Is transactional data the key to understanding retail customer behavior?
Photo: RetailWire

Presented here for discussion is a summary of a current article published with permission from Knowledge@Wharton, the online research and business analysis journal of the Wharton School of the University of Pennsylvania. 

“The Customer-Base Audit,” co-authored by Wharton marketing professor Peter Fader, argues that firms cannot make fully informed decisions without first understanding their customers’ buying behavior and the actual health of their customer base.

“The customer base has historically been something of a Wild West, lacking a lot of rigor and accountability,” Prof. Fader said in an interview with the Wharton School Press. “It’s about time it was audited.”

To help firms do that, the book sets out the tools and frameworks to assess their customer base, reassess growth objectives, understand how their customers differ in behavior and value, see how the quality of their customers has changed over time, and more.

The authors noted that most businesses already do customer analysis typically on an as-needed basis. A customer-base audit aims to formalize and impose structure to the analysis process.

Bruce Hardie, marketing professor at London Business School and co-author, said, “It’s a systematic review of the buying behavior of a firm’s customers using data captured by its transaction systems to summarize their actual buying behavior. We’re not interested in who these customers are, not what they think, or their attitude. It’s very much a focus on their actual behavior, and providing that high-level overview for top decision-makers in the organization.”

The audit takes in multiple “lenses” in analyzing the purchasing patterns of new and existing customers over time periods while grouping customers into cohorts to understand their behavior and performance over time.

Prof. Fader said such analysis requires “careful handling, careful analysis and careful inferences from data,” but isn’t “too technical.” He believes such analysis is the first step towards customer centricity and should be part of every marketer’s toolkit. Deeper insights into customer profiles should also elevate marketing’s role in guiding an organization.

“As we say in the book, the customer-base audit is unashamedly descriptive. It’s all just there in the data without you having to go out there and work with other vendors or buy a bunch of reports. It’s pure gold,” said Prof. Fader.

BrainTrust

“Transactional is where it should always start, because demographics, psychographics, etc. are all descriptive instead of actuals.”

Jenn McMillen

Chief Accelerant at Incendio & Forbes Contributing Writer


“These descriptive measures belong on the BI dashboards of senior management. They will help bring key trends to the surface.”

James Tenser

Retail Tech Marketing Strategist | B2B Expert Storytelling™ Guru | President, VSN Media LLC


“Can you really be customer-centric if you build a strategy only on transactions, not accounting for the customer decision making process and why they choose this over that?”

Casey Golden

CEO, Luxlock

Discussion Questions

DISCUSSION QUESTIONS: Do you believe a customer-base audit as proposed in the article is a good first step on the journey to customer centricity? What are the benefits and drawbacks of leaning on purchasing data to get more of a real-time view of customers?

Poll

Do you see transactional data as underutilized or over-hyped as a tool for evaluating a retailer or brand’s customer base?

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32 responses to “Is transactional data the key to understanding retail customer behavior?”

  1. Bob Amster Avatar
    Bob Amster

    The cons of reading the results of such audits is that there can be many factors affecting changing trends. Some of these are external so the retailer may not even know they are impacting the trends. The pros to conducting such an audit is that customer bases do change – for whatever reasons – and knowing that they may be constantly changing is of great value when planning one’s next move.

  2. Dave Bruno Avatar
    Dave Bruno

    Without reading more in-depth descriptions of the Customer Base Audit, I am struggling to identify exactly what is new here. The vast majority of our clients analyze “data captured by its transaction systems to summarize their actual buying behavior” and group them into “cohorts” based on those actual behaviors constantly. It’s baked into the business model. Perhaps this model injects more structure and discipline into the process?

  3. Cathy Hotka Avatar
    Cathy Hotka

    Prof. Fader is correct about our misunderstanding of the customer base, but there is no substitute for boots-on-the-ground observations. Do customers look happy? How do they interact with associates? It’s important to know.

    1. Verlin Youd Avatar
      Verlin Youd

      Totally agree. Knowing how customers are behaving prior to checkout is a goldmine. Figuring out how to efficiently get that data has been a great challenge … and some new solutions seem to be helping.

