NMBS Conference 2014: Why data analysis is so important
Published: 20 June, 2014
Paul Alexander, ceo of Beyond Analysis, reveals why companies need to make the most of the data they have on their customers.
Paul Alexander believes that companies should save themselves from "datageddon", where they gather lots of data on customers and their buying patterns without knowing how to extract from it useful analysis that helps to develop their brand.
Chief executive officer of consumer insight company Beyond Analysis, Mr Alexander first started working in the data sector because he believes it can be a "fuel for understanding your customers and how to make money from them".
"When merchants, suppliers and retailers collaborate you get a beautiful storm of insight into how to sell the right product, at the right time, to the right people," he said. "But you have to turn data into insight - simple analytics is no longer enough."
Mr Alexander believes that companies spend a lot of time and money implementing systems and then waiting for those systems to give them the analysis that they need to have now.
He used Amazon as an example of a company that has become successful because of the way it uses the data it holds. "When you buy something from Amazon, the next time you go back to the site it gives you more relevant products than it did last time, based on data it holds about what you have purchased previously," he said.
Mr Alexander believes that data has to be simple to understand in order for companies to get the most return out of it, and that businesses don't necessarily need loyalty programmes in order to analyse their customers. Instead, most businesses will already hold a lot of data, but it may not be the right kind of data to give them the tools they need to grow.
He urged delegates to make it easy and appealing for customers to give them data, and to make sure the customer can see the benefits that they will get from offering up that information, by giving them targeted offers and promotions that are relevant to them in return. "Then people will happily hand over their details," he said.
All that data then needs to be analysed and broken down into useful information that can help businesses work with their customers better.
"Data is the foundation of every business strategy," he explained. "It's vital that organisations use their data properly - it's a core promise that all businesses should make to their customers."
This means more than just keeping data safe and secure, he continued, stating that the free and unfettered use of data can be a very dangerous thing. Instead, using data effectively means helping customers to buy from you more easily and with confidence - the two greatest drivers for increased sales with any company.
Mr Alexander said that he often hears people say that they don't need to gather customer data because their staff have worked in the industry for years and so know it all already. To them, he agreed that data can't replace staff or management experience, but that what it can do is help to guide those staff in areas where problems might arise and offer advice about how to fix them. In order to do that, however, businesses have to convert that insight into action.
"Merge those two areas of knowledge together and you have something incredibly powerful," he said.
Mr Alexander then used the example of a supermarket branch in London, where management knew the store had fewer opening hours than their local competition, but needed to create a business case for the store opening longer. Working with the company's data, Beyond Analysis was able to show that rather than opening longer, it would make more sense for the business to change its Sunday opening hours to 11-5, rather than 10-4, as people tended to visit that store later in the day. As a result, the branch saw over £100,000 in increased sales.
In conclusion, Mr Alexander urged the listening delegates to fight the notion that data is big and scary. Instead, he said companies can grow markedly simply using simple data analysis, which he said is not as complicated as some people claim.
"The data is always there," he said. "It will be able to tell you what works and why, you just have to go and find it."
Masterclass: Think about the data you collect
Paul Alexander's Masterclass encouraged attendees to think more about the data they collect and how they use it. He explained that it wasn't enough to collect lots of data on your business and its customers, but that you have to know how to interpret and analyse it properly in order to see any real benefit.
He used the example of a business he had worked with which created a 47-page report on the state of the company every week, which was delivered to the board at 7am every Monday, ready for a 9am meeting.
The report was full of data, graphs, figures and analysis, but when questioned about how much of the report the Board read each week, most admitted they only read about one page, despite having a team of people working all weekend to prepare it.
He urged people to make all the data and analysis they collect easy to read and absorb, and said that the data had to be made available to as many people in the business as possible in order to be of the most benefit.
"You need very simply dashboards that people can use at store level, which can then drill down into KPIs that show how people are performing against their targets," he said.
Mr Alexander also said that collaborations between suppliers and builders' merchants on data can "create a win/win for everyone".
As an example, he told of a well-known sports equipment supplier who worked with department stores to find out more about the types of products being sold in their concessions, in order to send them more targeted stock. On sharing the data, the business discovered that its orange clothing was only ever selling at a discount in department stores, despite being a very strong selling line in the company's own stores, because a different type of customer was shopping in each place.
"All the information in the world won't help you if you don't know what you're looking for or what to do with the data," he said. "The obvious isn't always apparent."
Mr Alexander advised delegates to reward their customers for the behaviour they're seeking. "Reward those who spend a lot with you," he said. "Work out what got people to come into your branch in the first place and encourage that behaviour, as well as with potential customers who aren't quite loyal to you yet.
"Also look at those really valuable customers who come and buy from you once every six weeks - how can you get them to visit every three or four weeks? If those good customers don't visit on their usual schedule, what message can you send out to them to encourage them to return and stop them from disengaging with your business?"
Mr Alexander also stressed the importance of asking the right questions, as you can't commercialise a dataset that isn't fit for purpose in the first place.
If your business has sub-brands, he also advisded that you make sure those sub-brands share data between each other, to give both brands as much information as possible.