The UK-based Co-operative Group has begun placing its customers at the heart of its strategy and decision making, and overcame the challenges of creating a truly 'joined up' customer strategy by working with Emnos to set up a central 'insight team' to drive a group approach to customer insights company-wide. This article is copyright 2014 The Best Customer Guide.

Emnos set about analysing the Co-op's data from 14 million customers (including 8 million Dividend loyalty programme members), and used it to develop a Single Customer View. Using data from the Co-operative loyalty card, customer details from group businesses, and transaction data from thousands of retail outlets, the insight team built a one-off data set which held and connected customer and transactional data to gain new customer insights (such as a genuine incremental value from customers of more than one business).

To explore if customer data could support decision making, a generic set of processes was created for key customer experience factors (communications, store selection, pricing, ranging). With expert input from the different businesses, the team discovered that each process could apply to each business - whether it be insurance, food or pharmacies.

In establishing the value of these insights, some food pricing decisions were revisited, revealing that with customer data, investments could have been better optimised. A cross section of customers were also contacted several times over several weeks and post campaign tracking showed a 3% increase in sales driven by improved retention.

"These answers gave us the confidence to progress," explained Ian Ayling, Customer Change Director for the Co-operative Group. "Having decided on an externally built solution and following an extensive selection process, we chose continued working with Emnos for the rollout and to help build the operational Single View of our customers."

Together with BI systems partner, IM Group, Emnos started building the first fully operational, integrated database of Co-operative Group customers. Working with each individual Co-operative business ensured the different datasets could be merged and security requirements for data and personal information were met.

As well as helping the Co-operative understand its customers and the opportunities at Group level, Emnos is involved in an on-going project using membership data to help drive sales growth in the company's food business. With unmatched ability and expertise in distilling customer data, Emnos provided the information and insights needed to transform the Co-operative food business and turn it into a more relevant shopping experience.

To help the team focus on relevant category ranges, two segmentations based on Value and Needs were built and the latter identified six different shopping behaviours ranging from thrifty traditional to premium customers. Relevant category ranges could then be developed accordingly - for example, 'Shop for Today' to appeal to conventional daily cooks looking for an evening meal; or 'Eat on the Go' with strong offers for the snackers and grazers. Matching these segments to a household panel also supported category strategy by understanding the competitors customers go to for different categories.

As the Co-operative continues moving toward convenience focused retailing, Emnos has also been helping to define a new process for optimising the product range and reducing ranges whilst at the same time improving choice. It is designed to use customer data in a series of steps supporting smarter decisions and starts with a breakdown of what is driving sales - more customers, bigger baskets or more frequent shops?

A product clustering technique helped clarify different shopper needs within each category and therefore the breadth of range required in smaller stores. In a simple example, the Co-operative trading team were not convinced three types of honey were needed (squeezy, premium, standard) but the category tree clearly indicated sales could be lost unless all three were available in all stores. Delisted lines are therefore selected on the basis of sales, customer loyalty and penetration and whether most of the shoppers who buy them will buy another Stock Keeping Unit (SKU). This helps minimise sales loss in the category and avoid harming overall customer loyalty.

For the Co-operative, product ranking determines distribution and, historically, this was based on sales and margin - which potentially restricts customer choice and risks some customers leaving because the product they love is not stocked. With the Needs Units, customer segments and product clustering, the Co-operative now has the information to ensure a better mix of products across the estate.

In less than twelve months, the first operational view of customers across the Co-operative Group was created. This went live in November 2013 and, working centrally, the insight team can now access data which would have been very difficult to collate on an ad-hoc basis and is therefore much better equipped to deliver the information the business requires. The entire communications process has been reworked to make customers - not products - the starting point for campaigns. Customer value is now also tracked along with campaign results.

"The appetite for insight has grown significantly across the Group and the data generated is being used to create strategy at both group and individual business level," concluded Ayling. "We are using new solutions, such as Operational Scorecards, to satisfy the demand for insight and truly put our customers at the heart of our decision-making."

In the group's food business, Emnos helped the Co-operative reduce its overall SKU count from 12,000 to 10,000 lines whilst still achieving a 1% 'Like for like' (LFL) sales increase over the Christmas 2013 period. Some categories which had significant SKU changes saw strong sales growth, such as Cereals which grew LFL sales by 6% following a 25% change to the range. The business continued to grow LFL sales in 2014 and the focus is now on driving the new formats.

And for the future? The next step is to continue driving insights from the Single Customer View, which includes deep transactional data from the food business, across the entire Group of companies. Integrating campaign, digital and Wi-Fi datasets into the Single Customer View will help enrich it even further. For the food business, a key differentiator will be the ability to deliver daily offers to motivate customers to 'Shop For Today' or 'Eat on the Go' at the Co-op - a direction which the company feels all successful convenience retailers will need to follow in the future.