11 of 11 people found the following review helpful:
5.0 out of 5 stars
A must-read for maximising retail profits, January 11, 2004
This review is from: Customer Intelligence (Hardcover)
Everyone who is serious about maximising profit from a retail business should read this book. It is fascinating, even for a non-retailer, to see quite how far the art of analysing retail data has progressed. Hawkins is a master at it - his own supermarket in Syracuse, NY, has been in his family since it opened as a summer farm shop in 1934. It is now a leading edge information-driven independent supermarket, regarded by some experts as one of the best in the world.
Hawkins begins by describing the factors that are driving modern retailing - this first chapter makes the book worth reading in itself. Modern retailing has become heavily product-driven. An enormous amount of time, money and effort has gone into the collection and analysis of product data (aided, not surprisingly, by product manufacturers). Because what can be measured can be managed, most retailers have focused on managing products - moving them as cheaply and efficiently as possible from the factory to the sales shelf and out of the store door. This is certainly an important part of retailing but, when it is being done efficiently by most contenders, there is little potential for differentiation in the market. This had led to a situation in which the customer's shopping experience has become the new retail battleground: good locations, the right product assortment, competitive pricing - these are all part of the price of entry to the market. But if strong branding skills and customer information are added to the picture, we have a winner.
Hawkins asserts that there is no such thing as an "average" customer. They are all different. I don't think that many retailers would argue with that. But he goes on, through this book, to reveal just quite how different customers are and how, if you have sufficient information about them, you can use that fact to your advantage. It is not rocket science; it's largely common sense, discipline and meticulous attention to detail. The book contains many tables to illustrate the points made in the chapters. They are easy to follow and any reader with the necessary data and a spreadsheet could emulate them. A picture is said to worth a thousand words: the use of some of the concepts behind these tables could be worth many thousands of dollars to any intelligent retailer.
One table that I found particularly interesting shows how much a customer's propensity to buy marked-down products affects his or her value as a customer. Using actual figures from a supermarket, and making perfectly reasonable assumptions of company gross profit margin (before markdown is deducted) and the company's cost of operations, the table shows that it is only customers in the top three deciles who actually generate enough profit to cover the cost of providing service to them!
A chapter is devoted customer tier management (Hawkins explains why tiers generally make better segments than do deciles or quintiles), and to the use of customer tier performance reporting and management (along with the more traditional department or product group metrics).
Another chapter deals with customer focused marketing: maximising the performance of the already higher-spending customers while improving the results from marketing expenditures over the whole customer base. The management tools to do this are provided.
According to Hawkins, the hypercompetitive world of today's retail no longer forgives companies that are slack in their operations or unfocused in their field. He goes on to discuss in detail the four primary requirements for success in customer intelligence:
- Top management understanding and commitment
- The redirection of some portion of mass marketing expenditures to fund customer-focused activities
- Gathering enough accurate customer data
- Remembering that it is all about the customer
A chapter is devoted to customer intelligent strategy in action: three comprehensive case studies, each focusing on a company and how it is making use of a customer intelligent strategy.
In the final chapter, Hawkins provides a view of the future: not a science fiction-like view, but a view of how technology that is already available can help retailers maximise returns from all their customers.
Having read Building the Customer Specific Retail Enterprise, Hawkin's first book, several years ago, and having heard him present at various conferences, I expected this one to be good. I am not disappointed.
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