Dunnhumby has recently commissioned Forrester Consulting to conduct a study into the pressures and priorities driving global grocery retailers. For 85% of the 600+ surveyed, developing new revenue streams will be one of their top priorities for the year ahead.
This shouldn’t come as any great surprise. The past decade has been one of monumental change in grocery retailing, and as margins become tighter and the competition more fierce, casting a wider net in response is entirely logical. The real question, of course, is how to diversify revenues against that already tightly competitive backdrop.
Data monetization dominates the retail mind set
For many, the answer lies in extracting greater value from their customer data (or data monetization as dunnhumby likes to term it). Four-fifths of those surveyed by Forrester plan to grow revenues by using insights to improve customer-centric strategies and decision-making.
Let’s be clear: Data monetisation is not simply selling EPOS data to the highest bidder. dunnhumby sees two distinct ways to Monetize – commercializing insights from your customer data and commercializing your Retail Media. Combining both approaches, done properly, it can be an engine of extremely effective sustainable growth.
Put simply, dunnhumby sees Data monetisation as the way CPGs can most effectively activate Shoppers through actionable insights and targeted media. 65 retailers around the globe are currently monetizing their data and this is growing every day, as retailers are looking at ways to create new revenues and to focus on putting their Shoppers first. Today dunnhumby works with 25 of these 65 retailers, giving the global leader in Customer Data Science an excellent insight into the emerging trends and the true potential. Dunnhumby expects that the customer data market will double both in value and number of retailers’ monetising over the next 3-5 years.
What does success look like?
A £3bn retailer who partnered with dunnhumby to successfully launch a monetisation strategy generated revenue >0.1% within a year and engaged 30 suppliers to cover 100 categories. To achieve this, they built their plans around the four following pillars:
Strategy: They knew they needed a plan and importantly that it was endorsed by management. And using a partner was crucial for them as they identified large gaps in their ability to build and execute the plan alone.
Data Management: Suppliers who were unfamiliar working with Customer level data and a lack of category management teams or tools meant they needed new technology and training to allow better analytics and application of their data.
People: The internal team had limited resources and lacked the knowledge needed for implementing this strategy. A dunnhumby team on the ground has been working side by side with the retailer to provide expert consultancy and vital support and training to upskill the retailer’s employees and Suppliers.
Processes: The dunnhumby team built a collaborative category management process that was supported by dunnhumby tools and endorsed by the retailer’s Head of Commercial, which brought efficiencies and drove LFL sales.
These are, of course, predominantly internal factors. And while these four pillars undoubtedly provide an excellent data monetization structure for retailers to aspire to, dunnhumby’s experience has shown that successful monetisation programmes are a result of true collaboration between the retailer and their suppliers supported by best in class software, processes and people working towards making better decision for the customer.
Small changes can yield big results
Some retailers already have good foundations present beneath each of those four pillars. The challenge for most lies not in rebuilding but making small adjustments and continual improvements that empower them to fully embrace the data monetization opportunity.
And have no doubt, it is a compelling, proven opportunity too. Those businesses that have made their move on monetization are already reaping the rewards. Almost half (48%) of retailers that monetize their insights from customer data already say that they’ve grown new revenue streams as a result. That’s in addition to improvements to innovation (52%), existing revenues (56%), and customer experience (61%) and supplier relations.
No matter whether you’re already on the way or yet to even begin, if revenue growth is on your list of New Year’s resolutions, then data monetization must play a significant role in your strategy for 2020 and beyond.
Focused. Centric. Obsessed. The words have changed over the years, but the sentiment remains the same; put your customer at the heart of everything you do, or someone else very quickly will.
Data-led businesses will dominate retail’s next decade
Navigating that journey successfully, says Forrester, requires grocery retailers to build strategies that are data-led. Data-driven companies, those that use customer data to reaffirm and support decisions that have already been made, will increasingly find themselves lapped by those that use that data to shape those decisions from the ground up. The distinction may be subtle, but the implications are not.
The good news is that even small improvements to your capabilities in each of those areas can reap great dividends. Testing, learning and iteration should be the watchwords for anyone looking to harness the true value of their customer data.
And there can be little doubt that the time to realize that value is now. Obstacles may stand in your way, but they are hurdles your customers cannot – and should not – see. Overcoming those challenges will define your ability not just to survive, but to thrive in an insights-driven future.
Because, as we enter a new decade, first class Customer Experience will be defined not by the channels we use but by the connections we build. Data, and only data, gives us the power to embrace that change.