  4. Jenn McMillen Avatar
    Jenn McMillen

    Transactional is where it should always start, because demographics, psychographics, etc. are all descriptive instead of actuals. You always want to base decision-making on actual data, not inferred. It sounds so old school at this point, but there’s nothing wrong with going back to basics.

    1. Ryan Mathews Avatar
      Ryan Mathews

      But Jenn, demographics and psychographics inform, if not drive, those actual transactions. We now have tools that give us a much more holistic understanding of the consumer. Why would we go back to pretending retailing is best measured using old metrics?

      1. Casey Golden Avatar
        Casey Golden

        Agree. No longer are demographics, psychographics, preferences, influences, etc. considered only “inferred data.”

  5. Mark Ryski Avatar
    Mark Ryski

    Yes, this is a good step, but it’s only one step. Transactional data only accounts for the shoppers who made a purchase — what about the shoppers who visited and left without buying? Store traffic data is one of the most — if not the most — reliable activity signals of store level activity. Furthermore, store traffic quantifies a store’s sales opportunity. In addition to traffic, shopper conversion rates provide important insights into how effectively the store is doing at turning store visits into sales. Ultimately, retailers need to combine transactional data with other, non-transaction data to find the insight gold.

    1. Verlin Youd Avatar
      Verlin Youd

      Absolutely! Traffic and conversion are a good start to understanding all of the behavior that goes on prior to checkout. New solutions are finally providing a useful window into that behavior.

  6. Matthew Pavich Avatar
    Matthew Pavich

    Understanding the buying behavior of your customers is definitely foundational to running a successful business. Not only is it invaluable in understanding how they have behaved in the past, but it is the most critical input into predicting what they will do in the future. Every strategy should be heavily informed by customer data with the right sophistication and AI being used to identify key shifts and trends in how they behave coupled with the technology and processes to evolve accordingly.

  7. Dion Kenney Avatar
    Dion Kenney

    Yes, the customer-base audit of historic purchases is the baseline, organizing the results into clusters of meaningful demographics and psychographics. And it should be considered mandatory today, with the easy access to both the Big Data and data analytics tools necessary to perform it. But beyond the baseline, the data-driven marketer should also include a correlation analysis of “when purchased vs exogenous phenomenon” to identify meaningful variables and better predict future purchases against them.

  8. Dave Wendland Avatar
    Dave Wendland

    Transactional data is certainly a big part of the equation. However this needs to be combined with qualitative data that examines behaviors not just transactions.

    1. Verlin Youd Avatar
      Verlin Youd

      Yes, as well as the quantitative data that examines and highlights all of the behavior prior to transaction!

  9. Nikki Baird Avatar
    Nikki Baird

    Well, you have to first take into account whether you actually know your customers or not and can build a basket history over time. Retail’s ability to do that has grown significantly in this area over the last 20 years, but also took some hits (Apple tracking, for example, and the reduced ability to ID shoppers if they have not volunteered that identification). But otherwise, definitely – how can you claim to be customer-centric if you don’t know what your customers are actually buying? The only drawback to looking at purchase data is if it takes up so much of your time that you don’t look at other things. Purchase history is the center, but you need to look at leading indicators (social sentiment, for example) and lagging indicators too (customer sat), to see how it all comes together.

  10. Lee Peterson Avatar
    Lee Peterson

    A former CEO of mine used to say, “you don’t know anything until that register rings,” which is true. But aside from that, I really believe in observational research. Whether it comes from store managers, buyers, execs of all stripes or the CEOs themselves, nothing beats actual on-site experience. And that goes for online too. How many times have you had an experience with a retailer and said to yourself, “wonder if the CEO knows how hard it is to do X?” In short, if they don’t “live” with their own brand, they should.

  11. Mark Self Avatar
    Mark Self

    I guess I need to read the book. Haven’t retailers like Walmart analyzed product movement, basket sizes and content by leveraging analytics, Big Data, transaction logs, and the web, for some time now? As an aside, when there are available tools and a framework available for this assessment, that usually screams “consulting engagement” to me.

    Buying behavior over time does change — people age and their shopping list changes.

