Tag Archives: retail analytics

Using In-Store Customer Journey Data: Associate Optimzation

If store layout/merchandising and promotion planning are the core applications for in-store customer journey measurement, staff optimization is their neglected and genius offspring. For most retail stores, labor costs are a huge part of overall operating expenses – typically around 15% of sales. And staff interactions are profoundly determinate of customer satisfaction. In countless analytic efforts around customer satisfaction and churn, the one constant driver of both is the quality of associate interactions. People matter.

The human factor is a huge part of the customer journey. Some in-store measurement solutions treat staff interactions the way digital solutions treat employee visits – as data to be culled out and discarded. The only thing worse is when they leave them in and don’t differentiate between customer and staff!

No part of the customer journey and no part of the store has a bigger impact on the journey, on the sale, and on the brand satisfaction than interactions with your sales associates. And, of course, labor costs are one of the biggest cost drivers at the store. So optimizing staff is critical on every front: revenue optimization, customer satisfaction and cost management. It’s rare that a single point of analysis drives across all three with so much impact, highlighting how important associate optimization really is.

With staff data integrated into customer journey measurement, you know how often associate interactions occurred, you know how long they lasted, and you know how often they resulted in sales. Some stores will already track at least some of this as part of their incentive programs, but customer journey data provides a true measure of opportunity and productivity. Some of these data points are straightforward, but there are interesting aspects to staffing data that go beyond basic conversion effectiveness. It’s possible, for example, to isolate the number and impact of cases where staff interactions should have happened but didn’t. It’s also possible to understand optimal contact strategies, answering questions like ‘how long should a customer be in a section before a contact becomes desirable or imperative? ‘  Even more interesting is the opportunity to bring sports-driven team and player metrics to bear on the problems of staffing. You can understand which associate combinations work best together, how valuable team cohesion is, and the value spread between a top associate and an average hire. This is all invaluable data when it comes time to plan out schedules and staffing levels and, when paired with weather data, can also be used to optimized staffing plans on a highly local basis.

Finally, there are deep opportunities to use this data to optimize broader aspects of staff optimization. By integrating Voice of Employee (VoE) data with associate effectiveness, you can hone in on the golden questions that will help you identify the best possible hires. Creating a measurement-driven, closed loop system to optimize associate hiring decisions isn’t what people generally think of when they evaluate in-store measurement. But it’s a unique and powerful use of the technology to drive competitive advantage.

 

Questions you can Answer

  • Are there days/times when a store is over/under staffed?
  • Are there better options of positioning staff?
  • What’s the best way to optimize staffing teams and placements?
  • How much does training impact staff performance?
  • What questions should I ask when I hire new staff to identify potential stars?
  • How successful is any given associate in converting opportunities?
  • What’s the right amount of dwell-time to allow a customer prior to an associate interaction?

To find out more about retail analytics and in-store customer journey tracking, check out my new company’s site: DigitalMortar.com

The Uses of In-store Customer Journey Data – Store Marketing

I’m working my way through the broad uses of in-store customer journey optimization. I started with Store Layout and Merchandising optimization – which is really the foundational analytic capability that this type of data provides. Today, I’ll tackle a use that’s nearly as fundamental – optimizing in-store promotions. For those of you from the digital world, you can think of these two applications as parallel to site optimization and digital marketing optimization.

Promotion Planning

In-store promotion planning is one of those constant grinds in the life of retail analysis. You never stop planning promotions and you never get good enough. With PoS data, it’s pretty easy to measure the single most important aspect of a promotion – how much it sold. It can be a lot harder, however, to answer questions about why something worked or, as is often more salient, why something didn’t. In-store measurement can fill in the gaps around performance measurement AND help develop new promotion and display strategies.

With in-store journey measurement, you can track how and whether a promotion shifted behavior. Did a promotion steer visitors to a section? Did it keep them there longer? Did it drive key milestones like staff interaction or dressing room decisions? With only PoS data, you can easily misunderstand what drove a promotion’s apparent effectiveness. Almost as important, in-store journey measurement provides unique insight into how a promotion cannibalized shopping behaviors and generated new opportunities. When you change navigation patterns in the store, you ALWAYS cannibalize some behaviors and you nearly always disadvantage some sections/products. You also create new opportunities and traffic corridors that might present additional optimization or promotion opportunities. Understanding how cannibalization and redirection worked and whether or not their impact outweighed the promotion benefits is essential to developing sound long term strategies.

