Monday, 11 November 2013

Little brother is watching you

Concluding my brief series looking at how multichannel demands changes to the traditional retail organisation, something a little bit more future-facing. “Big Data” is a pretty topical term right now; lots of organisations are working to exploit the trail left by the ROBO customer (Research Online Buy Offline and/or Research Offline Buy Online).


Often these initiatives are dressed up for customers with nice phrases like “we treat every customer as an individual” which of course really means “we’re collecting as much data as we can about you so that we can work out what else we could sell you.” The rise and rise of the smart-phone aka personal tracking system is helping play a big part in that; if you’re on a boring journey one day, try passing the time by going through the apps on your mobile and see what each of them has permission to access – contact lists, call and messaging histories, location data and so forth. And to be fair, making it easier for customers to find things relevant to them (in whatever way – purchase patterns, nearby locations) is probably good for customers too.

Slightly below the radar (or so it seems right now), various governments, especially in Europe, are taking an interest in this. Not in the Edward Snowden NSA snooping way, but in a more constructive citizenship-aiding way. The UK government's Midata initiative is one such. It aims at “giving consumers access to the data created through their … internet transactions and high street loyalty cards.”

 According to the Department for Business, Innovation & Skills website:

midata will allow consumers greater insight into their everyday consumption and lifestyle habits by using applications and intermediaries to analyse their actual behaviours and thereby empower them to make better spending choices and secure the best deals.”

Or so the UK consumer minister says.
Roughly (one of) its ideas is to get companies to subscribe the data they collect about their customers to a personal data store for that customer, and make the data available in ways that are helpful to the customer. So for example a Tesco clubcard holder could find out how much they spend on fresh produce compared to pre-processed food each year, or on branded versus unbranded goods.
The idea extends further in that this data repository should be under the control of the customer, and should allow that individual to consolidate data from different sources, for example bank statements, clubcard data and utility bills in a way that helps give them insight into their own lives. "If I spend less on gas keeping the house warm, do I use up all the savings boiling the kettle and consuming tea-bags, milk and sugar?"
Taking it one step further again, the customer should be able to make part of that data publicly available, at their discretion and under their control.

Why is that helpful and what does this mean for retailers (or for that matter anybody that sells online)? Well the most interesting application for the future is the idea that, instead of customers having to come looking for you, you’ll go looking for customers. As a customer I can, in effect, put my business out for tender, along with whatever consolidated data (from all possible footprint sources that subscribe to the service) I choose to release publicly from my “Midata store” in order to help the potential vendors match my need as closely as possible.

“I’d like to buy insulation, or maybe solar panels, and here are my recent electricity and gas bills plus some outline idea of my general spending-power and preference for quality” is a sample concept.

It’s a potentially alarming (for some!) paradigm shift in retailing. And it’s happening now: Midata is already a legislative reality. It's even got a logo, so it must be serious...
Midata briefing at

Monday, 4 November 2013

Sharing the credit - the enemy within

Continuing my series briefly looking at organisational impacts of multichannel.

In a previous post I took a look at the basic stages of organisational development as a retailer becomes "more multichannel". On of the first aspects of this journey that typically needs attacking - and realigning - is the question of incentives and KPIs. Put more crudely: "whose sale is it anyway?" This is part of a wider topic of avoiding "channel conflict" i.e. ensuring that your channels collaborate and not compete. Incentivising appropriate behaviour throughout your organisation forms an essential part of a channel conflict avoidance strategy.

Firstly, let's take a look at how NOT to do it. Apologies for a screenshot in German, but I think it's pretty clear what's going on:

Ah yes, we have stores. And it's not fair if the website "steals their sales" so let's make sure that we show a more expensive price online than for the stores, and so defeat this invading enemy. Plausible, except that our brand slogan is "I'm not stupid" (because I shop here and it's great value); and now you can see quite how stupid you would be to shop online. And in fact, the site let you change your home store and see that the price was different in Vienna than in Salzburg. As you can imagine, this concept (Media Markt Austria in early 2010) didn't last all that long.

I'm not entirely sure why they needed expensive consultants to tell them this wasn't sensible, and in fact that the answer was fairly simple: whenever a sale gets made online, a store should get the credit. Different clients I've worked with use slightly different rules, but the basics are always the same: online sales are split, usually geographically by delivery postcode, and the benefit from those sales, either directly as increased sales/margin or indirectly in some sort of "commission", is allocated to the nearest store.

This has the benefit of neatly dealing with all those cross-channel stories too. Online sale, return to store? No longer does it make the store look bad, because the store "got" the sale in the first place. (OK, you might have to increase the acceptable KPI for stores because online sale typically generate proportionately more returns, especially in categories like fashion). Similarly collect-in-store is dealt with. Whose sale was it? Obviously the store where the collection took place.

Such approaches do need a little bit of dexterity in back-end accounting. Typically this is done by treating the website sales as "virtual". In other words, any ecommerce team-members that might be targeted on online sales still get credited for their efforts by accumulating the sales which pass through the website, but these sales are not rolled-up into the overall P/L (because the store sales are used for this), they are just tracked for KPI purposes.

Overall, it's another big change from traditional brick-and-mortar only: store managers and store staff need to really care about the website and regard it as their friend not their enemy.