    Coming back to the question — the benefits of leveraging purchasing data can be great, IF the retailer makes the commitment necessary in talent and tools to attain these “real time views.” Many times that commitment and investment is “under sized” and the benefits are not immediate, making a strategy change and investment like the book suggests difficult, especially for publicly traded companies.

  12. Peter Charness Avatar
    Peter Charness

    That’s so last century. OK, it depends on the type of product and transactional data is clearly critical. But the customer journey starts well before the “buy” button, and doesn’t end there. If all you have is transaction logs well then have at it, but today understanding customer behavior demands much, much more.

  13. David Spear Avatar
    David Spear

    Sure, every company should understand their customers and the customer-base audit, as described by Prof. Fader, is a solid first move, but there are many more layers that need to be peeled back. Descriptive analytics only tells you what happened (backward looking), but the real treasure is when insights are generated with predictive (what you could do) and prescriptive (what you should do) analytics. This means massive data sets sourced internally and externally.

  14. Ananda Chakravarty Avatar
    Ananda Chakravarty

    I’m not familiar with the details of Prof. Fader’s focus on transactional data — but almost all retailers capture and review t-logs and other transactional data. The challenge is that it provides limited information about the customer when taken in isolation. Sales, units, products and timestamps are it. But this is common information and every retailer uses it. Merchandising for a customer-centric view needs more than this to offer a competitive advantage. More importantly, if retailers use only this type of information – they will only have the same type of results. This is a recipe for zero change and zero growth. Lastly, the data offered is all historic data. They will never be able to assess future scenarios based on past data alone. This mirrors an adage from Wall Street about past performance. Retailers need to strike a balance between transactional and other opportunities to collect customer data such as loyalty programs, CSAT surveys and NPS scores. Customer-centricity is much more than transactional data.

  15. James Tenser Avatar
    James Tenser

    There’s plenty to like about making more systematic use of transaction data to understand retail business health. The customer-base audit is a natural adjunct to the widely-used Lifetime Customer Value discipline.

    I have mad respect for Dr. Fader and I like this “5 lenses” cohort analysis approach that seeks to establish and track some fundamental facts about purchase trends. Are newer customers buying differently compared with older customers? Are purchases of certain products associated with greater LTV? How is your customer acquisition trending? Are existing customers changing their purchase behavior?

    These descriptive measures belong on the BI dashboards of senior management. They will help bring key trends to the surface. Getting to “why” is the role of other marketing methods, including attitudinal, sentiment, loyalty and behaviors outside the retailer’s “walled garden.”

  16. DeAnn Campbell Avatar
    DeAnn Campbell

    Transactional data tells you what customers ultimately buy, but that’s only a small part of the story. Are they buying it because their preferred product is out of stock – meaning they likely won’t buy it again? Are they spending a lot of time considering a more expensive product but ultimately defer to price and leave feeling naggingly unsatisfied? Are shoppers avoiding a part of the store because of its location or look, but would buy the products if they were better positioned? This is way more important data to gather because ultimately it drives customer satisfaction, repeat business and long term success.

    1. Brad Halverson Avatar
      Brad Halverson

      Spot on. Getting an understanding of less frequent shoppers, or even shoppers who haven’t adopted your business is just as important. From here, you’ll be able to understand any barriers and ultimate solutions for transformation.

  17. Ryan Mathews Avatar
    Ryan Mathews

    Like Dave Bruno I would need to read the actual study, but my first reaction is that in attempting to correct one flaw the authors have defaulted to another, possibly worse one. Hardie’s assertion that, “We’re not interested in who these customers are, not what they think, or their attitude,” is nothing short of — well — given The RetailWire Golden Rule, I’ll just say massively shortsighted. Here’s the logic flaw. Transactional data always is a measurement of a forced choice, the option the consumer selected from among the objects for sale. If I’m a Count Chocula fanatic but the supermarket is out-of-stock I may grab a box of Lucky Charms. A purely transactional analysis will assume I like Lucky Charms. Like Dave, without reading the whole study, I think this appears to be the marketing equivalent of “mutton dressed as lamb” — something old wrapped in the veneer of something new.

