Retail, CPG and Logistics

The Strategic Advantages of Leveraging Consumer Behavioural Data for Business Growth and Enhanced CX

Markets today are hyper-competitive to say the least, and businesses are constantly looking for new and innovative ways to differentiate themselves and deliver value to their customers. Leveraging consumer behavioural data has been found to be one of the most effective ways to achieve this. By understanding how customers interact with products, services and brands, businesses can make informed decisions that drive growth and boost customer experiences (CX).

The numbers speak for themselves. Industry reports indicate that by 2030, almost 80 per cent of shoppers will expect personalised experiences, while about 67 per cent think multiple brands should make collaborative offers to attract consumers.

Understanding consumer behavioural data

Consumer behavioural data refers to all the information gathered from customer interactions, preferences and buying patterns. This data can be collected through various channels such as websites, mobile apps, social media, in-store interactions and customer feedback surveys. It includes metrics like browsing history, purchase frequency, product preferences and even time spent on specific web pages.

The importance of behavioural data lies in its ability to provide actionable insights. By analysing these patterns, businesses can predict future behaviours, identify trends and tailor their offerings to meet customer needs. Industry research shows that businesses that utilise customer behavioural data and insights are known to outperform their competition by 85 per cent in the growth of their sales and over 25 per cent in gross margin.

Strategic advantages of leveraging consumer behavioural data

1. Personalised customer experiences

One of the most significant benefits of consumer behavioural data is its ability to allow personalisation. Customers today expect tailored experiences that cater to their unique preferences, and they are willing to share certain personal data to enjoy those perks. Behavioural data allows businesses to:

1. Recommend products or services based on past purchases
2. Send personalised marketing messages
3. Offer customised pricing or discounts

For example, e-commerce giants like Amazon dip into behavioural data to suggest products that align with a customer’s browsing and purchase history. This not only enhances CX, but also increases the likelihood of repeat purchases.

2. Improved payment options and credit processing

By understanding and analysing customer behavioural patterns, businesses can have enough information about preferred payment options and credit risks. This information allows businesses to:

1. Offer customers cost-appropriate credit recommendations
2. Offer instalment loans
3. Offer customers instant checkout options to speed up the shopping experience

Having enough information about a customer’s creditworthiness also allows businesses to be aware of a customer’s fraud and credit risks and optimise their lending decisions.

3. Improved customer retention

Understanding customer behaviour helps businesses identify pain points and areas for improvement. By addressing these issues proactively, companies can enhance customer satisfaction and loyalty. Behavioural data can reveal:

1. Why customers abandon their carts
2. Which touchpoints cause frustration
3. How customers like to engage with the brand

For example, if certain data shows that customers frequently abandon carts during the checkout process, businesses can try to reduce the trouble points and streamline the process. Such a step ensures that customers remain loyal and engaged.

4. Enhanced product development

Behavioural data provides valuable insights into customer preferences and needs, and that enables businesses to modify their product development process. By analysing this data, businesses can:

1. Identify gaps in their product offerings
2. Develop features that align with customer expectations
3. Discontinue products that no longer resonate with the audience

Tech companies such as Apple leverage behavioural data to refine their products. For example, feedback on user interactions with iPhones and MacBooks greatly influences updates and development of new features, thereby ensuring the products remain relevant and user-friendly.

5. Optimised marketing strategies

Behavioural data enables businesses to build highly targeted marketing campaigns. Instead of adopting a one-size-fits-all approach, companies can segment their audience based on behaviour and preferences. This leads to:

1. Higher conversion rates
2. Reduced marketing spend
3. Better engagement with target audiences

For example, Netflix uses behavioural data to recommend shows and movies tailored to individual viewing habits. This personalised approach keeps users engaged and makes them spend more time on the platform.

6. Proactive decision-making

Real-time behavioural data allows businesses to anticipate customer needs and take proactive action. This agility is crucial today. By leveraging predictive analytics, companies can:

1. Forecast demand for specific products
2. Prepare for seasonal trends
3. Adjust inventory levels accordingly

Certain leading retailers use behavioural data to predict shopping trends during holidays and events. This enables them to stock popular items in advance, reducing the risk of stockouts or overstocking.

7. Competitive advantage

Businesses that effectively utilise consumer behavioural data gain a significant edge over competitors. By understanding customer needs better than the competition, companies can:

1. Deliver superior experiences
2. Innovate faster
3. Build stronger brand loyalty

For instance, certain consumer brands use their mobile apps to gather behavioural data and offer personalised rewards and promotions, helping to position such brands as leaders in customer-centric innovation.

Best practices for leveraging consumer behavioral data

In order to maximise the benefits of consumer behavioural data, businesses should adopt certain best practices to ensure ethical and effective use of data.

1. Ensure data privacy and security

As concerns about data privacy are on the rise, businesses must handle consumer data responsibly. This includes:

• Compliance with regulations like GDPR and CCPA
• Transparency about data collection practices
• Robust cybersecurity measures
2. Invest in advanced analytics tools

Analysing behavioural data requires sophisticated tools and technologies. Businesses should invest in:

• Machine Learning (ML) algorithms for predictive analytics
• Customer data platforms (CDPs) for unified data management
• Visualisation tools for actionable insights
3. Focus on data quality

Accurate and reliable data is the foundation of effective decision-making. Companies must:

• Regularly clean and update their datasets
• Avoid relying on incomplete or biased data
• Use multiple data sources for a comprehensive view
4. Train teams to leverage data effectively

Perhaps one of the most important steps is to ensure that employees understand how to interpret and apply behavioural data. This involves:

• Providing training on data analytics tools
• Encouraging cross-functional collaboration
• Creating a data-driven culture within the organisation.

Common challenges

Leveraging consumer behavioural data to enhance CX is not without a few challenges. Addressing these challenges requires a strategic approach and a commitment to continuous improvement.

Some of the challenges that businesses must navigate include:

• Data privacy concerns: Balancing personalisation with privacy is a delicate task. While customers are aware that businesses have a lot of information about them, they expect the businesses to ensure that data is protected.
• Integration issues: Consolidating data from multiple sources can be complex.
• Analysis paralysis: Overwhelming amounts of data can hinder decision-making if not managed effectively.

Consumer behavioural data is a powerful asset that can drive business growth and enhance customer experiences. In fact, leveraging behavioural data has now become a necessity. To unlock its full potential, companies must prioritise data privacy, invest in advanced analytics tools and foster a data-driven culture. Businesses that embrace this approach will not only thrive but also build lasting relationships with their customers, ensuring loyalty and success.

How can Infosys BPM help?

One of the largest expenditures for CPG businesses is trade promotion. Not surprisingly, trade promotions management (TPM) is a critical part of an organisation’s business strategy. IBPM’s TPM services deliver digitally enabled practices, frameworks and solutions that can transform services. Our services include analytics advisory and data consulting, business process consulting and advisory services, and managed trade promotion services, among others.