Full Text of Edwina Dunn’s talk: How Big Data Changed Retailing- Curiosity & Collaboration at TEDx London Business School conference.
Edwina Dunn talks about how big data transformed businesses, Future of Big data, market research in the digital age, how to extract value and truly understand your customers.
Notable quote from this talk:
“Even though Tesco Clubcard was probably the most defining moment in my career, I’m still excited about what data allows us to tell the stories, and the business transformation it will allow us to deliver. I’m still excited about that. I still think there are things that are going to be important. And that’s my mission in the future.”
Edwina Dunn- Founder and Chief Executive of dunnhumby
I want to talk about one of the most defining moments of Big data and how Big data transformed businesses.
By collaborating with partnering with some of the biggest retailers in the world, we were able to add millions of pounds; millions of dollars to their bottom line, and that made a difference.
It was exciting. It was my personal journey. It’s been a 30 year journey. And what I want to share with you is how that happened, how we did it, and what’s next.
So where did it start? In 1989, Clive Humby and I, started a company called Dunnhumby. What was amazing where businesses around the world use this company, a British startup, to help fuel their business. So it was a really exciting time.
It started in 1989. The moment that changed everything, although we didn’t know it then was when Tesco came to us in 1994 and basically said- “We have data. We have so much of it that we can’t get our arms around it.”
And I remember at that time, people in the press were talking about this geyser of data that was coming through this new mechanism called Clubcard. And the words were, “it was an absolute geyser, no one could control it. It was too much.”
And it was a difficult task. It was quite phasing. But because we approached the whole exercise with maths, we were able to take some of the data and look at parts of the business a little bit at a time. So we broke it down and by breaking it down by using statistics, we were able to conquer it.
And so there was a very important point where we’d done the first analysis within three months of this mass of data across nine stores only. And we were asked to present it to the Tesco board. And this was a very important moment because we took the data in and it’s all about the story you tell from it. And we presented it. We told our story.
And the entire board was there. And there was a moment of silence. Ian McLaurin (now Lord McLaurin), was silent. Basically then said, “I’m extremely worried”. At which point everybody looked down, there was a gasp around the room and we swallowed hard.
There was then a silence, which felt like an eternity, but it was perhaps only a minute. But as you know, a minute is a long time and he looked up and he said, “I’m really worried because in three months, you know more about my customers than I know after 30 years”.
Well, smiles broke out, not least amongst us. We were delighted. And that was the moment where everything changed. So that moment of recognition and bravery gave us permission to be the new experts in the room.
And his next question was, how can we roll this out nationally? How can we make this happen all over the UK?
And that became the next challenge. So it was an enormous moment and a defining moment. We then looked at how you create this across the country. It was no mean feat because we’d been analyzing nine stores. We now had to analyze something like 365 stores.
So a geyser of data became an absolute waterfall. And so how we did that was really the reason that we got the job in the end. The industry said it would take three years and cost 50 million pounds. And this could have been our success but it could’ve also been our biggest failure, we said, “It’ll take ten weeks and cost quarter of a million pounds.”
We got the job. It was a really hard, long job, but it was really exciting. And Clubcard went national in 1995. And for those of you who remember or have read about it that changed everything. Tesco had been in 3rd position in the UK market. It was well behind Sainsbury’s. Some of you will remember that Sainsbury’s famous words were- “This is just green shield stamps by another name; it’s not important.”
In one year, Tesco had doubled its market share and leaped into the Number ONE position. In one year, through understanding customers. So it was a really, really important move.
And from that point, Tesco put the customer at the heart of its entire organization, by understanding that it wasn’t just about how many cans of baked beans were sold. It was about the fact that one person bought 10 and another person never bought any. Once they knew that they could do amazing things and important things with that knowledge. They could recognize when their number one customer was in the store.
So they put it at the heart of their organization and change their whole business. It became a customer first strategy, and it met very closely with the concept of every little helps. Knowing a little bit more, allowed them to put the right products on the shelves and create the right formats in every store.
Eight years later, Kroger, which is the biggest grocer in the U.S. approached Dunnhumby in the UK. I’m ashamed to say that at the time they approached us, we didn’t actually know who Kroger was. We’d heard of Walmart, but we’d never heard of Kroger.
Kroger had three and a half thousand stores. It was a 70/80 billion-dollar company. It was massive and it was being killed by Walmart. And so, we went to the U.S. and this is again, a British company exported to the U.S. to help them defend and beat Walmart, the biggest discounter in the world.
And what’s incredibly exciting is that Kroger have just published the 44th consecutive quarter of positive identical supermarket sales growth… the 44th. So ever since that moment that was the growth. So the trajectory was just constant and incredible.
And what I just like to remind you of is that each 1% growth in market share is worth about a billion dollars. So we know we undervalued what we did, but we’re excited about it anyway.
What is it all about? Essentially, how do you get to a billion dollars of extra growth through the work that you do?
It’s really about something for everyone. It’s not about picking off the 10% of customers and asking them to buy more and do more. It’s about picking every single person from across your business and moving them up the ladder a little bit. And what that breaks down to is encouraging people, one more item, one more visit.