  18. Casey Golden Avatar
    Casey Golden

    Can you really be customer-centric if you build a strategy only on transactions and not accounting for customer decision making process and why they choose this over that? I’ve never found long-term success in a complete top-down strategy. This quote really hits a chord: “We’re not interested in who these customers are, not what they think, or their attitude.”

  19. Brian Cluster Avatar
    Brian Cluster

    With so much data available to conduct an audit, I would be cautious to only include one slice of data. Consumers are increasingly omnichannel in their behavior from discovery, and research to purchase and delivery. Having only in-store POS data to audit is only part of the first step. Utilizing Behavioral data online, in apps and in-store are additional data elements that should be brought in to answer how are consumers behaving in-store, online, and across digital touchpoints. Purchase data is not real-time — there are actual services to anonymously view the customer’s path to purchase on a website ( what products and content they view, where they dwell, when they drop or convert). That is truly real-time.

  20. Gene Detroyer Avatar
    Gene Detroyer

    “What are the benefits and drawbacks of leaning on purchasing data to get more of a real-time view of customers?”

    You don’t know the why? Why? Why?

  21. Ken Morris Avatar
    Ken Morris

    I really believe in a customer-base audit, but there’s a whole other dimension to add to this customer-base audit: individual shopper behavior. Traditionally retailers preach the mantra of the four “P’s” — Place, Product, Price and Promotion. But the most important “P” is the people. Capturing that data to date has been all around product movement. I believe video analytics, in store, captures that missing link, the fifth P. Video analytics gives us insight into customer behavior (people) and allows us the capability of capturing information previously only gathered via ecomm transactions.

    Yes, retailers should, as recommended, use data science to gain actionable insights from doing a deep dive into customer transaction history. And part of that analysis should include comparing planograms with purchases. Most retailers set up a planogram and forget it. Long story short, retailers should strive to collect, analyze, and leverage in-store data as successfully as already do with their online stores. It’s not as easy as online, but there is technology that makes it attainable. Realtime retail is here and just a 5G inch away.

  22. Brad Halverson Avatar
    Brad Halverson

    Transactional data is an effective tool to understand the performance of your existing customers and can help show the results, the impact of product, merchandising and marketing efforts. And so a customer audit might help you posture towards customer-centricity, but you’ll want more of the story.

    Missing from transactional data is understanding your entire potential target market of likely available customers, whether they are infrequent or never shoppers, their orientation towards quality or price or their key motivators, which competitors they shop and why (vs you). Armed with this, you can do a full 360 review and build the business growth or transformation you want. Context is key.

  23. MattFurneaux Avatar
    MattFurneaux

    Trying not to repeat other comments, but some findings from the Loqate Holiday Shopper Insights report this year showed that while 25% of consumers expect to do the majority of their shopping online, 55% will be hybrid shoppers, underlining the need for retailers to bridge the digital and physical to support the 85% of shoppers who expect consistency during every interaction, no matter where it takes place. That golden thread? Data.

  24. Verlin Youd Avatar
    Verlin Youd

    Apologies for length … two comments:
    1. Good retailers have been doing this for years! 25+ years ago my team at IBM was delivering software that used the POS transaction log to deliver insights on customer loyalty and performance as well as handle delivering what were then complex offers that had been delivered to different cohorts, if desired.

    2. This is only measuring one specific behavior — purchase. Purchase is very important of course, it’s the final and confirming action of a customer in a store. However, as we’ve learned from e-commerce, there is so much more to understand, manage, and modify than just the purchase. (Example Store Corollaries: where do customers go in the store, what adjacent products increase/decrease sales for a product, how do adjacent promotions impact sales of a product, how does physical placement change purchasing behavior, how long does a customer consider a product before picking it or moving on, do customers return to locations previously visited, how do customers actually flow through the physical space, what is the relationship between customers and store team members, how do in department/aisle displays impact behavior and purchase, and I could go on and on!) If the purchase is 20% of the behavior, retailers are missing 80% of the behavior in-store … that is where gold is to be found for impactful insights. Correlating that gold to the purchasing data is where retailers will find the diamonds! (WARNING – SHAMELESS PROMOTION – this is exactly what http://www.ariadnemaps.com is already delivering to retailers, along with malls, airports, cities.)

