Keeping Up With Ever-Changing Customer Behavior Patterns


By Brian Kelley, CEO, Quantivo
Open today’s newspaper and try to find one story that doesn’t make you think, “I should watch my spending.” Layoffs, bankruptcies, the mortgage crisis – it makes you want to put your paycheck directly under your mattress. That sentiment is shared by nearly all consumers, who put purchases on hold and account for December’s 10% drop in retail sales.

These days, consumer spending habits are a constantly changing whirlwind of cutbacks and delays. But consumers still need clothing, food, and other items. So how are consumers spending? Retailers are seeing less revenue, but the smart ones are minimizing the impact of this weak economy by changing how they target customers. These retailers understand the latest buying trends, which purchases customers are postponing and for how long, and which items they are still buying and at what price.

Most retail marketers and merchandisers get the standard Monday morning reports, which tell them what sold, how much of it (or, these days, how much less of it). But without a focus on the customer behavior aspect, their data simply states what happened instead of giving them a view into what to do next, and more importantly, what their customers will do next.

A new area of business intelligence, customer behavior analytics, focuses on the customer dimension, giving retailers a profile of customers who purchased an item, what brought them into the store, what else they purchased, what they purchased before, and what they are likely to purchase next – all commonly referred to as market basket, loyalty analysis, segmentation, and lifetime value. Since that information is contained in point-of-sale transactions, it is easy to access and analyze.

The difference is that customer behavior analytics are actionable. That powerful insight allows retailers – from big-box home improvement stores to online specialty shops – to better market products, target customer segments, increase loyalty, create store layouts, stock stores, and promote follow-on purchases. Customer behavior analytics helps retailers discover new aspects of customer buying patterns, challenge previously-held marketing and merchandising beliefs, and show quick and impressive returns on investment.

Who knows how tomorrow’s economic news will hit consumers’ pocketbooks. Retailers need every bit of insight, and customer behavior analytics is giving smart retailers the edge that they need to stay competitive in this challenging market.

Brian Kelly has 20 years of experience in enterprise software development and marketing. Before joining Quantivo, he was Executive Vice President of Products at Kana, where he oversaw worldwide marketing, product management and industry solutions delivery. Brian also served as Director of Business Intelligence Applications at Peoplesoft. He was Founder and CEO of Kelly Information Systems (acquired by Peoplesoft), which pioneered business intelligence applications for the retail industry. Brian also designed and developed large-scale data warehouses and BI applications for some of the largest retailers in the US while working at Teradata. Brian holds a BS degree in Computer Science from the University of Cincinnati.

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