And it’s not all about the customer. In digital analytics, we didn’t have to worry much about compliance issues. What you pushed to the website is what was on the website. With dozens, hundreds or thousands of stores to manage, though, pushing content and making sure it’s consistent and correctly deployed is no joke. In-store customer journey measurement provides a strong behavioral compliance check. When a promotion drives specific patterns of behavior, it’s easy to see which stores are roughly following the pattern and which aren’t – given you near real-time feedback on potential compliance issues.

 

Questions you can Answer

  • Why did a promotion work better or worse than expected?
  • How did promotions localize and were there stores that didn’t “play along”?
  • How much opportunity did promotions have to influence shopping?
  • How successful were shoppers who were exposed to the promotion?
  • Did the promotion create new “impulse” opportunities?
  • Did the promotion cannibalize other areas/products and to what extent?
  • For a potential promotion, what are they placement areas that will drive exposure to the right shopping segments?
  • Were there stores that didn’t deploy or correctly implement a promotion?

Next up? A really powerful and oft-neglected aspect of customer journey measurement – staff optimization.

What is in-store customer journey data for?

In my last post, I described what in-store customer data is. But the really important question is this – what do you do with it? Not surprisingly, in-store customer movement data serves quite a range of needs that I’ll categorize broadly as store layout optimization, promotion planning and optimization, staff optimization, digital experience integration, omni-channel experience optimization, and customer experience optimization. I’ll talk about each in more detail, but you can think about it this way. Half of the utility of in-store customer journey measurement is focused on you – your store, your promotions and your staff. When you can measure the in-store customer journey better, you can optimize your marketing and operations more effectively. It’s that simple. The other half of the equation is about the customer. Mapping customer segments, finding gaps in the experience, figuring out how omni-channel journeys work. This kind of data may have immediate tactical implications but it’s real function is strategic. When you understand the customer experience better you can design better stores, better marketing campaigns, and better omni-channel strategies.

I’m going to cover each area in a short post, starting with the most basic and straightforward (store layout) and moving up into the increasingly strategic uses.

 

Store Layout and Merchandising Optimization

While bricks&mortar hasn’t had the kind of measurement and continuous improvement systems that drive digital, it has had a long, arduous and fruitful journey to maturity. Store analysts and manager know a lot. And while in-store customer journey measurement can fill in some pretty important gaps, you can do a lot of good store optimization based on a combination of well-understood best practices, basic door-counting, and PoS information. At a high-level, retailers understand how product placement drives sales, what the value of an end-cap/feature is, and how shelf placement matters. With PoS data, they also understand which products tend to be purchased together. So what’s missing? Quite a bit, actually, and some of it is pretty valuable. With customer journey data you can do true funnel analysis – not just at the store level (PoS/Door Counting) but at a detailed level within the store. You’ll see the opportunity each store area had, what customer segments made up that opportunity, and how well the section of the store is engaging customers and converting on the opportunity. Funnel analysis forever changed the way people optimized websites. It can do the same for the store. When you make a change, you can see how patterns of movement, shopping and segmentation all shift. You can isolate specific segments of customer (first time, regular, committed shopper, browser) and see how their product associations and navigation patterns differ. If this sounds like continuous improvement through testing…well, that’s exactly what it is.

Questions you can Answer

  • How well is each area and section of the store performing?
  • How do different customer segments use the store differently?
  • How effective are displays in engaging customers?
  • How did store layout changes impact opportunity and engagement?
  • Are there underutilized areas of the store?
  • Are store experiences capturing engagement and changing shopping patterns?
  • Are there unusual local patterns of engagement at a particular store?

Next up? Optimizing promotions and in-store marketing campaigns.

 

Optimizing Omni-Channel with Analytics from the In-Store Customer Journey

I’m going to be co-hosting a webinar with my friend John Morrell at Datameer on Omni-Channel Analytics and using In-Store Customer Journey Data. It should be pretty cool stuff – and, of course, it’s free!

You can register here!

What is In-Store Customer Journey Data?

Analytics professionals love data and technology. So it’s easy for us (and I use “us” because I completely self-identify in both the category of analytics professional and someone who loves data and technology) to get excited about new data sources and new measurement systems – sometimes without thinking too carefully about what they are for or whether they are really useful. When I first got interested in the technologies to track in-store customer journeys, I’ll admit that its newness was a big part of its appeal. But while newness can get you through a “first date”, it can’t – by its very nature – sustain a relationship. In the last few months, as I’ve worked on designing and building our initial product, I’ve had to put a lot of thought into how in-store measurement technology can be used, what will drive real value, and what’s just “for show”. In my last post, I described using the “PoS Test” (asking whether, for any given business question, in-store customer journey data worked better or differently than PoS data) to help choose the reports and analysis that fit this new technology. But I can see that in that post I put the cart somewhat before the horse, since I didn’t really describe in-store customer journey data and it’s likely applications. I’m going to rectify that now.