    Keep mining that t-log for incremental value, find the other 80% of the gold by exploring the behavior before checkout. New technology is making it doable and cost effective.

  25. Anil Patel Avatar
    Anil Patel

    Everything comes down to customer experience. In order to provide customers with what they actually desire, retailers need an end-to-end analysis of their preferences. Transactional data won’t be sufficient for identifying concrete insights, retailers also need to analyze the following:

    1. Alternatives that customers are evaluating.
    2. The product customers are actually buying.
    3. For whom they are making a purchase.
    4. The number of times they are postponing a purchase.
    5. Key aspects customers are reviewing before finalizing buying decisions.

    A lot goes behind a customer’s buying journey. What retailers can do to get a better hold of customers’ perceptions:

    1. Cross-analyze eCommerce and in-store data.
    2. Evaluate the number of walk-in customers and customers who actually made purchases.
    3. Check the number of abandoned carts.
    4. Identify how much time customers spend browsing a particular product on eCommerce.
    5. Study customers’ frequency of buying and accordingly create customer profiles.

  26. Tony Walker Avatar
    Tony Walker

    Key to maximising transaction data is having sharp “family tree” styled back-end product categorisation to drill down beyond general category and department level within the assortment. This should also include brands and pricing clusters.

    It is capable of providing insight to real time behavioural change in buying preferences, unlike the claimed behaviours in research or surveys. Knowing what is and is not selling allows qualification of the most important question; why?

32 Comments
oldest
newest
Bob Amster
Bob Amster
9 months ago

The cons of reading the results of such audits is that there can be many factors affecting changing trends. Some of these are external so the retailer may not even know they are impacting the trends. The pros to conducting such an audit is that customer bases do change – for whatever reasons – and knowing that they may be constantly changing is of great value when planning one’s next move.

Dave Bruno
Dave Bruno
9 months ago

Without reading more in-depth descriptions of the Customer Base Audit, I am struggling to identify exactly what is new here. The vast majority of our clients analyze “data captured by its transaction systems to summarize their actual buying behavior” and group them into “cohorts” based on those actual behaviors constantly. It’s baked into the business model. Perhaps this model injects more structure and discipline into the process?

Cathy Hotka
Cathy Hotka
9 months ago

Prof. Fader is correct about our misunderstanding of the customer base, but there is no substitute for boots-on-the-ground observations. Do customers look happy? How do they interact with associates? It’s important to know.

Verlin Youd
Verlin Youd
  Cathy Hotka
9 months ago

Totally agree. Knowing how customers are behaving prior to checkout is a goldmine. Figuring out how to efficiently get that data has been a great challenge … and some new solutions seem to be helping.

Jenn McMillen
Jenn McMillen
9 months ago

Transactional is where it should always start, because demographics, psychographics, etc. are all descriptive instead of actuals. You always want to base decision-making on actual data, not inferred. It sounds so old school at this point, but there’s nothing wrong with going back to basics.

Ryan Mathews
Ryan Mathews
  Jenn McMillen
9 months ago

But Jenn, demographics and psychographics inform, if not drive, those actual transactions. We now have tools that give us a much more holistic understanding of the consumer. Why would we go back to pretending retailing is best measured using old metrics?

Casey Golden
Casey Golden
  Ryan Mathews
9 months ago

Agree. No longer are demographics, psychographics, preferences, influences, etc. considered only “inferred data.”

Mark Ryski
Mark Ryski
9 months ago

Yes, this is a good step, but it’s only one step. Transactional data only accounts for the shoppers who made a purchase — what about the shoppers who visited and left without buying? Store traffic data is one of the most — if not the most — reliable activity signals of store level activity. Furthermore, store traffic quantifies a store’s sales opportunity. In addition to traffic, shopper conversion rates provide important insights into how effectively the store is doing at turning store visits into sales. Ultimately, retailers need to combine transactional data with other, non-transaction data to find the insight gold.

Verlin Youd
Verlin Youd
  Mark Ryski
9 months ago

Absolutely! Traffic and conversion are a good start to understanding all of the behavior that goes on prior to checkout. New solutions are finally providing a useful window into that behavior.

