Do you know how you see ads that seem as if the company just knew that you would be intrigued? For instance you want a new pair of jeans but are unsure of type of cut and wash you want. Soon after, you are looking on your email and see info about jeans that are a similar style to many of the pants you already have. Is this pure coincidence?
Probably not. More likely this is an instance of the common practice called Retail Analytics. During this process a company collects data from your purchases, online searches, and characteristics you share with others that they use to specifically target you in the most effective way. Returning to our jeans example, let’s say that over the past five months you purchased jeans that were all a similar dark bootleg style. When you paid, the cashier more than likely asked for your email address and you casually agreed to give it, not thinking about any future implications. Well, now the stores have a way to categorize you and once they notice you follow a certain purchasing trend they will promote similar apparel when they have a sale going on. In this since they will maximize the chance that you will come in and purchase this product.
Furthermore, retail analytics can also help to make a company’s loyalty program effective. Panera Bread’s MyPanera loyalty program is a good example of this. On the surface this practice looks to be just one of good will that encourages customers to increase their visits thereby increasing their chance of winning free food. But if you look deeper, you find that this is a brilliant example of retail analytics. Over extended periods of time, Panera has collected data from across their franchises that sort individuals into demographics. For instance, perhaps individuals who enjoy cinnamon rolls also seem to like café mocha drinks. Then, if a customer comes in and uses their MyPanera card to consistently buy a cinnamon roll, Panera will give them a free café mocha drink during one of their trips. It’s true that the company will not make any money by doing this, but that wasn’t their initial goal anyways. Rather, they are hoping to turn that customer onto Café mochas causing additional purchases that wouldn’t have happened in the future.
But, a company doesn’t need to have a loyalty program to use the same system to attract customers to new things. Just look at YouTube! There is always a section in the sidebar that has videos that are “recommended for you.” And, without fail one of those videos is the one you planned on watching after your current one finished. But how did it know? Yet again, retail analytics. By looking at your history they are able to categorize what styles of music and videos you enjoy and make very accurate suggestions for what you should watch in the future.
Retail analytics has huge potential for the future as more and more entities gain the capability and understand the importance of installing a program. As this continues, be prepared to be individually targeted even more. H