Before IKEA existed, people preferred to buy the pre-assembled furniture for their homes. Thanks to IKEA, self-assembling furniture became slightly obsessed for some people. Not only that, we have fallen in love with everything IKEA offers. Every time visits the IKEA store, it’s basically turning into Tom and Summer scene in 500 Days of Summer.
It’s no wonder that more than 545 million people visited an IKEA store and 217 million copies of its catalogue were distributed globally in 2015. Moreover, according to Journal of Consumer Psychology by Michael Norton, Daniel Mochon, and Dan Ariely, people were willing to pay 63% more for furniture they assembled themselves than pre-assembled furniture.
There are many different reasons behind IKEA’s global success but we can agree that the utilization of big data is one of them. IKEA knows that customer satisfaction is the key to their success and that can’t happen without knowing what their customers really want. This is where big data analytics comes in and influences the IKEA’s customer experience.
Helps Customers Feel More Confident About Their Furniture Purchases
One unique thing that sets IKEA apart from competitors is their amazing showroom design. IKEA’s store is not just a furniture showroom but provides fully furnished walk-in rooms and walk-through apartments. We can’t help but feel amazed every time we walk through them.
Interestingly, IKEA doesn’t just put certain furniture and arrange them randomly. IKEA’s showroom design is actually being influenced by qualitative data. This qualitative data enables IKEA to arrange walk-in rooms and apartments that reflect on how customers actually want to live in. All those furniture setups can make customers not just imagine but to experience how to look in their homes would be in future. This will help IKEA’s customers feel more confident to pick the product that will meet their needs.
Friendly Shopping Destination for Family
Going to furniture shopping on your own sometimes feels overwhelming already. It’s nothing compared to when you go shopping with children. However, IKEA’s qualitative data shows that their average customers often shopping with children. So, in order to make them feel convenient without having a problem to abandon their children, IKEA offers a supervised play area. This way, parents can shop while leaving their children to play. It’s a win-win solution!
Additionally, IKEA’s qualitative data also shows that customers tend to become hungry after hours of shopping. This data inspires IKEA to provide a high-quality restaurant inside the store. So, when the customers feel hungry, they won’t have to leave the store to eat and return thereafter.
Psychographic Data to Create Customized Communications
When it comes to customer experience, IKEA doesn’t only rely on its qualitative data but also utilize psychographic data to help them create customized communications. Psychographic data gives IKEA an insight that they don’t get through demographic data. It allows them to create a higher level of customization when used together with demographic data.
IKEA realizes that even though one customer group comes from the same demographic characteristics, they still have widely varied values. This is where psychographic data plays a big role in shaping the customer experience. For instance, IKEA’s psychographic data reveals that customers in certain city respond more positively to ads highlighting IKEA’s low prices than other promotions.
Using that information, IKEA designs customized, low price-focused communications for customers in that particular city. Imagine if IKEA only relied on the demographic data, which did not capture the data they needed, they would not have been able to understand the city’s level of price sensitivity.
Big Data for Daily Forecast and Analysis
IKEA’s customer satisfaction also depends on its back-end operations. Without seamless supply chain and efficient cash flow mechanism, they won’t be able to deliver as many types of furniture to people as possible at a fair price. In order to do that, IKEA makes the most out of its big data analytics.
See, IKEA stores are stocked at night before opening hours. In order to determine its min/max system, IKEA uses the number of a product that will be sold from their stock within a single or two day periods. According to Intelligencenode.com, this process helps meet the customer’s demand, minimizes order and reorder requests. Also, it can help reduce the operational costs by making sure they have the necessary inventory that will meet customer demands.
However, this whole process won’t be able to go smoothly without daily analysis of huge amount of data which they use to predict stocking mechanism, ordering, and predicting sales. This is how it goes: IKEA offers the point of sale data to their managers which allow them to see how many inventories go through the store from direct shipments to distribution centers. Then, the data will be analyzed through their data management system. Finally, the result will out and manager can strategize next plan whether to make sure the demand products don’t go run out quickly or drive the sales of their less exciting product.
Considering IKEA’s big data utilization which sets them apart from other furniture retailers, it’s no wonder that the company has a deeper understanding of their customers. This leads to a higher level of customer satisfaction, which will improve their shopping experience! Also, they try to lead their customer through their imagination on what exactly a place of living truly lookalike. On the other hand, IKEA learns one of the main things that most of the consumers tend to when buying a thing which is a highlighted ad of low-price.