Big Data: How Closing the Transactional Loop Could Have Helped Jessops and HMV
While the fate of HMV and Jessops is sad, it’s a valuable lesson for retailers looking to survive in a competitive market, says Dan Brassington, CEO of ERN.
It’s a tragedy to see Jessops – a chain renowned for knowledgeable, helpful staff – and HMV, a long-established brand name, disappear from the high street. However, it is a pointed reminder that bricks-and-mortar retailers need to think hard about how they maintain relationships with their customers and keep them coming back.
Jessops, specialising in cameras and photographic equipment, did a lot to promote loyalty among its customer base – one of the benefits of taking time to hire and train the right people – but still fell victim to strong competition, largely from the online sector. In fact, for many people, Jessops had inadvertently become the showroom for its competitors – customers would go to Jessops to decide which camera, lens or tripod to buy, then go home and find an online stockist to buy it from. While Jessops would have been hard pressed to match online competitors for price on all of the items it stocked, a better understanding of the individual needs of its customers could have helped it to survive.
That’s not to say Jessops didn’t understand its customers’ needs – it’s just that it didn’t have a way of targeting each individual customer with regard to what they had bought from Jessops in the past, in order to offer them loyalty offers or discounts on future purchases. The type of camera a customer uses reveals a lot about the kind of peripherals and accessories they are likely to buy, as they have to be compatible with existing equipment. A well-targeted coupon for an item a customer is really going to be interested in buying could work wonders – it’s much more likely to result in another sale than a more general discount offer.
But without a way of contacting every customer after they’ve made a purchase, this can’t be done. In most cases the last link that a customer has with a retailer after a purchase is the paper receipt – which often ends up in the bin, or disintegrating at the bottom of their wallet. While some retailers have loyalty schemes that mean they do have a way of contacting a customer in the future and even keeping tabs on the type of things he or she buys, in general only a fraction of customers do this.
What if Jessops had had a way of linking every purchase made to an individual profile, and a way of targeting every single one of these customers through their smartphone, or by email? It would have been able to use the profiles to understand purchasing behaviour, make the link with the kind of other items an individual would be interested in, then push a timely, personalised coupon to his or her smartphone – perhaps even when they were in close proximity to a Jessops store.
It sounds fairly simple – all that is required is an IT platform capable of storing customer details and purchases that can be looped back to the individual customer, via the credit or debit cards they use. However, due to legacy IT systems employed by many high street retailers and banks, this just isn’t possible. Effectively, this means there is a massive volume of transactional data going to waste – but what if there were a way of harnessing this big data, and putting it to work?
Similarly, transactions made at HMV would have generated a lot of data that would have been very useful for targeting customers in the future. You can tell a lot about someone’s taste in music by the CDs, t-shirts and posters they buy – this is also the case with films. If HMV could have targeted every single one of its customers with personalised offers based on their purchasing behaviour on an ongoing basis, then it would have stood a far better chance of competing with online retailers and digital downloads.
We’re not talking about overhauling the backends used by merchants and banks and replacing them wholesale – this is a cost that many retailers wouldn’t be able to afford – but using an additional, cloud-based platform capable of processing and analysing this big data running alongside existing systems.
This is why at next month’s Finovate conference, ERN will be taking the wraps off a global platform of live payment, analysis and tracking products developed for use by banks, businesses and consumers, capable of processing 100,000 transactions per second – to put that figure in context, around 600 transactions take place in the UK every second.
Retailers will be able to get more from less by analysing and leveraging the 11 billion transactions that take place annually. They’ll be able to use the data to enhance loyalty schemes for clients, putting them in a position to promote bespoke, targeted offers to individuals, even drawing on geo-locational and time-specific data.
Retailers and banks need to be under no illusions about the future of the high street – unless transactional data is harness and utilised appropriately, we’ll be saying goodbye to a lot more well-loved brands in the future.