To measure the in-store customer journey you track customers as they move through your physical environment. The underlying data is really a set of way-points. Each point defines a moment in time when the customer was at a specific location. This is the core journey measurement data.

By aggregating those points and then mapping them to the actual store layout, you have data about how many people entered your store, where they went, and how long they spent near or around any store section. This mapping to the store is the point where concerns about accuracy crop up. After all, the waypoints themselves don’t have any meaning. It’s only when they are overlaid on top of the store that they become interesting. The more precisely you an place the customer with respect to the store, the more you can do with the data.

By tracking key waypoints along the journey (such as dressing rooms or registers), the basic journey data can be used to help build an in-store conversion funnel. Add Point-of-Sale data (and you’d be crazy not to) and you have the full conversion funnel at a product level and all the experience that went with it. For those coming from a digital world, this may feel like the complete journey. It has everything we measure in the digital world and can support all of the same analytic techniques – from funnel analysis to functional and real-estate optimization to behavioral segmentation. But in physical retail, there’s an additional, critical component: measuring staff interactions. It’s hard to overstate the importance of human interactions in physical retail; so if you want to really map the in-store customer journey you have to add in associate interactions. For any given customer journey, you’ll want to know whether, when, how long and with whom a customer interacted.

For most stores, this combination of journey waypoint data, store mapping, PoS data, and staff interaction data is the whole of customer journey data and it’s powerful. At Digital Mortar, though, we’re trying to build a comprehensive measurement backbone for the store that includes detailed digital experiences in store (mobile, digital signage, and specialized in-store experiences) AND a set of variables that encompass the background environment for a customer visit.

In-store digital experiences are a key part of a modern retail customer journey and if you can’t integrate them into your omni-channel picture of a customer you don’t have key ingredients of the experience. I also happen to believe that custom digital experiences will be a crucial differentiator in the evolution of retail experience.

What about the background environment – what does that mean? There’s a lot more environment in physical retail than there is in digital. Weather, for example, is a critical part of the background environment – impacting store traffic but also dramatically changing in-store journeys and purchase patterns. Other important environment variables include store promotions (local and national), advertising campaigns, mall traffic and promotions, road traffic, events, what digital signage was showing and even what music was playing during a customer visit. The more environment data you have, the better chance you have of understanding individual customer journeys and figuring out what shapes them in meaningful ways.

 

Summing Up

The in-store customer journey data begins with the waypoint data. That’s the core data that describes the actual customer experience in the store. To be useful, that data has to be mapped accurately to the store layout and the merchandise. You have to know what’s THERE! Integrating PoS data provides the key success metrics you need to understand what parts of the experience worked and to build full in-store funnels. Associate interactions data adds the human part of the experience and opens the door to meaningful staffing optimization. And the picture is completed by adding in digital interaction data and as much background data as you can get – particularly key facts about weather and promotions. Taken together, this data provides remarkable insight into the in-store funnel and customer experience. And to prove it, my next post will tackle the actual uses of this data and the business questions it can (and should) answer!

Why do we need to track customers when we know what they buy?

Digital Mortar is committed to bringing a whole new generation of measurement and analytics to the in-store customer journey. What I mean by that “new generation” is that our approach embodies more complete and far more accurate data collection. I mean that it provides far more interesting and directive reports. And I mean that our analytics will make a store (or other physical space) work better. But how does that happen and why do we need to track customers inside the store when we know what they buy? After all, it’s not as if traditional stores are unmeasured. Stores have, at minimum, PoS data and store merchandising and operations data. In other words, we know what we had to sell, we know how many people we used to sell it, and we know how much (and what and what profit) we actually sold.

That stuff is vital and deeply explanatory.

It constitutes the data necessary to optimize assortment, manage (to some extent) staffing needs, allocate staff to areas, and understand which categories are pulling their weight. It can even, with market basket analysis, help us understand which products are associated in customer’s shopping behaviors and can form the basis for layout optimization.

