To learn more
During the Winter Las Vegas Market, the International Sleep Products Association will host an information session about the new ISPA Consumer Analytics Program. Mark your calendar for 2 to 3 p.m. on Monday, Jan. 29, in the World Forum on the 16th floor of Building B in the World Market Center. For more details, visit SleepProducts.org and click on Resources.
BY LANCE ELKO
User-friendly data tools help retailers increase their share of consumer spending, improve the efficiency of advertising expenditures, and understand their business and customers.
Know your customer!
It’s an essential ingredient to sales success. The better you understand the people who come through your door—and the prospects living in your trade area—the more your retail operation will profit. All the decisions you make about location, inventory, pricing, promotions, timing of sales events and staffing feed into your bottom line. And the bottom line is, in almost every way, a measure of your success.
To help increase your share of consumer spending, the International Sleep Products Association is introducing the ISPA Consumer Analytics Program. This offering promises to provide actionable analysis and insights unique to each retailer that subscribes.
To develop ICAP, ISPA is working with Michael Knight, president of Customer Analytics LLC, a spinoff of the University of Wisconsin-Madison. Based in Madison, Knight has 25 years of experience in applied economic, demographic and forecasting analytics across industries ranging from health care to retail. The company, which started with a small staff that today has grown to 400 employees, provides complete support for all client and internal operations, from application development to network security. Customer Analytics has extensive experience as a trusted third party in aggregating proprietary information and delivering confidential analysis and support to individual clients.
“The difference between information and analytics is the same difference as between motion and direction.”
This is an adage used by Knight and Customer Analytics. “In this digital age, information abounds,” he says. “Or perhaps more accurately, it inundates us. What separates analytical success from a fishing expedition (using your money for bait) is being able to separate the signal from the noise. Out of a huge matrix of data, we can see exactly the kind of people who come to your store.” He adds that ICAP is “about delivering on the promise of analytics, which is to reduce the risk and uncertainty when you make a decision. Our tools visualize key aspects of your business and lay out a path for retailers to follow.”
The analytics Knight uses are based on an impressive array of data sources that have value for accurately assessing and predicting consumer behavior. He says: “Our analytical techniques use many current surveys and both public and private data sources to identify and interpret changes of all kinds on a national, regional, state, county and city level, and drive that information all the way down to a retailer’s neighborhood.”
Ryan Trainer, president of ISPA, says that “spatial analytics”—knowing who and where your customers are within your trade area—provide critical insights. He points out that ICAP will analyze important details about the population within a retailer’s territory. Using basic demographic information—average age, gender, race, educational level and average income—ICAP shows how your customers, both actual and potential, spend their money on such items as food, housing, vehicles and bedding.
Publicly available demographic data provides an enormous matrix of numbers, but, as Knight notes, that matrix is meaningless without context.
And context is constantly shifting in response to evolving consumer behavior, social change and increasingly sophisticated analytic tools. For the analytics to stay relevant, the matrix also gets updated with new data arriving regularly. Trainer points out that ICAP can show, for example, how a traditionally blue-collar neighborhood with family homes is becoming a young, urban professional scene, where residences are moving toward smaller homes and more apartments and condos. It’s this kind of information that can help you tailor your product mix and messaging to appeal to this new customer profile—in this case, shifting your advertising, promotions and the specific mattresses you display to best address their needs, shopping preferences and income levels.
Another example: Do you want to open a new retail store? ICAP can guide your site selection process. Using a mix of demographics and aggregate market intelligence, ICAP can help you identify cities, towns and neighborhoods that have the right population density and potential customers with the right mix of incomes, household size and type, education, age, and other factors that fit your business model. It can help you decide between alternative store locations based on the potential mattress sales revenue in each area; the number, type and location of existing competitors in those areas; average drive time from the customers’ home to the potential store site; expected demographic trends over the next several years; and more.
Your customers—in detail
A key value of ICAP is analyzing the data that each subscribing retailer provides. All data shared by a retailer is fully confidential and well-protected. (See story below.) Knight’s company will connect with your IT people to collect, “de-identify” (a step that protects the security of your information), process and analyze your retail data. ICAP then generates key metrics that describe your customers’ buying behavior; the prices, brands and methods of payment they use; the geographic trade area your store actually serves; and more.
