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Faster Decision Making: A Business Advantage For Retailers
By Kyle Wierenga, Director Of Analytics And Measurement, AIMIA
Retailers have multiple channels today on different systems with different levels of complexity that when combined can give retailers actionable insights. When insights are leveraged effectively they can improve their customer’s experience and increase customer spending. In my experience the main hurdle is usually the one that holds the most value and that’s combining physical store data with online data. In traditional retailers that have been in business for 20-plus years, the web commerce platforms are usually separate from the physical POS systems that are used in the physical stores. Additionally these different data sources are managed by different teams and leadership with different goals for their business area. Having a CIO over both business areas that sees the value of having a 360 view of the customer is the key to successfully combining these main data sources. In the high volume retailer space I have seen effective architecture where all customer data is sent to a Hadoop cluster including online, physical, social, call records, email, feedback, and any additional customer touch point data. This data is then used to load an analytics sandbox environment where insights can be uncovered and communicated to business leaders to take action upon. I have seen this system produce increased sales and measureable increases in customer loyalty.
The Key to a Successful Technical Implementation
In my experience the key has been to truly understand the business goals for satisfying consumer expectations before looking for a technical solution. For example, I worked with a company that wanted to capitalize on providing the best data possible to support key business decisions that would impact their customers. They invested heavily in what was a great analytics platform without understanding that the platform’s strength was in deep analytical queries. They proceeded to use it to feed into their business intelligence platform that ran very shallow queries to thousands of users. Of course the platform did not perform well because it was built for a different purpose and they had to go through the additional pain of migrating to another system to achieve the business goals. Understanding exactly the results you would like to achieve before investing is key to a successful technical implementation.
Role of Technology in Vital Retail Segments
• Reporting and Analytics – Reporting is a gauge of how your business is performing and is integral to understanding your key performance indicators. Analytics is a tool that can help you make better quality decisions faster.
Analytics is a tool that can help you make better quality decisions faster
In our hypercompetitive retail environment today, improving decision making by leveraging analytical insights from your data can greatly improve your sales and be a competitive advantage over the other retailers.
• E-Commerce – Online transactions continue to increase every year and customer expectations of how businesses operate online continue to increase as well. For companies that are looking to increase customers in a younger demographic, the expectations for their online experiences are extremely high and their patience for a less then seamless experience very low, resulting in high cart abandonment if the retailer cannot deliver on expectations.
• Core Operations – Technology advancements in core operations are lowering operational expenses in store operations by optimizing floor scheduling and offering suggestions for space merchandising optimization. The biggest advancements I have witnessed are around supply chain, where analytics are helping optimize trade routes and providing insights into packaging/ shipping across multiple vendors that are assisting companies in achieving a competitive advantage.
Big Data and Analytics Transforming In-store Experience for Retailers
Big Data and analytics are making the in-store experience more personal. Utilizing transaction history and demographical data to improve customer experience will separate leading retailers from those that are not able to leverage their data. The key to gaining this ability is to know and understand who is shopping in your store. This is where having a loyalty program is the key. If you don’t understand your customer how can you successfully address their needs? By having an identifier that the consumer opts in to by joining a loyalty program the retailer is able to tie transactions to an individual and adjust store layouts to help achieve business goals for a defined segment. Marketing can be more personal leading to increased customer loyalty.
Movement in Analytics
As a leader in the analytics industry I have been seeing rapid growth in the areas analytics is being asked to support. Initially most of my time was spent supporting marketing and risk management departments. Now analytics is being asked to give decision support to store operations such as E-commerce, supply chain, manufacturing, and purchasing. I see future movement in analytics going more to “decision support” for all areas of the business where key decisions could use the backing of strong data analysis.
With the Rich Experience
My advice would be to spend more time on ensuring your goals are precise and well communicated. I have seen many very expensive mistakes made in IS where the wrong technology was chosen due to the goals not being well defined. Have a business goal with success criteria, evaluate technology vendors and ask for client referrals that have had similar success criteria, and involve the business in the decision making process so you can gain alignment with any solution that will impact them.
Internet of Things in the Retail Sector
It means that the business is going to have more data coming in about more products, people, and processes than they ever had in the past. Companies that have built out architecture to consume this data effectively will be rewarded with faster insights into their business, allowing them to make key business decisions faster. Decision makers will feel more confident in their decisions and will be more likely to take risk, knowing that they will be armed with the data quickly so they can review the impact of their decision. Maybe they need to change direction, maybe they need to expand the decision from a regional test to a national or global business process rollout. Faster decision making will give retailers a business advantage they can leverage against slower moving retailers.