Over the next several years, retailers will continue to invest in technology, Art Sebastian, founder and CEO of NexChapter, a convenience-store advisory firm, said at CSP’s Convenience Retailing University in Nashville, Tennessee, last week.
“Operators are committed to investing in technology, but we’re quite puzzled with where to invest,” he said.
Some options include tech supporting both the customer and employee experience (replacing clipboards, paper and pens with applications for employees to be more efficient), merchandising systems, self-checkout, accounting, back-end, inventory, space management and core information technology (infrastructure, cyber security, integration layers).
While there’s a lot to consider when deciding what to invest in—such as who to partner with, how to integrate it into legacy technology and how to train the team—the biggest speculation is what kind of return it will generate.
Sebastian, formerly with Ankeny, Iowa-based Gasey's General Stores Inc., provided examples of how technology can bring in revenue with customer data platforms (CDPs).
CDPs are technology storage that houses data from customer interactions and unifies everything to a customer record. With that data, retailers can build data models to segment the customer in multiple ways, across loyalty but also beyond it.
“I believe that data is a tremendous asset for any retailer. Your customer data is your No. 1 asset as a retailer,” Sebastian said.
“The technology does the job; it pays for itself.”
Example 1: Getting the fuel customer inside
A customer—we’ll call him Jerry—is filling up his car with gas and enters his loyalty number at the pump. The system has now authenticated who that customer is. That data flows to the CDP in real time. The CDP recognizes that Jerry likes Zoa Energy and interrogates the existing digital offers in the offer bank. Then, Jerry gets an text as he’s filling up at the pump. At the same time, the fuel pump runs a Zoa advertisement.
“That is extremely valuable time where we know we have the customer’s attention for 90 seconds,” Sebastian said.
After being influenced by the personalized promotions, Jerry goes inside, grabs a Zoa out of the cold vault, turns around and finds a shelf full of salty snacks. He grabs a bag of private label chips, and as he’s making his way to the register, an employee is sampling mac and cheese balls. After trying the sample, Jerry looks at the hot case because he realizes it’s lunch time and he’s hungry.
Jerry just walked out of the store with a beverage, bag of chips and a foodservice item on top of the tank of gas he intended to purchase.
That delivered an incremental (approximate) $10 of revenue and $4 in gross profit because the technology enabled that marketing, Sebastian said.
If this only happens twice a day, a small chain of 50 stores could make around an additional $160,000 a year, based on some simple math that Sebastian proposed.
An 800-store chain could “pay for the technology with one automated campaign. The technology does the job; it pays for itself.”
Example 2: Daypart Details
A CDP can segment customers better than a regular loyalty program in many ways, and another example is through dayparts.
A CDP can tell retailers which customers shop the morning daypart. Of those customers, a CDP can distinguish who buys the new bean-to-cup coffee that the store just launched. Finally, the system can pick out which of the coffee-buyers have never bought a breakfast sandwich. That very particular group of people is offered half-off a breakfast sandwich with the purchase of coffee.
“We already know they’re going to buy the coffee…so we’re going to upsell them something that makes a whole lot of sense,” Sebastian said.
This kind of offer can be run in any category.
“In my experience, campaigns like this typically came in at around 33% redemption rate,” he said. “You’re driving incremental revenue that essentially offsets the technology cost.”
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