People are really loyal to supermarkets. They shop around, you all know you do… You go to Asda, Sainsbury’s, Waitrose. If Tesco can get you to come into their store; one more visit, it makes millions of pounds worth of difference. If they can get you to put one more item in your basket, millions of pounds.
So that’s really what the journey was for Tesco and the journey continues for Kroger in the U.S. and that’s why it made a difference.
What were the beginnings of big data? Where did it all start? Where did the idea come from? Because no ideas, as you know, are really that new.
My inspiration and I’m really honored to be here in the Royal Geographical Society. Because I’m a geographer and actually my original inspiration was this wonderful social philanthropist called Charles Booth.
And Charles Booth was a pioneer of Big Data. He basically pulled together a way of describing London’s streets. And if you ever take a look at them, you’ll be able to see that he describes streets in terms of social deprivation and wealth. And so he would have, very well to do streets and he would have, extreme hardships, semi vicious streets, and that’s what he called them. And he mapped them right across London.
And why did this matter? Why did those descriptions have an impact?
The impact was he explained and very logical, hard to argue with terms, the problem and quantified it because he did that. He pioneered and championed old age pensions and free school meals. So he made a big difference. And so he was my inspiration.
And when I started work, way back in 1980s, we started work with classifying census data and streets around the UK. And that’s where I met Clive Humby, who I married a year after joining the company. And he’s been my partner and my partner in work for the last 30 years.
So by classifying streets, we were able to help retailers work out catchment areas and footfall in every part of the UK. And that world and that business spread to every country. So today site location directors are found in just about every retailer.
In terms of what’s the future of big data, we know that actually, if you have the lowest price, people come to you. If you’re Walmart, if you’re Asda, you set about your price, you lay it out and everybody finds you. But if you want to be in customer centric businesses, you have to recognize and understand that everybody wants something different for a different reason.
So tailoring your offer is the key to customer-centric models.
It’s hard work and lots of computer programming, lots of algorithms, but the idea is very, very simple. We all have fantastic brains as human beings. We’re all nosey. We’re all curious. We’re standing in a supermarket. We look over the shoulder at the person in front of us and we go, “I’d like to be going there to dinner” or “God, that looks horrible.”
We all do it. And that’s what our brain is doing. It’s classifying that basket and helping us to understand how people live their lives, how they eat. And that’s essentially what we do with the algorithms and the data- we classify the baskets.
So the history of insights goes from social class, still around in media planning to Geodemographics, which is where I started, to customer data.
So, Geodemographics- ‘You are where you live.’
Customer data- ‘You are what you buy.’
And in the future, we see a lot of work around ‘you are what you’re passionate about or who you follow.’ And so we’re really interested in social media data and other data. That’s the journey, I’m on. And I continue to be interested in that.
So we can understand shopping baskets. This is American shopping baskets, German shopping baskets. We can understand what brands go in there. It’s kind of shocking when you see all the products laid out and they look very different all around the world.
We are excited and really interested in how there is still more data out there that we think is going to be able to transform businesses of the future. So financial services, data, credit card data, immensely powerful, still largely untapped.
Mobile phone data- It’s all there. We all know what’s possible. Does it happen powerfully at scale yet? No. That’s very exciting. And social media data– very, very powerful.
So what can you do with things like social media data?
The advantage of social media data is it’s public. It’s open-source. We can farm it and understand it today. And so what can you understand from it? You can understand who the stars, who are the celebrities are. And celebrities can be politicians and bloggers and businessmen. It’s not just about Justin Timberlake.
We can understand where brands fit in, how much people love certain things and truly brands down here and everything else- sports, music; everything like that is way up here and what media people love.
So we can start to get a fantastic read of the market through this. And this way of looking at brands and data, the reason it’s transformational is that this is the data today, or this week. This isn’t data, that’s a year old or six months old. It’s not data that’s been sampled from a 10,000 panel. This is 1.7 billion people around the world in every country and what they love and follow right now.
So in terms of brands and brand knowledge and gap analysis, this will change a lot. And we’re really excited about it.
This is a scenario which is looking at teenage girls in the UK. How do we get age? We look at the things they follow to give us the age. People behave rather than necessarily the age that they are. We can get to geography by looking at who they follow, because certain stars are very customer-centric and others are more global.
So in terms of my future; my excitement, it hasn’t diminished. Even though Tesco Clubcard was probably the most defining moment in my career, I’m still excited about what data allows us to tell the stories, and the business transformation it will allow us to deliver. I’m still excited about that. I still think there are things that are going to be important. And that’s my mission in the future.
For you, I really wanted to leave you with a few questions to think about because for me these questions make a difference: Whether a business really does big data or just pays lip service to it?
So for me, it’s about so many companies using who they bill to imagine big data. Do they really understand them? Are they trying to be relevant or because it’s free sending everything to everyone?
And, are the stories that are being told within the business really creating vision and excitement or is it just death by reporting and the statistics? And I see a lot of that.
So, it’s been my pleasure to talk to you. I hope I’ve left you with some useful thoughts. Thank you.
– Edwina Dunn
RECOMMENDATIONS FOR FURTHER READING: