What can retailers do to catch up with the ever changing communications trend and consumer behaviour? SAS, the global business analytics software and services provider, has many successful cases in helping retailers around the world to understand their customers' behaviour. Retail in Asia recently caught up with Lori Schafer, executive advisor for Retail at SAS Institute, to learn about how analytics solutions can help retailers understand consumer behaviour. Schafer also shared advices for retailers who want to see success in different retail channels.

RIA: How does SAS help retailers identify customers who went to their websites and optimise revenue based on their behaviour?

Lori Schafer (LS): Analytics, incorporated throughout a retailer's business, has become essential for retailers to thrive and survive in this new world of communication, globalisation and localisation. SAS specialises in understanding the various segments of retailers (from grocery to apparel to hard goods), their channels of business (brick-and-mortar stores, online, mail catalogues, social media and mobile), and then developing solutions specific to their needs. Today's consumer is shopping through multiple channels and expects personal, local and relevant offers which is a very complex undertaking for retailers, who often have tens-of-thousands of customers to analyse.

When a consumer shops at a retailer's website, SAS uses a combination of click-stream analysis, behaviour tracking, event detection and real-time decision management to automate and optimise offerings presented to a specific consumer, which will improve that consumer's propensity to purchase.

Today, customers expect a retailer to know who they are regardless of which channel through which they shop. Here, it is critical to integrate online customer behaviour data with offline data. SAS uses data-mining, forecasting and other types of analytics to identify a customer's past purchase patterns and forecast future demand, cross-sell and up-sell opportunities, what products he may be interested in the next time he visits a physical, online or mobile store, and the promotional offerings that will be most appealing to drive additional purchases.

Think about companies like Amazon.com, Coles, Gilt Group, Lotte, Macy's, Office Depot, Walmart, Tesco and other international multi-channel and online retailers. While many of their models and processes are proprietary, SAS analytics is being used by all of them to provide highly customised offers on a mass scale, providing customers with a better, more personalised experience.

RIA: How does SAS help retailers increase their conversion rates for new customers?

LS: Consumers who are shopping at a retailer for the very first time are more difficult to understand as there is no past behaviour or purchase history to pull from. However, in the digital world, we have the advantage of being able to track exactly what a customer has done through click-stream analysis, so there are techniques that SAS uses to maximise conversion rates. Behaviour tracking, event detection and real-time analytics can automate and optimise both the offerings presented to a specific consumer as well as the timing of those offerings to maximise conversion. For example, as the customer clicks through the website and looks at various products, real-time cross-sell, up-sell product offerings and incentives can be presented based on other customers who had displayed similar interests. Also, if a consumer is browsing the shoe category and then begins to exit the website without purchase, an incentive can be offered in real-time before the customer exits.

While we are not at liberty to discuss results from specific retailers, one recent example of results from a members-only, large flash-sales site included a 10 to 20 percent lift for customers browsing in new merchandise categories who had not purchased in those categories; a 100 percent lift (for the first three deciles) for women who shopped at the men's site but had not yet purchased, and a 20 percent increase in new member conversion rates (a measure of customers who join but hadn't yet purchased.)

RIA: What are SAS advices for retailers who want to increase their conversion rates among new and old members?

LS: It's no longer enough to push the same products and incentives to all customers. As we discussed, customers are now in charge and expect not only a local but also a personalised experience. Furthermore, customers are now more price-conscious than ever before. Many retailers are still merchandise or product-centric in their decision making as that is the way retail has operated for decades. However, today, a retailer must put the customer at the centre of every decision to identify the channels through which those customers shop and the segmentation and behaviour of customers in local markets, and then target both products and incentives, often in real-time, to specific groups or even to individual customers.

RIA: As a business analytics software and services provider, what does SAS see as the key for retailers to lift their marketing ROI and sales? Do Asian retailers have different key for success than retailers from the rest of the world?

LS: A continued theme of this interview is the fact that communications is rapidly changing and the consumer is now in charge, not the marketer. Pushing marketing messages to consumers is no longer acceptable as the consumers want an on-going dialogue, not a one-way marketing campaign. Mobile and social media are playing a huge role in this behavioural change. As communication becomes more digital, traditional media such as weekly retail circulars in newspapers will continue to decline. The key is to identify the segments of consumers a retailer should target and then, more specifically, what method of communication, and what specific products and incentives to best reach a particular segment of customers. Colyrut, a Belgium based food retailer, used to send out a mailer each week with 400 promotions to millions of customers. Now, through its use of SAS analytics, Colyrut tailors the specific promotions sent to each individual household. Online, email, mobile and social media can now be used as additional communications vehicles to offer tailored promotions based on where the consumer wants to interact.

