By Jack Lovely, Business Analyst Intern at Enhanced Retail Solutions LLC
Who does your business serve? Customers. How can they better serve customers? Data. Specifically, demographic data. Companies that are aware of who their customers are can better tailor goods and services to satisfy customers’ needs. By identifying a target demographic, businesses can customize products and advertisements to appeal to that market. By pairing POS data with demographic data, suppliers can measure how effectively their strategies are working. Following trends observed in other geographic or demographic groups can reduce the risk to companies making capital investments. Additionally, there is a lot of value to be gained by digging into the numbers and searching for patterns between sales and consumers.
Power in Numbers
From the perspective of national or multi-national companies, customers can just be jumbles of numbers on a screen. However, these numbers can help smart companies to learn about their consumer-base. Collected information can be averaged and used to create a template for who is purchasing a product by age, income, education, and other factors of identity. This helps companies track any potential correlations between products and groups of consumers. Identifying trends can showcase opportunities for increased sales or impactful advertising. Trends also help companies to develop effective strategies for long term success.
Privacy in Data
One of the largest controversies with using consumer data to perform analytics and modeling is privacy. Personal information is often collected from consumers without their full and knowledgeable consent. Fortunately, there are large data sets untainted by any moral concerns. The U.S. Census provides public knowledge on several key characteristics used to identify and group consumers. When paired with smart programs and algorithms these clusters of numbers can help businesses understand their market. From regional trends to zip codes, companies have access to anonymous data that can provide valuable insights. This Census data allows Enhanced Retail Solutions to provide clients with ethically sourced analytics on US demographics.
The Census data also helps create more accurate predictive models. By analyzing the target consumer, these models can predict where products will have the best sales. Similarly, predicting how much inventory should be ordered in certain geographic areas can reduce the risk of dead or insufficient inventory. For example, if a certain product performs the best in communities where the median annual income is $120,000 and 15% or more of that population has a bachelor’s degree, then finding similar demographic patterns could lead to higher performance of the product overall. The ability to directly target a market with demographics has become a revolutionary aspect of modern technology in the retail business.
Technology and Data
Smartphones have become an essential part of modern society; almost every consumer has one. These devices are more than just tools to be used by their owners to access the internet and communicate. They are methods of data collection for big tech companies. The most glaring example of this is cookies. When browsing the internet, cookies become tagged to users by websites they visit frequently. These cookies can be read and used to imply what a consumer might want. Websites will begin to service ads for products that fit a user’s theorized needs. Some consumers appreciate the tailored experience, but others are concerned about their personal rights to privacy.
Demographic data is a powerful way to obtain a better understanding of the market and develop strategies for expanding a business’ consumer base. By scanning large data sets with smart programs and filters, companies can discover patterns of consumer behavior. These patterns generate more accurate modeling on expected sales, direct targeting for advertisements, and the development of effective strategies. Demographic data provides companies with a competitive advantage by helping them understand who their consumers are, and how to best cater to their needs- without direct privacy concerns.
To learn more about how Enhanced Retail Solutions can help integrate your POS with Census data, contact us.