We come from a digital analytics background – analyzing customer experience on eCommerce sites we often had a similar situation. The back-office systems told us which products were purchased, which were bought together, which categories were most successful. You didn’t need a digital analytics solution to tell you any of that. So if you bought, implemented and tried to use a digital analytics solution and those were your questions…well, you were going to be disappointed. Not because a digital analytics solution couldn’t provide answers, it just couldn’t provide better answer than you already had.

It’s the same with in-store tracking systems; which is why when we’re building our system, evaluating reports or doing analysis for clients at Digital Mortar, I find myself using the PoS test. The PoS test is just this pretty simple question: does using the customer in-store journey to answer the question provide better, more useful information than simply knowing what customers bought?

When the answer yes, we build it. But sometimes the answer is no – and we just leave well enough alone.

Let me give you some examples from real-life to show why the PoS test can help clarify what In-Store tracking is for. Here’s three different reports based on understanding the in-store customer journey:

#1: There are regular in-store events hosted by each location. With in-store tracking, we can measure the browsing impact of these events and see if they encourage people to shop products.

#2: There are sometimes significant category performance differences between locations. With in-store tracking, we can measure whether the performance differences are driven by layout, by traffic type, by weather or by area shop per preferences.

#3: Matching staffing levels to store traffic can be tricky. Are there times when a store is understaffed leaving sales, literally, on the table? With in-store tracking we can measure associate / customer rations, interactions and performance and we can identify whether and how often lowered interaction rates lost sales.

I think all three of these reports are potentially interesting – they’re perfectly reasonable to ask for and to produce.

With #1, however, I have to wonder how much value in-store tracking will add beyond PoS data. I can just as easily correlate PoS data to event times to see if events drive additional sales. What I don’t know is whether event attendees browse but don’t buy. If I do this analysis with in-store tracking data, the first question I’ll get is “But did they buy anything?” If, on the other hand, I do the analysis with PoS data, I’m much less likely to hear “But did they browse the store?” So while in-store tracking adds a little bit of information to the problem, it’s probably not the best or the easiest way to understand the impact of store events. We chose not to include this type of report in our base report set, even though we do let people integrate and view this type of data.

Question #2 is quite different. The question starts with sales data. We see differences in category sales by store. So more PoS data isn’t going to help. When you want to know why sales are different (by day, by store, by region, etc.), then you’ll need other types of data. Obviously, you’ll need square footage to understand efficiency, but the type of store layout data you can bring to bear is probably even more critical than measures of efficiency. With in-store tracking you can see how often a category functions as a draw (where customers go first), how it gets traffic from associated areas, how much opportunity it had, and how well it actually performed. Along with weather and associate interaction data, you have almost every factor you’re likely to need to really understand the drivers of performance. We made sure this kind of analytics is easy in our tool. Not just by integrating PoS data, but by making sure that it’s possible to understand and compare how store layouts shape category browsing and buying.

Question #3 is somewhere in between. By matching staffing data to PoS data, I can see if there are times when I look understaffed.  But I’m missing significant pieces of information if I try to optimize staff using only PoS data. Door-counting data can take this one step further and help me understand when interaction opportunities were highest (and most underserved). With full in-store journey tracking, I can refine my answers to individual categories / departments and make sure I’m evaluating real opportunities not, for example, mall pass throughs. So in-store journey tracking deepens and sharpens the answer to Staffing Gaps well beyond what can be achieved with only PoS data or even PoS and door-counting data. Once again, we chose to include staff optimization reports (actually a whole bunch of them) in the base product. Even though you can do interesting analysis with just PoS data, there’s too much missing to make decision-makers informed and confident enough to make changes. And making changes is what it’s all about.

 

We all know the old saying about everything looking like a nail when your only tool is a hammer. But the truth is that we often fixate on a particular tool even when many others are near to hand. You can answer all sorts of questions with in-store journey tracking data, but some of those questions can be answered as well or better using your existing PoS or door-counting data. This sort of analytics duplication isn’t unique to in-store tracking. It’s ubiquitous in data analytics in general. Before you start buying systems, using reports or delving into a tool, it’s almost always worth asking if it’s the right/easiest/best data for the job. It just so happens that with in-store tracking data, asking how and whether it extends PoS data is almost always a good place to start.

In creating the DM tool, we’ve tried to do a lot of that work for you. And by applying the PoS test, we think we’ve created a report set that helps guide you to the best uses of in-store tracking data. The uses that take full advantage of what makes this data unique and that don’t waste your time with stuff you already (should) know.

