The Potential of ID-POS Utilization: The Key to Understanding Customer Shopping Behavior (Part 2)

• The Potential of ID-POS: The Key to Grasping Customer Shopping Behavior (Part 1)

ID-POS enables the identification of challenges by capturing and analyzing the reality of customer shopping behavior. This data is extremely important for those involved in the retail industry, as it allows for the consideration of various initiatives. However, it is said that if the analysis method is incorrect, it may not be utilized effectively.

This time, we interviewed three experts: Mr. Atsushi Konuma of DENTSU PROMOTION PLUS INC. (formerly Dentsu Tech Inc.), an ID-POS analysis specialist with extensive consulting experience in retail and distribution and promotion support for manufacturers; Mr. Hideki Sugimoto of Dentsu Retail Marketing Inc.; and Mr. Shingo Asano. In Part 2, we discussed the precautions for ID-POS analysis and its potential applications.

Failing to analyze data holistically risks missing the true issues

Q. Are there any common pitfalls to avoid when conducting data analysis?

Sugimoto: I believe the most crucial point to watch out for is "viewing the whole picture." For example, when analyzing why a certain brand's sales are declining, we tend to dig deep into trends like changes in the customer base to pinpoint the cause or key issues. However, if you step back and look at the store's overall sales, you might find it's simply because the total number of customers has decreased.When you delve into brand-related matters—like whether a commercial aired, its quality, or competitor actions—various hypotheses emerge. But the fundamental issue of fewer customers visiting the store exists before these factors come into play. In other words, the key is not to jump straight to examining specific "points," but to break things down progressively from the top, like an inverted triangle.

Another common pitfall is analyzing data without a clear purpose, just to say, "We ran the numbers." You get results, but then it's like, "So, what should we actually do?" You end up staring at the analysis, feeling vaguely frustrated, satisfied with the effort of analyzing, and that's it. Unless you approach analysis with the intent to make a decision, the results won't lead anywhere.We've often been asked by client companies during our reports, "So, what should we do about that?"

Integrating various data sources strengthens personalized approaches.

Q. ID-POS data captures in-store purchases. Can we integrate and analyze online purchase data alongside it?

Sugimoto: Integrating offline and online data has become increasingly common in recent years. It's straightforward if there's a common key across the data sets. Integration reveals customers' patterns of using online versus offline channels. Adding location data and app information beyond just purchase data allows us to observe customer behavior in greater detail. However, when there's no common key between online and offline data, we sometimes have to integrate the data based on certain assumptions.

Asano: There are two main approaches to data integration: "definite" and "estimated." The "definite" approach uses a key, like an email address. If the email addresses match, we can say it's the same ID. When there's no such common key data, we attempt integration using the "estimated" approach.Developing the logic for determining "same person" in the estimation type can be quite challenging. To improve accuracy, we must refine the underlying data, which inevitably requires significant effort.

Q. How are the analysis results actually utilized, and how do they inform subsequent actions?

Sugimoto: The areas where analysis results are applied are diverse. Examples include "underperforming store countermeasures," "product development," "targeting," "competitor research," and "price revisions."Ultimately, they feed into management decision-making. For instance, in retail, we first provide management with a preliminary analysis visualizing the current state. This analysis uses four axes: "entire chain," "store-based," "product-based," and "customer-based," to inform subsequent actions.

For one restaurant company, we conducted an effectiveness verification of "seasonal products." We examined limited-time items launched at several stores to determine if their pricing and presentation were effective, providing insights for planning future renovations.

Analyzing the sales rankings of these limited-time items, along with customer purchase rates, repeat rates, and average spend per customer, revealed that customers were willing to pay a premium for them. This meant there was no need to discount them. Furthermore, purchasers spanned a wide range of ages and genders. This indicated that a presentation targeting all genders and ages was effective, rather than focusing solely on "women" or "young people." Additionally, it was found that a high proportion of purchasers were loyal customers.Furthermore, many customers purchased it alongside drinks or other staple items.

These analyses revealed several possibilities: expanding extensions likely to please loyal customers, offering more value-packed sets with drinks and staple items, or increasing toppings while raising prices accordingly. Implementing the renewal based on these insights resulted in achieving four times the planned sales.

Q. Finally, could you share your outlook for future ID-POS utilization?

Sugimoto: ID-POS data represents actual purchase history and is extremely valuable real-time data. The trend of integrating this data with other sources will only accelerate. Thinking in terms of IDs fundamentally means considering the individual, which will likely transform marketing strategies. Rather than targeting broad demographics with ads, we'll see more personalized approaches focused on stimulating existing customers.

Konuma: Moving forward, alongside connecting data with data, we'll also see progress in connecting data with devices and tools. Linking data to smartphones enables approaches like "targeting people who bought this product." Or, connecting not just to smartphones but also to digital signage allows for real-world approaches. From our perspective, we'll implement and combine various strategies within the viewpoint of "maximizing the overall effectiveness of promotions."This ID-POS analysis is a crucial factor within that framework. Customers follow diverse journeys to purchase products and maintain their buying habits. We possess extensive experience and strengths in capturing these journeys and responding effectively at key points. Within this, we aim to be a group that can maximize promotional effectiveness by deploying various tactics—utilizing SNS, LINE, and other methods—to continuously connect with customers across the entire funnel. We want to be of service to you all.

As data utilization advances further—such as integrating ID-POS data from physical stores with online purchase data—the possibilities for approach methods will diversify significantly. However, the most crucial element remains the mindset of "seeing each customer as an individual."The expansion of ID-POS utilization will likely lead to a greater focus on the individual customer. The key to a company's growth always lies within its customers. Why not start by accurately grasping the profile and needs of your own customers, and then re-evaluate your company's approach and behavior?

*Dentsu Tech Inc. changed its name to DENTSU PROMOTION PLUS INC. in April 2022.

※Affiliations and positions are as of the time of publication.