While high-tech analytics are all the rage for improving business, not all retailers have the budget to invest in the data collection technologies needed to better understand their consumers. A recent study conducted by MIT student researchers Lennart Baarman and Tamar Cohen, under the guidance of Prof. Georgia Perakis, examined how more traditional methods of observing and collecting data on consumer trends can help retailers increase sales. Their study looked at two distinctive factor groups that impact customer buying habits: timing, price and promotion and consumer-to-consumer influences.
By paying attention to the timing of purchases, the locations where purchases are made and the types of customers making the purchases, the researchers were able to create profiles for consumers who demonstrated similar behavioral patterns. Once the researchers developed these profiles, they were able to study what or who influenced each profile’s buying habits.
The study revealed that geographic influences play a serious role in how people make purchasing decisions. For example, the researchers had initially assumed that their product should be promoted in larger cities first. Their thinking: buyers in a highly metropolitan area would have the strongest influence on buyers in surrounding areas. Focusing on Ohio as a test subject, Cleveland served as their “larger city.” However, the conclusion that emerged from the study results was that a smaller city, Columbus, that influenced another city, Dayton South, actually had a significant impact on buying patterns in Cleveland. By promoting their product to buyers in Columbus, researchers influenced buyers in both Cleveland and Dayton South.
If retailers can observe, even through traditional data (i.e. what they see and hear in their stores as well as data collected through sales records), they can determine both how to get the right product in the right hand at the right time and who influences their buyers. By leveraging this information, retailers can reach buyers with promotions at ideal times or cut costs by reaching influencers first.
Listening and observing can not only help determine the best way to promote a product, but it can also anticipate the needs of customers. A recent Fast Company article highlighted the small, often low-cost adjustments business owners can make to improve their customer experience based on simple observations made by really hearing their customers.
The moral of both these stories is that data-driven strategies don’t always need advanced – and expensive – technologies. By critically observing your customers, then taking steps to use the data you’ve collected, you can improve the customer experience and generate more revenue for your store.
This article originally appeared in Sleep Retailer eNews on November 9, 2017
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