to be analyzed for the value it brings to the brand and the customer in order to solve a particular problem.
Imagine testing customer data from a mirror with facial recognition. It might be able to predict purchase intent, for example, by analyzing how long someone stands in front of it. That’s something a high-end retailer could use to prompt salespeople to offer a discount in real time.
The smart data approach reduces the problem into bite-sized pieces. With a single insight, brands can immediately create a marketing plan even if they aren’t working with the full picture. Over time, this single insight can be tested and compared to other insights that might be even better indicators.
The futuristic gadgets on display at McKinsey’s new store certainly have promise for improved customer experience, and brands should evaluate them as such. But McKinsey isn’t a tech company, and they aren’t planning to become a retail brand.
As a business consultancy, they’ve caught on to the smart data approach, and know that many brands will be able to pull valuable insights from these new technologies – that is, if they have the right approach.
Gretchen Scheiman is Senior Director of Marketing at Liveclicker