Why Christmas is priceless
Australians are set to spend upwards of $50 billion this festive season, according to the Australian Retailers Association. But the ways in which they’re shopping have changed dramatically, even from as recently as last Christmas.
In the past year, a raft of local retailers such as Roger David and Esprit have shut up shop, and international incumbents such as Amazon continue to make their mark, muscling in on a local retail landscape which has been comparatively slower to exploit its data to its full potential.
Christmas is a time when retailers are heatedly competing for attention. Operating in this context without a clear understanding of what is resonating and what needs improvement with customers spells disaster for a brand.
It’s all about experience
Pricing and data are two components of the retail business model especially important to consider in the Christmas period, and the beauty is, they’re intrinsically connected. Data science is the best way to influence, in an analytical rather than speculative manner, how pricing elasticity, product placement, or subtle wording changes in promotional content can be applied to maximise profits, loyalty and customer experience.
The ways retailers have approached pricing, particularly around the Christmas period, have changed in the past few years. We’ll see an increasing trend that focuses more on experience than on price.
Reducing prices simply won’t cut it to get customers through the door this Christmas. Big retailers are realising customers, especially discerning millennials, worry less about how much a product costs if they get a shopping experience tailored to their needs and expectations.
Pricing and repricing can no longer be bogged down in manual processes, particularly as retailers are tasked with reacting quickly in the “up and up” time period that extends from Black Friday, to the Christmas lead-up, Boxing Day and beyond. An automated approach to pricing can set and relax pricing rules as needed, handling challenging requirements like seasonal trends.
Discounts absolutely shouldn’t be the focal point of your Christmas strategy. Why? Because the holiday shopping period is unique above all others in the calendar year. Some customers depend on it being stress-free; others look forward to shopping at Christmas for an enticing, sensory experience to enjoy the holiday spirit.
All this has to do with a personalisation-focused approach and looking after loyal customers – not just cheap prices.
Harness the power of data
Heading into the new year, and in order to prepare for the holiday shopping peak, there’s little room for error when it comes to getting customer loyalty, pricing and data right. Customers have long shopping lists, an idea of how much they want to spend, and want to have an enjoyable, painless experience when buying Christmas presents.
Retailers need to find a way to harness the power of data science to maximise their profitability, ensure brand loyalty, and offer the personalised experiences customers are demanding – particularly in this crucial Christmas period. They can do this by reframing the way they approach Christmas marketing campaigns and communications to put the customer at the heart of the experience.
Retail buyers are never busier than in the lead-up to Christmas, and are faced with more responsibilities. They’re tasked with being expert negotiators, are expected to read, interpret and act upon ever-increasing quantities and sources of data, decide which items to keep or delete, and decide which products go where on the shelf.
Having a holistic view of customer data through the right technology and partners can lead to smarter decision-making in these high-pressure periods, including for pricing, promotions and product placement.
By looking at customer data, retailers can clearly see where customers are shopping, what they are buying, how many they are buying, how much they are spending, where in store they are making decisions. This also sets up the business for greater success in Christmases to come.
It’s time for personalisation
Christmas is a perfect time to use customer data to give personalisation strategies even greater impact. More than half (59 per cent) of Australian consumers have said they receive disconnected experiences from retailers, according to a recent survey, highlighting the urgent need for retailers to personalise and harmonise the customer journey.
Some seasonal ideas on how to behave in a more personalised way towards customers can include sending a holiday greeting card to loyal customers – one that’s big on the gratitude, and dials down on the sell. This will show an authentic investment in relationship with customers that sits outside of profiteering.
Another popular option is to offer a sneak preview of planned promotions or discounts on holiday products, or to give customers hint of what to expect in upcoming Boxing Day sales. The more targeted and personalised these communications are, the better, as you’re increasing your chances of return visits over the whole holiday season for that customer.
Retailers can even go a step further and introduce new or test items to loyal customers first, through hosting exclusive holiday-timed shopping evenings in store. This helps the already busy period by making sure customers are coming through the door, but it’s also a chance to give your best customers a chance to try something new, and perhaps reward with even greater levels of loyalty.
Data can be generated in ways previously not explored. While having a robust technology platform to extract analysis from the massive amounts of customer data is best practice, data can also come from customers themselves. Use Christmas as a time to ask what experiences customers want from the retailer, what new product have they been craving? Having customers vote and influence retailer decisions through crowdsourcing is a great way to discover ideas to work into next year’s Christmas planning.
Every Christmas retail period should improve upon the last, no matter the macro circumstances. Having data on your side will guarantee the long-term loyalty of customers to keep them coming back year after year.
Kylie Gleeson-Long is managing director of Dunnhumby ANZ.