Matthew Pavich
Matthew Pavich
9 months ago

Understanding the buying behavior of your customers is definitely foundational to running a successful business. Not only is it invaluable in understanding how they have behaved in the past, but it is the most critical input into predicting what they will do in the future. Every strategy should be heavily informed by customer data with the right sophistication and AI being used to identify key shifts and trends in how they behave coupled with the technology and processes to evolve accordingly.

Dion Kenney
Dion Kenney
9 months ago

Yes, the customer-base audit of historic purchases is the baseline, organizing the results into clusters of meaningful demographics and psychographics. And it should be considered mandatory today, with the easy access to both the Big Data and data analytics tools necessary to perform it. But beyond the baseline, the data-driven marketer should also include a correlation analysis of “when purchased vs exogenous phenomenon” to identify meaningful variables and better predict future purchases against them.

Dave Wendland
Dave Wendland
9 months ago

Transactional data is certainly a big part of the equation. However this needs to be combined with qualitative data that examines behaviors not just transactions.

Verlin Youd
Verlin Youd
  Dave Wendland
9 months ago

Yes, as well as the quantitative data that examines and highlights all of the behavior prior to transaction!

Nikki Baird
Nikki Baird
9 months ago

Well, you have to first take into account whether you actually know your customers or not and can build a basket history over time. Retail’s ability to do that has grown significantly in this area over the last 20 years, but also took some hits (Apple tracking, for example, and the reduced ability to ID shoppers if they have not volunteered that identification). But otherwise, definitely – how can you claim to be customer-centric if you don’t know what your customers are actually buying? The only drawback to looking at purchase data is if it takes up so much of your time that you don’t look at other things. Purchase history is the center, but you need to look at leading indicators (social sentiment, for example) and lagging indicators too (customer sat), to see how it all comes together.

Lee Peterson
Lee Peterson
9 months ago

A former CEO of mine used to say, “you don’t know anything until that register rings,” which is true. But aside from that, I really believe in observational research. Whether it comes from store managers, buyers, execs of all stripes or the CEOs themselves, nothing beats actual on-site experience. And that goes for online too. How many times have you had an experience with a retailer and said to yourself, “wonder if the CEO knows how hard it is to do X?” In short, if they don’t “live” with their own brand, they should.

Mark Self
Mark Self
9 months ago

I guess I need to read the book. Haven’t retailers like Walmart analyzed product movement, basket sizes and content by leveraging analytics, Big Data, transaction logs, and the web, for some time now? As an aside, when there are available tools and a framework available for this assessment, that usually screams “consulting engagement” to me.

Buying behavior over time does change — people age and their shopping list changes.

Coming back to the question — the benefits of leveraging purchasing data can be great, IF the retailer makes the commitment necessary in talent and tools to attain these “real time views.” Many times that commitment and investment is “under sized” and the benefits are not immediate, making a strategy change and investment like the book suggests difficult, especially for publicly traded companies.

Peter Charness
Peter Charness
9 months ago

That’s so last century. OK, it depends on the type of product and transactional data is clearly critical. But the customer journey starts well before the “buy” button, and doesn’t end there. If all you have is transaction logs well then have at it, but today understanding customer behavior demands much, much more.

David Spear
David Spear
9 months ago

Sure, every company should understand their customers and the customer-base audit, as described by Prof. Fader, is a solid first move, but there are many more layers that need to be peeled back. Descriptive analytics only tells you what happened (backward looking), but the real treasure is when insights are generated with predictive (what you could do) and prescriptive (what you should do) analytics. This means massive data sets sourced internally and externally.

Ananda Chakravarty
Ananda Chakravarty
9 months ago

I’m not familiar with the details of Prof. Fader’s focus on transactional data — but almost all retailers capture and review t-logs and other transactional data. The challenge is that it provides limited information about the customer when taken in isolation. Sales, units, products and timestamps are it. But this is common information and every retailer uses it. Merchandising for a customer-centric view needs more than this to offer a competitive advantage. More importantly, if retailers use only this type of information – they will only have the same type of results. This is a recipe for zero change and zero growth. Lastly, the data offered is all historic data. They will never be able to assess future scenarios based on past data alone. This mirrors an adage from Wall Street about past performance. Retailers need to strike a balance between transactional and other opportunities to collect customer data such as loyalty programs, CSAT surveys and NPS scores. Customer-centricity is much more than transactional data.