Those insights are possible at the program’s most basic level. Analyzing complete point-of-sale data can provide a more robust level of analysis. As an example, Knight offers this: In the spring months of April through June, you might find that your average customer is a 35-year-old woman, married with two kids between the ages of 10 and 12, a household income of $70,000, two cars, and living in a three-bedroom home built in 1985. In contrast, the profiles of your average customer during other seasons of the year might be very different. Does your store adjust for these seasonal changes to best serve these different customers?
Knight says that ICAP’s spatial techniques “can assign a latitude and longitude to each of your store locations and every customer at those stores. Analyzing that information can help retailers optimize the sales and profitability of each store location; evaluate how each store is performing within its sales territory, compared with total sales of all mattress retailers in the same area; and develop a range of other location-based solutions.” He adds that ICAP can break down data in countless ways. It can compare your store’s results with national, regional and local aggregates, providing an opportunity to see how your store’s performance measures up against different scales. Knight offers this example: You might learn your store’s motion foundation attachment rate is lower than the national average. Time for a change?
Questions and answers
ICAP offers a sophisticated set of user-friendly data tools that can slice and dice data in a variety of ways. As a subscriber, you will get a link to a proprietary cloud address where you can access interactive dashboards that provide multiple options for drilling down to information that can help inform your business decisions. For example, do you want to compare your Memorial Day sales over the past three years? Or do you want to see what types of customers responded well to a new ad campaign? ICAP’s dashboards can tell you exactly what happened at your location on a specific date or set of dates.
You also can get answers to broader questions such as: Am I getting repeat customers? Is my geographic footprint showing an increase in younger residents moving into smaller residential units? Is the Hispanic population in my neighborhood growing? Are more retirees arriving? What’s being built in my zip code?
Knight calls ICAP’s dashboards “a living thing” because data is refreshed constantly. He points out that both the volume and velocity of new data are increasing at a phenomenal rate, and correspondingly so is the sophistication of ICAP’s analytic tools. “The more data we receive, the more complex the matrix becomes,” Knight says. “It’s much like an ecosystem. In this vast array of data, there are not-so-obvious interrelated factors that we can work with to reveal patterns and predict outcomes in very fine detail.”
As a subscriber, you can add suites of analytic tools, depending on the kinds of information you seek. For example, you can learn what are the hot SKUs, the cold SKUs, how market share has shifted, what price points have moved and what kinds of product mixes are effective. You can discover what type of customer is tending to buy mismatched (mattress and foundation) sets. Who is buying your accessories—pillows, mattress protectors, toppers, comforters? Are you selling them only when you sell a new bed? Or are recent customers coming back to buy accessories? And beyond that, all of the results of your inquiries can be compared with aggregate numbers at the macro and micro levels.
The dashboard data can be a valuable resource when making critical decisions about the best location for your next store, whether your product mix matches the trending demographic in your sales area and which advertising medium (print, broadcast, internet, direct mail, etc.) is most effective with your target customer. Knight says ICAP will “deliver to retailers relevant, actionable information that can improve their sales, profitability and sustainability.”
Participating retailers pay an annual subscription fee. The amount depends on their choice of service level, each one tied to the level of analytic detail desired by the user. The more detailed data a subscriber submits, the more granular the tools and analytics become.
Is ICAP right for you? If you’re looking to grow your business, increase profits and stay relevant with your customer base, consider making ICAP part of your competitive toolkit.
The first step for an ISPA Consumer Analytics Program subscriber is to sign a nondisclosure agreement. Once the subscriber is ready to transmit its data, ICAP will use state-of-the-art firewalls and processes to protect the subscriber’s data from the point at which its information is uploaded, during the data processing stage, when the data are stored and when the subscriber accesses results of the analysis. The International Sleep Products Association and Michael Knight, president of Madison, Wisconsin-based Customer Analytics LLC, respect the confidentiality of your business data. Knight and his team will not disclose your data to ISPA staff, your competition or anyone without your express permission. ICAP developed this approach when providing similar services to the health care industry, which has some of the strictest data-protection requirements in place.
An editorial veteran with more than 30 years of experience, Lance Elko served as the editor for six nationally distributed publications, most recently US Airways Magazine and USAA Magazine. He currently is a freelance writer whose work has appeared in AAA Living, Wells Fargo’s Lifescapes and Conversations publications, Winston-Salem Visitor’s Guide, and Wake Forest University’s School of Business annual. He can be reached at email@example.com.