Asian retailers currently need to be savvier on mobile communication as it has been used longer in other parts of the world. However, all retailers are now faced with the same issue as mobile communication is growing near-exponentially throughout the world. In general, however, Asian retailers are no different in terms of having to identify, understand and act on local consumer needs.

Sejung, a retailer in South Korea, uses SAS to segment customers by brand, store, preferred products and time-to-purchase. The retailer is now able to perform robust customer segmentation, predictive analytics and offer optimisation and do so more accurately and in a fraction of the time, measured now in minutes instead of hours. Coles in Australia implemented SAS to provisioning products and historical reporting and saw a return on investment within six months. They evaluated three solutions before choosing SAS, but found SAS enabled the best segmentation and marketing optimisation. Finally, Shopper Stop in India is employing SAS's reporting and analytics capabilities in the areas of merchandising, loyalty management, distribution and logistics, sales performance, loss prevention, and financial analysis.

RIA: What services and products does SAS provide to help retailers to get this "key"?

LS: SAS has the most comprehensive customer analytics suite of solutions available today. Each software or SaaS (Software as a service) offering is combined with a highly competent professional services team that focuses on understanding the retailer's business needs and implementation of software and key performance metrics to drive more profitable results. SAS Customer Intelligence solutions include:

Customer Interaction: Campaign Management, Email/Mobile Marketing, Marketing Optimisation and Real-Time Decision Management allow a retailer to plan, test and execute personalised, multichannel campaigns to millions of customers regardless of the channels they shop.

Customer Experience: These analytics integrate online customer behaviour data with offline data for improved decision making. Web Analytics allow a retailer to optimise its website's performance and Social Media Analytics allow it to instantly aggregate, analyse and act upon online conversations involving its brand.

Strategy and Planning: Marketing Mix Analysis allows retailers to predict the business value and optimise the mix of various direct marketing and digital investments. Marketing Operations and Marketing Performance Management align activities and resources to overall strategies and goals, tie marketing performance to a retailer's overall financial metrics and plan, manage and execute marketing operations efficiently and effectively.

Data Analytics: Event Triggered Marketing identifies customer communication opportunities with patented behaviour-tracking and event detection. Customer Link Analytics incorporates customer relationship information into profiling segmentation and targeting. Customer Value Analytics helps a retailer to understand and manage profitability of various customer segments or even individual customers where appropriate.

RIA: What other useful analyses, information and data can be generated from SAS's products that may be useful for retailers to improve their businesses?

LA: In addition to the solutions mentioned above for Customer Intelligence, SAS has developed a wide variety of solutions for Merchandise Analytics, Operational Analytics for in-store, logistics and the corporate offices and overall retail performance management. For example, Merchandise Analytics solutions are being used by leading retailers around the world for Merchandise Planning, Assortment and Space Planning and Optimisation, Demand Forecasting, Allocation, Size and Pack optimisation by store and Regular price, Promotional and Markdown price optimisation.

Lori Schafer is an entrepreneur with 26 years of experience in retail and consumer-packaged goods' marketing, merchandising and technology. In addition to her position as executive advisor, Retail for SAS Institute, Schafer advises retailers and suppliers on their analytics and digital strategies in this rapidly changing world (e-commerce, social, mobile and cross-channel). In late 2010, she co-authored a business book Best Seller, Branded! How Retailers Engage Consumers with Social Media and Mobility, which now has worldwide distribution and has been translated into multiple languages. Schafer currently serves on the board of directors of various public and private retailers and technology companies. She is also a faculty member of the International Institute of Analytics (IIA) and Retail Analytics Research Council.

From 2003 to 2008, Schafer served as president of SAS Retail and vice president of SAS. During that time, Schafer was instrumental in developing and building SAS global leadership position in retail analytics. Prior to her tenure at SAS, Schafer served as chairman and chief executive officer of Marketmax, Inc., a merchandise intelligence software company acquired by SAS in 2003. She built and directed Marketmax operations since 1996 and established its brand name reputation among some of the world's most prominent retailers. Prior to moving into software development, Schafer spent time consulting with retailers in the areas of merchandising, marketing, supply chain and information technology. Schafer started her career at Procter & Gamble, including assignments in brand management, sales and management information systems. Schafer attended and received a Bachelor of Science degree from Miami University where she graduated Summa Cum Laude and first in her class.

Taking Stock is Retail in Asia's column dedicated to showcasing opinions and providing advice from experts in the retail industry.