 

The Road Goes Ever On

“It’s a dangerous business,” says Bilbo Baggins, “going out your front door. You step onto the road, and if you don’t keep your feet, there’s no knowing where you might be swept off to.” Eighteen years ago I stepped outside my comfortable door and was swept out into a digital world that I – like everyone else – knew very little about. There were dragons in that wilderness, as there always are. Some we slew and some we ran away from. Some are out there still.

But though a road may go on and on, a person sometimes finds another path. In the last few months I’ve felt rather like young Mr. Baggins, visited by dwarfs and a wizard, and confronted with a map of a great unexplored wasteland, a forbiddingly guarded, lonely mountain, and a vast treasure.

It’s not so easy to give up adventuring.

Eighteen years ago when I first started thinking seriously about digital analytics, we were the poor step-child of analytics. Web analytics (as we called it back then) was pathetic. To call it analytics was a misnomer – the right word being some polyglot mash-up of hubris, false-advertising and ignorance. Perhaps “faligris” was the word we needed but didn’t have. We looked with envy at the sophisticated analytics done for mass media, retail, and direct mail.

Seriously.

My how times have changed.

I’m not going to go all Pollyanna on you. There’s still a lot not to like about the way we do digital analytics. But here’s the thing – I’m not sure there’s a field that does it better. Without really realizing it, digital has spawned a discipline of continuous improvement that includes a fairly sophisticated view of dashboarding and reporting, interesting segmentation, a decent set of techniques for specific analysis problems, and – probably most impressive – a real commitment to experimentation. Sure, most companies get a lot of this wrong. My extended discussion of the perils and problems of digital transformation isn’t (really!) just grumpiness. But the companies that do it well are truly outstanding. And even in the flawed general practice there is much to like.

The best of digital analytics these days has nothing to be ashamed of and much to be proud of.

That’s why, on the map of the digital analytics world, there are more gardens than wasteland, more cultivated field than dangerous mountain. Digital Analytics is well past the “trough of despair” in the hype-cycle – delivering tremendous value on a consistent basis. That’s a great place to be, but I’m looking for a little more adventure.

A little backstory may be in order here. Not too long ago, one of my larger clients asked us to take a look at a solution they’d tried to measure their customer’s IN STORE journeys. Their vendor wired up a sample store with a network of cameras to detect and measure in-store customer paths. It looked a lot like digital analytics. Or should I say it looked a lot like web analytics? Because in almost every respect, it reminded me of the measurement capture, reporting and analysis we did back in 1997. The data capture was expensive and broke frequently. The data was captured at the wrong level of granularity and there was no detail feed available. The reporting was right there with Webtrends 1.0. The analysis – literally – became a standing joke with our client.

It was pathetic.

Well, even from this mess, there was interesting information to be salvaged. You COULD do better reporting even on the sadly broken data being collected. But it got me thinking. Because this was a “leader” in the field.

So naturally, I checked out the rest of the field. What I found were the same type of engineering heavy, analysis tone-deaf companies that I remembered back in the old days of the web before people like Omniture and Google figured out how to do this kind of thing right. I found technology solutions desperately looking for actual business problems. I found expensive implementations that still managed to miss the really important data. I found engineers not analysts.

I found opportunity.

Because this data and these systems are very much like digital analytics. The lessons we’ve learned there about collection, KPIs, reporting, segmentation, analysis and testing all feel fresh, important and maybe even revolutionary. And this time, there’s a chance to provide an end-to-end solution that combines technology with the kind of reporting and analytics I’ve always dreamed about. There’s a chance to be the Omniture AND Semphonic of a really cool space.

I just couldn’t resist.

So I’m going to be leaving EY and, for that matter, digital analytics. I’ll miss both keenly. These past years in digital analytics have been the best and most rewarding of my professional life. I’m proud of the work I’ve done. Proud of the work we’ve done together. Proud of the discipline we’ve created. But I want to take that work and build something new from the ground up.

I’m going to build a startup dedicated to bringing the best of digital discipline and measurement to the physical world. Helping stores, malls, stadiums, banks, hospitals and who knows what else understand how to use customer behavior to actually optimize customer experience.

I want to make the best experiences in the real world every bit as seamless, personalized, and optimized as the best experiences in the digital world already are.

It’s a dangerous world out there in physical retail. They’re struggling and they don’t really know how to get better. If there really was a map, I’m pretty sure it would have a big X with “there be dragons” printed right above.

I can’t wait.

Welcome to Digital Mortar!