What we buy often tells a lot about who we are. That’s why payments data – information about what consumers buy, when they buy it, where they are coming from and every other detail imaginable – has become a goldmine for some retailers.
But many retailers either don’t collect it, or are not using it to its full potential. During an panel at Street Fight’s Local Data Summit in Denver Thursday, Krish Mantripragada, SVP & GM of data & analytics products at FirstData, and Marc Freed-Finnegan, CEO of Index, spoke with UBL’s Damian Rollison about the importance of collecting payments data and adopting a method for understanding it.
“Most retailers manage their businesses by looking at their revenues,” said Freed-Finnegan. “But that’s only part of the picture.
Retailers primarily look at company store sales, year-over-year performance and same-store sales for indications of growth. But those numbers are revenue metrics, Freed-Finnegan said. He described one restaurant with which Index worked who knew their same-store sales were growing, but didn’t know what caused the increase.
“If you don’t know how you grew, how are you going to do it again?” Freed-Finnegan said. “They counted transactions, but not unique people.”
Index uses credit card transaction data to obtain the unique-person information needed without introducing a new method of data collection and without asking the customer to do anything such as sign up for a loyalty program. The data can offer retailers a profile of customer health that basic data cannot: not only how much is spent on aggregate, but what consumer are buying individually.
By gaining that data, the restaurant management realized they needed to completely change their marketing structure. Previously, they perceived that customer purchase frequency was once or a few times per week.
“Their customer frequency turned out to be a few times per year,” Freed-Finnegan said. “They were a totally different business than they thought they were. They were a specialty business.”
Krish Mantripragada, senior vice president of data and analytics at First Data, said that generating insight for merchants can help determine what action is critical at any point in time.
“Some focus on attracting new customers, some focus on retaining existing customers,” Mantripragada said. “Helping the merchant understand what to focus on will move the needle for them. But then, address where do customers come from? What types of attributes do they exhibit?”
Most merchants have no idea how their customers found their business, Mantripragada said. Looking at customer behavior is essential, and retailers should start with identifying who their customers are, what they’re buying and when. With the right data, merchants can even course-correct an advertising campaign as it is happening.
“If you look at customer behavior, neighborhood behavior, sales data, seasonality, you can project and forecast what the business will look like for 10, 15, 20 days out,” Mantripragada said.
April Nowicki is a contributor to Street Fight.