Retailers Should Focus on Data Analytics that Illuminate What Customers Want

BOSTON, MA (April 24, 2019) – Digital technologies and social media have produced a flood of information about consumers. But vast amounts of data aren’t useful if retailers don’t know what they’re looking for. Savvy retailers focus their data and analytics on customer needs and look for ways to connect with and learn about their consumers.

Those are among the central conclusions of Digital Strategy: Activating Against Customer Needs, a new report by L.E.K. Consulting. According to Chris Randall, a Managing Director at L.E.K. and coauthor of the report, the problem isn’t too much information – it’s not being focused about how to use it.

“Information is only valuable if it helps leaders address critical business challenges and better understand what drives results,” Randall says. “For retailers, the best use of data is to better understand customers’ needs and purchase paths to then drive to better engagement and conversion.”

Retailers have always looked to data for consumer insight. “Brick-and-mortar retailers drew data from their stores – sales information, how competitors performed, how well promotions worked and what customers told them in surveys,” says report coauthor and L.E.K. Managing Director Rob Haslehurst. “But, with such a quantity of rich data available from online retail, third parties and longitudinal customer behavior, the challenge today is how to identify the meaningful insights and make better decisions – not just once but on an ongoing basis, taking advantage of all available tools including AI.”

The best use of data is to uncover and solve customer problems, says Noor Abdel-Samed, an L.E.K. Managing Director and coauthor of the report. “A pragmatic way to tackle the problem is to focus on four critical consumer needs,” he explains. “Excelling at any one of them can be enough to generate improved results.”

According to the report, innovative retailers use their data to focus on customer pain points and aim to:

  • Increase transparency, helping consumers understand what they need, why their product meets the need, and what it should cost. Online mattress-in-a-box seller Casper and used-car retailer CarMax have used their data to determine optimal pricing, bringing price transparency to notoriously opaque markets.
  • Reduce stress. Laurel & Wolf helps online consumers choose among many different independent interior designers. Warby Parker offers a free, try-at-home program for prescription eyeglasses and sunglasses. Both companies harness data to determine their merchandise selections and length of trials.
  • Narrow a bewildering array of choices by curating the experience. Netflix has built its brand by presenting a data-driven selection of content to each user based on past viewing history, genre interests, ratings and other data. AirBnB uses a quiz to engage with consumers – and crunches the answers to help formulate user-specific travel recommendations.
  • Make the purchase easy by using data to identify the right mix of shipping and payment options. Amazon offers multiple shipping options, accepts most payment types, and offers fast, free returns, all of which help move customers toward commitment. Shopify is one retailer that streamlines purchasing by storing transaction data and letting consumers use it for future purchases – they saw their conversion rate increase by 18 percent after they adopted the program.

Focusing data on consumer needs is just one example of how to build an effective digital transformation. In another report, Digital Transformation: Road Map to a Digital First Organization, Randall and Abdel-Samed recommend a similar kind of focus and discipline for all businesses, not just retailers. They advise companies not to plunge into digital but instead establish a vision based on customer, brand or financial objectives; assess their digital capabilities (not just analytics but also content and channels) and identify gaps; and start with specific, focused initiatives. “By taking these steps, you establish a roadmap for transforming the essential elements of your business – people, process, technology and content – so that the company can deliver against its goals and generate value,” Abdel-Samed says.

For retailers, the real opportunity is to use their analytics to sharpen their competitive differentiation and strengthen their relationships. “By understanding consumer needs, they can create real engagement, and create memorable experiences exactly when consumers are most likely to act,” Randall says.

About L.E.K. Consulting
L.E.K. Consulting is a global management consulting firm that uses deep industry expertise and rigorous analysis to help business leaders achieve practical results with real impact. We are uncompromising in our approach to helping clients consistently make better decisions, deliver improved business performance and create greater shareholder returns. The firm advises and supports global companies that are leaders in their industries — including the largest private and public-sector organizations, private equity firms, and emerging entrepreneurial businesses. Founded in 1983, L.E.K. employs more than 1,400 professionals across the Americas, Asia-Pacific and Europe. For more information, go to