Why Do Retailers Need Our Data?

I got a lot of mail on the piece I wrote last week about retail data collection. The mail ran two to one in support, but it was still interesting to gauge the reactions of those who think the notion of collecting data like ZIP codes, drivers license numbers and the like is kosher.

Perhaps the best response to those who think all the numerology has a point came from Kevin Hillstrom who has a blog called, “The MineThatData Blog.” In the blog Hillstrom wrote that the piece “correctly illustrates the uselessness of the information” collected. He goes on to note that retailers are at the mercy of a lot of market forces today including what I call the de-massing of the mass market — there is no “mass market” anymore, just a lot of large interest groups that each need to be satisfied differently.

Know When to Say When

My favorite bit of mail came from someone who will remain nameless who supported the status quo with, “how good a job most retailers do of that [capturing customer attitudes] is a fair question. But you shouldn’t say they’re wrong to try.”

I have lots of issues with this idea. It’s one thing to make a valiant effort when you think you are doing the right thing, but once that effort is proven to be ineffective it takes real good denial skills to persevere. Check out what’s happening in Washington these days and you will get my meaning.

On the heels of all this, Stop and Shop, the operator of 385 grocery stores in New England, New York and New Jersey, revealed that its security had been breached and that customer credit and debit card information may have been compromised by tech thieves. Stop and Shop is part of the Dutch company Ahold, which operates about 1,300 supermarkets in different regions of the country operating under various names.

Let me say again in plainer language: Collecting my ZIP code, driver’s license number and credit card number and the like, and not securing it while thinking you will learn something about my shopping preferences is a fool’s errand. The only thing you will learn for sure is how irate I can be at this intrusion into my privacy. Actually, you might also learn how to say “class action,” and it surprises me that people who have been harmed by lax retail data security have not become better organized.

Meaningful Information

On the flip side, one major retailer wanted more detail on what I meant when I said there are better ways to collect more meaningful information about customer attitudes and behaviors, and I am happy to provide my ideas here. They boil down to the customer community of interest or just “community.”

Communities, if run well, are marvelous things. I have studied communities of very rich people and special demographic groups, and each one worked amazingly well to reveal what’s on people’s minds. In the hands of good product and marketing people, those ideas turn into better products, services and messages.

What might surprise a traditional marketer is that the groups I have had exposure to all represented a demographic that was hard to reach by conventional marketing methods.

For example, 18- to 24-year-old men are notoriously hard to pin down; they have more important things on their minds than giving a lot of time or thought to marketers. Yet in a group I studied, the participants couldn’t wait to tell the community leaders about their lives and preferences. The same was true of rich people talking about their investing habits — you could barely shut them up.

The reasons are the same in both groups. People participate because they believe someone is listening and, as corny as it sounds, they believe they are making a difference. Compare that situation to the gum-snapping, surly and overworked clerk behind the customer service desk at your local retailer and you get a stark contrast.

‘Deep Marketing’

What’s interesting about communities is that they can ultimately serve two internal business processes, product development and pure marketing. In other publications and on our Web site, I have begun referring to these processes as “deep marketing,” which simply means what you do long before you engage with the customer to ensure you have the best chance of understanding the customer’s needs and then of consummating a sale.

There are three secrets to building a community — trust, freely revealing ideas and authentic communication — and retail data collection falls flat on its face in all three areas.

It’s in the authentic communication, though, that old-fashioned retail data gathering is best exposed. In most retail situations that I know there is no authentic data gathering — you can’t call capturing a ZIP code or any other information reluctantly handed over at the cash register anything more than data extraction.

If retailers took a community based approach to customer data gathering, the headlines would quite possibly be different when there’s a break-in. Rather than being worried about liability, the retailer would have a true sense of loss knowing that information that it had uniquely gathered might have fallen into the hands of others.

At this point, too many retailers have the same information about you and me so how valuable can it be to anyone looking to do something honest with it?

Denis Pombriant runs the Beagle Research Group, a CRM market research firm and consultancy. Pombriant’s research concentrates on evolving product ideas and emerging companies in the sales, marketing and call center disciplines. His research is freely distributed through a blog and Web site. He is working on a book and can be reached at [email protected].

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