Having conquered the loyalty sector, dunnhumby is putting its focus on enabling retailers and brands alike to better personalise their offerings for consumers, as Guillaume Bacuvier, its chief executive, tells ESM.
Marketing, as we know it, is changing.
Big brands’ ability to gain cut through with consumers is being challenged on all sides by a seemingly endless procession of disruptors and new-media channels, while, for retailers, the question of loyalty – at least in the traditional sense – is continuously being re-evaluated.
At dunnhumby – a business that was an early pioneer in the development of loyalty-based analytics back in the 1990s – the rules of the game have also changed. ESM had the chance to sit down with Guillaume Bacuvier, the company’s chief executive, in Singapore recently, to discuss how data-driven personalisation is fast becoming a buzzword, both at the company’s HQ and across the wider retail industry in general.
Centre Stage
“The use of data to better understand customers has been around for many years, but it’s now gone centre stage,” Bacuvier explains. “It’s no longer a ‘nice to have’ – it’s central to how many retailers operate. A few years ago, you wouldn’t have had the likes of Amazon and Alibaba occupying headline speaker slots at the Consumer Goods Forum Summit [the location of our meeting], but that’s common practice now.”
This heightened interest in all things data driven comes down to the need for traditional operators to emulate the capabilities of their online counterparts, particularly when it comes to tailoring their offerings to the specific needs of their customer base.
In the case of Amazon and Alibaba, that personalisation is activated as soon as you sign up to become a member of their sites. In a traditional retail environment, nobody is required to sign up in order to enter a shop.
“There’s been a tipping point. A few years ago, you could have got away with just having great products and awesome stores, and not focused too heavily on personalisation,” says Bacuvier, “but you cannot afford to do that any more.
“Native online players can enjoy a close relationship with their customers from day one, via their CRM platforms. That’s forcing the question, how do you recreate that level of understanding about who you are and what you are interested in, in the physical store environment?”
Tailored To Your Tribe
At the Consumer Goods Forum Summit, Bacuvier teamed up with Apichal Saligupta, VP of customer development at Unilever, for a presentation entitled ‘Mass Marketing or Tailored to Your Tribe?’, which examined the benefits of implementing more personalisation into branded marketing. It encouraged brands to focus on the top 20% of their shoppers, who typically account for 70% to 80% of total brand sales.
dunnhumby’s research also found that 73% of sales growth comes from retained shoppers, developing new ways of engaging with the most loyal customers in order to drive brand growth, as opposed to developing comprehensive mass-marketing campaigns.
Unlike retailers, FMCG firms are often at a remove from the shopper, as one of a myriad of products on a retailer’s shelves. How can they drive better personalisation?
“CPG brands’ ability to build that kind of ‘logged-in’ user base is more difficult, but they understand the benefits,” says Bacuvier.
“Some are opting for ‘direct to consumer’ – not so much due to margin considerations, more to develop a direct relationship with shoppers – but that doesn’t work for a lot of brands. You can’t just build a website that sells potato chips and expect sales to take off,” he adds.
“For many companies, the solution lies in developing partnerships with retailers. Through sharing data and collaboration, both sides have something to gain.”
Facilitating A Tech Mindset
Fostering this collaborative mindset is one of the main focal points of dunnhumby’s work with both retailers and manufacturers, particularly as more of them realise that they cannot develop next-generation technology platforms on their own.
“For many companies, the penny has dropped,” he says. “In order to compete with online retailers, they realise they are not going to be able to build the platforms they need in house, so they are looking to partner – with dunnhumby, or with their peers. For those that work with dunnhumby, it’s often the case that there is a plan from day one for them to upskill their teams over a set period of time, to meet the changing needs of the marketplace.”
Collaboration is not necessarily something that comes naturally to those in the retail and FMCG sectors, over fear of leaking trade secrets, but here, too, Bacuvier believes that the emergence of rivals such as Amazon means that this approach is changing.
“You can compete with your rivals on some areas, while agreeing to collaborate on others,” he suggests. “When it comes to data and personalisation, I would argue that retailers have a genuine interest in collaborating among themselves, in order to ensure they can retain a deep understanding of their customer.”
Similarly, in markets in Eastern Europe, or Asia, the biggest retail player might only have 8% or 9% of the total marketplace, meaning that “their ability to collate enough data to compete with online-only retailers is severely diminished,” says Bacuvier. “Elsewhere, in the case of mom-and-pop stores, how can we give them the tools to enable them to improve their understanding of customers and increase personalisation?
“It’s something that will come increasingly into focus over the next ten years, and we intend to play a part in it.”
© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.