James Tenser
James Tenser
9 months ago

There’s plenty to like about making more systematic use of transaction data to understand retail business health. The customer-base audit is a natural adjunct to the widely-used Lifetime Customer Value discipline.

I have mad respect for Dr. Fader and I like this “5 lenses” cohort analysis approach that seeks to establish and track some fundamental facts about purchase trends. Are newer customers buying differently compared with older customers? Are purchases of certain products associated with greater LTV? How is your customer acquisition trending? Are existing customers changing their purchase behavior?

These descriptive measures belong on the BI dashboards of senior management. They will help bring key trends to the surface. Getting to “why” is the role of other marketing methods, including attitudinal, sentiment, loyalty and behaviors outside the retailer’s “walled garden.”

DeAnn Campbell
DeAnn Campbell
9 months ago

Transactional data tells you what customers ultimately buy, but that’s only a small part of the story. Are they buying it because their preferred product is out of stock – meaning they likely won’t buy it again? Are they spending a lot of time considering a more expensive product but ultimately defer to price and leave feeling naggingly unsatisfied? Are shoppers avoiding a part of the store because of its location or look, but would buy the products if they were better positioned? This is way more important data to gather because ultimately it drives customer satisfaction, repeat business and long term success.

Brad Halverson
Brad Halverson
  DeAnn Campbell
9 months ago

Spot on. Getting an understanding of less frequent shoppers, or even shoppers who haven’t adopted your business is just as important. From here, you’ll be able to understand any barriers and ultimate solutions for transformation.

Ryan Mathews
Ryan Mathews
9 months ago

Like Dave Bruno I would need to read the actual study, but my first reaction is that in attempting to correct one flaw the authors have defaulted to another, possibly worse one. Hardie’s assertion that, “We’re not interested in who these customers are, not what they think, or their attitude,” is nothing short of — well — given The RetailWire Golden Rule, I’ll just say massively shortsighted. Here’s the logic flaw. Transactional data always is a measurement of a forced choice, the option the consumer selected from among the objects for sale. If I’m a Count Chocula fanatic but the supermarket is out-of-stock I may grab a box of Lucky Charms. A purely transactional analysis will assume I like Lucky Charms. Like Dave, without reading the whole study, I think this appears to be the marketing equivalent of “mutton dressed as lamb” — something old wrapped in the veneer of something new.

Casey Golden
Casey Golden
9 months ago

Can you really be customer-centric if you build a strategy only on transactions and not accounting for customer decision making process and why they choose this over that? I’ve never found long-term success in a complete top-down strategy. This quote really hits a chord: “We’re not interested in who these customers are, not what they think, or their attitude.”

Brian Cluster
Brian Cluster
9 months ago

With so much data available to conduct an audit, I would be cautious to only include one slice of data. Consumers are increasingly omnichannel in their behavior from discovery, and research to purchase and delivery. Having only in-store POS data to audit is only part of the first step. Utilizing Behavioral data online, in apps and in-store are additional data elements that should be brought in to answer how are consumers behaving in-store, online, and across digital touchpoints. Purchase data is not real-time — there are actual services to anonymously view the customer’s path to purchase on a website ( what products and content they view, where they dwell, when they drop or convert). That is truly real-time.

Gene Detroyer
Gene Detroyer
9 months ago

“What are the benefits and drawbacks of leaning on purchasing data to get more of a real-time view of customers?”

You don’t know the why? Why? Why?

Ken Morris
Ken Morris
9 months ago

I really believe in a customer-base audit, but there’s a whole other dimension to add to this customer-base audit: individual shopper behavior. Traditionally retailers preach the mantra of the four “P’s” — Place, Product, Price and Promotion. But the most important “P” is the people. Capturing that data to date has been all around product movement. I believe video analytics, in store, captures that missing link, the fifth P. Video analytics gives us insight into customer behavior (people) and allows us the capability of capturing information previously only gathered via ecomm transactions.

