Four out of five retail and consumer packaged goods (CPG) companies say that customer behavior analytics is a strong priority for their brand today, indicating that it will continue to grow in importance. Yet, most are failing to use it effectively.
Organizations have been experimenting with advanced analytics, but now, as erratic buying behaviors are expected to continue, the adoption of artificial intelligence (AI) and automated analytics to match business strategy with consumer demand is rising.
The 2020 Retail & CPG Customer Behavior Survey commissioned by Outlier found near universal agreement (91%) among respondents. This majority says that tracking customer behavior data is critical for staying competitive, however, 85% of respondents also acknowledge that this data is only as helpful as their ability to interpret or use it in decision making.
Companies are collecting hundreds of instances of data per customer but are struggling to apply it to their business: only one in three (34%) believe their company is leveraging data and analytics effectively. This raises the issue of interpretation and simplification of results. While a data analyst can set up dashboards, there’s a gap in retail and CPG brands’ ability to interpret and translate the results into action.
Further, brands can’t distinguish important or unexpected changes in data using current reports or dashboards. Changes can often indicate broken processes, disconnects with customers or other barriers to customer action. Fixing them can immediately improve operations, revenue and customer loyalty or allow the brand to take advantage of a behavioral change.
So far, efforts to minimize this gap have pushed the industry toward more data, more inputs and more dashboards. But, a lack of high-quality data analysis remains the number one challenge for retail and CPG brands, with limited ability to translate results into strategy as the second greatest challenge.
Adopting a strategic approach to data
Priorities around data such as collection and storage remain tactical. Only 45% of retail organizations are using analytics for any strategic function, such as optimizing spend. CPG organizations cited even less focus on using data for strategy, at 38%. To move past this, brands need to see the value of data as it relates to strategy and have access to the tools that translate data into strategic guidance, something current business intelligence dashboards are not able to provide.
Utilizing modern analysis tools
Only 21% of retailers and 11% of CPG companies indicate they are currently using business analysis tools effectively. While the rapid pace of technology and hassle of onboarding new technology can get in the way of adopting analytics and insights platforms, the biggest barrier will perhaps be a shift in thinking.
Automated or augmented analytics can help, both in the ability to collect and analyze huge volumes of data, and by identifying and elevating just the segments of data that point to problems or opportunities in an organization’s business, marketing, sales or supply chain strategy.
“When you have exactly the right information, you don’t need a constant stream of data. In fact, in times of uncertain and enormous change, like during the pandemic, being able to focus your attention on just the most critical changes is very beneficial,” says Sean Byrnes, co-founder and CEO of Outlier. “Access to specific insights each morning, combined with supporting information such as root cause analysis, helps brands shift resources and teams as needed, using rich data-driven analysis, to have an immediate impact.”
The 2020 Retail & CPG Customer Behavior Survey was commissioned by Outlier and conducted by SMS Research. The survey consisted of more than 180 business decision-makers from retail, e-commerce and CPG brands.
