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Business analytics bring retailers closer to their customers
Delaney Turner 270002T14M firstname.lastname@example.org | | Tags:  smarter_retail spss business_analytics retail ibmsoftware
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This is the second article in a four-part series exploring the performance challenges in retail as stores and chains of all sizes begin their recovery from the turmoil of the past year. In today's installment, we look at the ways smarter retailers can draw insights from social media channels to profitably respond to the changing expectations of the smarter consumer.
We’ve come a long way from the corner store where the owner knew everyone’s name and what they wanted.
Or have we?
Fast forward to Web 2.0 and everything is different: exponentially more choice, more shoppers, more technology, more stores and more data. Yet, the trend is back to the personal.
Retailers must build relationships with their customers – not just offer pricing incentives or cheaper products.
How to do that? It’s impossible to actually meet or know everyone who comes in your store, especially if you’re a global chain. But the internet, social networking and data mining can bring retailers surprisingly closer to their thousands or millions of customers.
What consumers want
One example: Threadless.com has created a new kind of reta
The New York Times cites the case of Wet Seal, a 500-store retailer of teenage clothing. It’s a “fast-fashion” retailer, which means trends change quickly, and the chain has as little as three weeks to update its inventory.
One strategy is to grow a stronger web presence, both for customer insight and revenue. A web feature called Outfitter, for example, allows users to assemble their own clothes online:
“The virtual outfits are posted, and users can browse through them, comment and exchange recommendations. So far, more than 300,000 user-generated outfits have been designed, generating millions of page views.”1 The company also has an iPhone app called iRunway, which lets users track how these designs are being used.
Co-creation, new ways to interface
A recent IBM Institute for Business Value study points to this very phenomenon. Consumers are willing to explore new ways to interface with their retailers of choice. 78 percent of study respondents said they want to co-create product offerings with their retailers.
And more people are willing to use the internet, digital television and mobile phones to shop and make purchases. In the U.S., for example, over 92 percent of adults conduct some form of research online before they buy a product from a store.
Social media, too, is where users exchange ideas and comments on what products or stores are working and which ones to avoid.
All this information is a gold mine for retailers. You can gain feedback from users, tap into customer thinking for future products, and strengthen relationships through community features like reviews, blogs and bulletin boards.
Add to that data from loyalty programs as well as POS and CRM systems, and you have a bank of input to steer your marketing and merchandising decisions. That is, if you have the means to turn your data into business insight.
Smarter systems enabled by enterprise content management, business analytics and planning – let you gather and act on this consumer information to create and sell products in ways that resonate with your markets. The newly released IBM SPSS Modeler Premium, for example, helps you analyze consumer sentiment from Web pages, email, blogs and wikis, right down to the emoticon.
Meanwhile, Market basket analysis uses analytics and algorithms against your customer data – such as demographics, behavior and attitudes – to build predictive models about what combinations of products will sell together or which customer is likely to buy which product.
Once you collect and integrate this kind of information, you can turn it into informed intelligence about people’s buying habits and preferences. You can test and rethink strategies, and optimize outcomes across every channel.
Consumers are getting smarter and more engaged. But retailers have the tools and means to stay in step. Information is the lynchpin. You can’t know every customer, but data and knowing how to use it, can bring you much closer.