How IKEA uses Analytics to Shape the Customer Journey
On April 21st, Mary Lunghi, Market Intelligence Director of furniture retail giant IKEA, will speak to AMA Tampa Bay members about how data influences the customer experience. Anyone who has visited IKEA knows it is far from the typical furniture retailer. The reason has much to do with data, and Lunghi sits at the helm of IKEA’s data collection and analysis.
IKEA uses demographic and quantitative data, like most other companies, but one characteristic that sets IKEA apart from competitors is consistent use of both qualitative and psychographic data. According to Lunghi, qualitative and psychographic data allow IKEA to understand customers in greater depth and to design a customer experience superior to that of IKEA’s competitors.
Qualitative Data: Ethnographies & Focus Groups Shape the In-Store Experience
The Full Furniture Experience
Qualitative data largely influences IKEA’s showroom design. Unlike most furniture showrooms, IKEA showrooms contain fully furnished walk-in rooms and walk-through apartments, which display room dimensions on their walls. While this setup was always a part of IKEA’s showroom design, qualitative data allows IKEA to ensure that the rooms and apartments reflect how customers actually live.
The setup described above allows customers to experience (rather than just imagine) how furniture and accessories would look in their homes. This, in turn, allows customers to feel confident that the products they select will meet their needs.
Redefining the Furniture Shopping Experience
Qualitative data guides IKEA in creating an in-store experience that eliminates many inconveniences of furniture shopping. According to qualitative data, when customers make one change to a room, other changes must follow, and this creates a domino effect.
For instance, when a customer purchases new sofas, he/she often must make changes elsewhere in the room to ensure that the rest of the room matches the sofa. This could mean purchasing pillows, textiles, lamps, coffee tables, rugs, etc. IKEA offers all of these items in one store, which saves the customer time that would otherwise be spent driving from store to store to find matching items.
Additionally, qualitative data shows that customers can become hungry after hours of shopping…which can, in turn, lead them to leave the store to eat and return thereafter. To eliminate this inconvenience, IKEA offers a high quality low priced restaurant inside the store.
Lastly, qualitative data shows that consumers often shop with children in tow, which can over-complicate the furniture shopping experience. IKEA, unlike other furniture stores, offers a supervised play area, where parents can leave children while they shop.
Considering the difference between IKEA and other furniture retailers, it’s clear that the company’s deeper-than-usual understanding of the customer leads to a highly unusual and much-loved customer experience!
Psychographic Data & Shaping the Customer Experience
Customized Communications
Psychographic data enables IKEA to customize the customer experience outside of the store, namely by guiding the design of the brand’s communications. Psychographic data reveals insights that demographic data does not, and therefore, allows for a higher level of customization (when used in conjunction with demographic data).
Often, customer groups with the same demographic characteristics vary widely in terms of values. This is where psychographic data is important. In one example, psychographic data revealed that customers in Pittsburgh responded much more positively to ads emphasizing IKEA’s low prices than to ads emphasizing other characteristics.
IKEA used this information to design ultra-customized, highly price-focused communications for Pittsburg customers. Had IKEA relied on demographic data alone, the company would have been ignorant to the level of price sensitivity in Pittsburg because demographic data did not capture it.
Covering all Data Types Isn’t Enough
IKEA demonstrates how collecting the proper types of data can shape a positive customer experience. However, Mary Lunghi stressed that collecting the right data can only influence the customer experience if the data is handled properly.
It’s imperative to collect and analyze data for the purpose of answering specific pre-determined questions and developing actionable insights. Only actionable insights can influence the customer experience. Marketers must also clearly demonstrate to their leadership what the data means and how it supports their proposed actions. After all, data can only influence the customer experience if key decision makers support the actionable insights derived from it.
On April 21st at AMA Tampa Bay’s monthly luncheon, Mary Lunghi will further reveal how IKEA uses both qualitative studies and psychographic insights to shape the customer experience.
About the Author: Chiara Tedone
Chiara is a Digital Content Creator for AMA Tampa Bay. She is Co-founder and Director of Winning the Fight, a non-profit organization specializing in neurodegenerative disease research. Chiara is also a freelance digital marketer for small businesses and is finishing up her MBA with a specialty in marketing from the University of South Florida. Prior to moving to Florida, Chiara lived in Washington, DC. She earned her BA in International Studies from American University’s School of International Services in 2007 and worked for Booz Allen Hamilton and the Department of Defense thereafter. Her hobbies include obstacle racing, running, swimming, kayaking, SCUBA diving, and opera/classical singing. She also loves country music and chocolate!
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