When it comes to strategic understanding, data insights are not only all the rave, but also the fundamental foundation to building an evidential intelligence for the organisation to follow. Whilst most brands understand the value of data, many are unsure of the various dimensions of value that it can deliver across their end-to-end operations.
In the 1960 American Western, The Magnificent Seven, a group of seven gunfighters are hired to protect a small village. The seven share traits, but are all different and work best together, so too, when combined, the “Seven Data Dimensions” can protect and empower your brand.
This series will provide an overview of the magnificent seven datasets that most brands have access to and that can be leveraged to gain insight and understanding to design strategies, develop tactics, deliver experiences and drive innovation. Working with the global mTab network and other industry experts this series will pull out examples, and top tips, from across the globe where brands are most effectively harvesting and deploying data.
Straight Source
Previously, we reviewed social media channels, online reviews and customer feedback data streams. The next data source we’ll explore is purchase data. Purchase or sales-based metrics were some of the first, mainstream, metrics used by businesses as a basic gauge of success. Understanding sales meant understanding the path of success.
The metrics related to customer purchases differ largely from the previously reviewed data types of social media, online reviews and customer feedback as purchase data is, on the whole, far more objective, typically containing less nuance. These attributes mean that it typically doesn’t need the level of interpretation and analysis that subjective opinions require.
As Alex Hunt, Chief Executive Officer of Behaviorally explains,
“Given the continual shifting trends and changing tendencies of consumers, purchase data is a major lifeline to a business. It not only shows volume and frequency changes, but also the performance of channels, promotions and communications. It is one of the most fundamental datasets to the bottom line. Purchase data should be a major driver in the strategies, decisions, engagements, promotions and innovations of the business.”
Having a solid, consistent understanding of these dimensions of a business is critical in not only reinforcing the strengths across specific products, services, channels and promotions, but, perhaps more importantly, modifying the points of weakness.
Whilst there’s significant value in ethnographic insight, there’s a great deal to be said when the information is provided directly from your customers ‘voting with their dollars’. This allows for straight-forward measures that are free from speculation and interpretation, which is often injected into customer feedback or social posts.
The Metric That Matters
Purchase data, is a straight-forward concept and doesn’t take the same Herculean commitment that gathering, social media and review data does. Rather, this insight is often readily available via the in-store point-of-sale systems, online purchase platforms, in-app purchase technology or inventory management systems. This typically makes accessing and managing this data easier to review and interpret.
Beyond this, the good news is that although simple to access, purchase data sources are also widely viewed as some of the most invaluable information available to a business. The key is setting up a process to access the purchase data stream so it can be monitored regularly.
According to Alexander Edwards, President of Strategic Vision,
“It is essentially the only metric that really matters. If those who search for you and write reviews about you do not convert to purchase your product or service, then it is meaningless. Yes, often people can pat themselves on the back and say, “We increased brand awareness by 32%!” or “We had a 443% increase in new traffic to our website with the new advertising campaign.” While these things are good and can “plant seeds” for customers of the future; however, even with these “good” behaviors, if it doesn’t convert to the behavior of purchase, then some other brand or product will be the victor and take the spoils of the war.”
Quality Control
The direct nature of purchase data serves as a quality control gauge for a brand and its offerings. This makes watching the trend lines critical to understanding a business’s health. Understanding the seasonal shifts is also important to deliver specific offerings or promotions to “smooth them out.” However, these trends also help to clarify when there is a burst of growth or loss within the business.
Purchase data can help identify the root causes of issues related to sales channel investments, engagement campaigns, promotional messaging and feature introductions. In other words, there’s both tactical (short term) and strategic (long term) views that can be delivered by purchase data analysis.
The straight-forward nature of this data and the fact that it typically sits within existing, in-house technology systems that are often easy to access, generally makes it a favorite go-to data source for decision makers. The data is typically easy to access and understand and simple to react and respond to.
Priority One
Given all of the benefits that purchase data can deliver to a business, it’s of vital importance for a brand to monitor and review it in a regular cadence in order to genuinely gauge the state of business. As a data stream this can also give an unbiased assessment of the performance of advertising promotions, marketing campaigns, sales channels and product innovations.
According to Keith Aldridge, Client Services Manager for mTab,
“Purchase data should be at the top of a company’s list of analysed insight. It delivers a bill of health for the business and shows where companies should be making their investments, be it increasing inventory for successful products, enhancing bandwidth of growing channels or winding down dying obsolete offerings. It serves as a no-nonsense dataset that is fundamentally easy and straightforward to interpret.”
Many leading companies set their strategies and develop their innovations primarily on the purchase performance data given its often indisputable nature, unlike subjective opinionated data sources, which remain important, but can suffer from bias and interpretation.
Don’t Forget the Profit (Commercial Realities)
Whilst it should go without saying, it’s important that insights practitioners also apply their business acumen to interpretating sales data. Sales can spike due to promotions and “loss leaders” or even from “gifting” products or services. Understanding the profit contribution of the purchase data analysed is fundamental to gathering and using insights for long term commercial success. A product line with rapidly growing sales and a negative net margin may or may not be viable long term. The organisation may, to take just one example, be initially “buying” market share and once it has a critical mass may go from making losses to “super” profits. A deep understanding of the strategy and the competitive context is critical to “ground” the insights generated. Our profession is sometimes criticised, particularly in comparison to the big Strategic Consultancies (Bain, McKinsey’s PwC et al), for being too “academic” or “purist” rather than considering data through a commercial lens. The reality is that data must be robust or “evidenced” as I prefer but then, absolutely, it must also be contextualised.
Getting Started
The first step in getting a handle on purchase data streams is to identify the systems that generate the data, whether via POS, online or app that likely already exist in the organisation’s technology stack. Like with other datasets, purchase data should have an identified centralised owner. As is often the case, this generally tends to lie with Marketing, Sales or Product given the nature of the information being provided by the system and the actionability around it by these teams. The ownership group should set up a process and frequency of reviewing the data reports to analyse and understand trends in terms of timing, frequency, volume and seasonality of purchases.
As the data is reviewed, there should be a focus on identifying these trends in order to “filter” them from unexpected changes in the purchase rates. From here, there should be point owners across every team, like we have discussed with social media, online reviews and customer feedback, across the organisation who serve as the conduit to review the intelligence and deliver it to the appropriate employees to assess and address the specific trend spikes.
When a spike occurs, in either a positive or negative direction, these individuals should work congruently to quickly determine the spike’s scope, impact on the company, and how the company should respond. There should also be an understanding of the potential root cause. This makes communicating changes to sales initiatives, marketing campaigns, promotional messaging, special offers, new distribution channels and added product features vital in order to understand what may be ‘moving the needle’ in order to address or replicate it.
With each data source, the key is to strategically set a plan in order to identify, collect, analyse and democratise the intelligence in the most effective manner possible. There also has to be ownership of decisions in terms of assessment, response and reaction. From there, it’s a matter of creating a habit of returning to the data to identify and understand shifts and evolutions to design strategies, develop tactics, deliver experiences and drive innovation.
Purchase data is just one of these ‘Magnificent Seven’ datasets that can empower your brand, although it is arguably the most valuable. Stay tuned in this series as we continue the review of these dimensions of data to help guide understanding of the holistic health of a brand.