Yes, retailers should, as recommended, use data science to gain actionable insights from doing a deep dive into customer transaction history. And part of that analysis should include comparing planograms with purchases. Most retailers set up a planogram and forget it. Long story short, retailers should strive to collect, analyze, and leverage in-store data as successfully as already do with their online stores. It’s not as easy as online, but there is technology that makes it attainable. Realtime retail is here and just a 5G inch away.

Brad Halverson
Brad Halverson
9 months ago

Transactional data is an effective tool to understand the performance of your existing customers and can help show the results, the impact of product, merchandising and marketing efforts. And so a customer audit might help you posture towards customer-centricity, but you’ll want more of the story.

Missing from transactional data is understanding your entire potential target market of likely available customers, whether they are infrequent or never shoppers, their orientation towards quality or price or their key motivators, which competitors they shop and why (vs you). Armed with this, you can do a full 360 review and build the business growth or transformation you want. Context is key.

MattFurneaux
MattFurneaux
9 months ago

Trying not to repeat other comments, but some findings from the Loqate Holiday Shopper Insights report this year showed that while 25% of consumers expect to do the majority of their shopping online, 55% will be hybrid shoppers, underlining the need for retailers to bridge the digital and physical to support the 85% of shoppers who expect consistency during every interaction, no matter where it takes place. That golden thread? Data.

Verlin Youd
Verlin Youd
9 months ago

Apologies for length … two comments:
1. Good retailers have been doing this for years! 25+ years ago my team at IBM was delivering software that used the POS transaction log to deliver insights on customer loyalty and performance as well as handle delivering what were then complex offers that had been delivered to different cohorts, if desired.

2. This is only measuring one specific behavior — purchase. Purchase is very important of course, it’s the final and confirming action of a customer in a store. However, as we’ve learned from e-commerce, there is so much more to understand, manage, and modify than just the purchase. (Example Store Corollaries: where do customers go in the store, what adjacent products increase/decrease sales for a product, how do adjacent promotions impact sales of a product, how does physical placement change purchasing behavior, how long does a customer consider a product before picking it or moving on, do customers return to locations previously visited, how do customers actually flow through the physical space, what is the relationship between customers and store team members, how do in department/aisle displays impact behavior and purchase, and I could go on and on!) If the purchase is 20% of the behavior, retailers are missing 80% of the behavior in-store … that is where gold is to be found for impactful insights. Correlating that gold to the purchasing data is where retailers will find the diamonds! (WARNING – SHAMELESS PROMOTION – this is exactly what http://www.ariadnemaps.com is already delivering to retailers, along with malls, airports, cities.)

Keep mining that t-log for incremental value, find the other 80% of the gold by exploring the behavior before checkout. New technology is making it doable and cost effective.

Anil Patel
Anil Patel
8 months ago

Everything comes down to customer experience. In order to provide customers with what they actually desire, retailers need an end-to-end analysis of their preferences. Transactional data won’t be sufficient for identifying concrete insights, retailers also need to analyze the following:

1. Alternatives that customers are evaluating.
2. The product customers are actually buying.
3. For whom they are making a purchase.
4. The number of times they are postponing a purchase.
5. Key aspects customers are reviewing before finalizing buying decisions.

A lot goes behind a customer’s buying journey. What retailers can do to get a better hold of customers’ perceptions:

1. Cross-analyze eCommerce and in-store data.
2. Evaluate the number of walk-in customers and customers who actually made purchases.
3. Check the number of abandoned carts.
4. Identify how much time customers spend browsing a particular product on eCommerce.
5. Study customers’ frequency of buying and accordingly create customer profiles.

Tony Walker
Tony Walker
8 months ago

Key to maximising transaction data is having sharp “family tree” styled back-end product categorisation to drill down beyond general category and department level within the assortment. This should also include brands and pricing clusters.

It is capable of providing insight to real time behavioural change in buying preferences, unlike the claimed behaviours in research or surveys. Knowing what is and is not selling allows qualification of the most important question; why?