So That's How This Works...:Big Data from Sales Helps Retailers Adjust Marketing

Everyone agrees that Big Data could be really important. They're just not exactly sure how.

The proliferation of information about what is selling, where and to whom is a boon to marketers trying to manage costs while increase margins and profits. The challenge is trying to make sense of it all, given the volume and specificity of the knowledge being created.

Not surprisingly, a variety of businesses are producing software and selling analytical services designed to meet that need. In the past there has been a similarly optimistic proliferation of offerings when new data became available: Oracle, SAP, Salesforce.com and others were the precursors to this latest trend. As in the past, there will eventually be a consolidation as vendors learn to differentiate themselves. Some enterprises may try to do this themselves - and some will succeed - but the cost of hiring and retaining the most talented may be beyond the ability of individual organizations. In addition, keeping up with the latest developments is likely to be resource-intensive and more efficiently distributed over a broader array of clients.

Ultimately, as the following article explains, the challenge will be in determining which data are meaningful and which are not. Experience will be a great teacher but many institutions will come to realize that they do not have the luxury of time given the competitive stakes. JL

Mohana Ravindranath reports in the Washington Post:

A new market has developed for companies that can digest and analyze all the “big data” that retailers and others collect

Like a lot of retailers, Brooks Brothers collects rivers of data about the sales it makes at its more than 500 physical and online clothing outlets around the world. And for a lot of retailers, the deluge of analytics can be overwhelming.
“We couldn’t get to the answers fast enough,” said Cindy Lincks, Brooks Brothers’ analytics director. Her team was mired in spreadsheets, she said, trying to make sense of data about how many people viewed the online store and why, sometimes, they didn’t buy anything.

So last year, the menswear giant turned to a firm to help it analyze which marketing campaigns work, which products to promote and where to invest more.

Brooks Brothers is hardly alone.
Some, like Nordstrom, have invested in internal data analysis, creating what it calls the Nordstrom Innovation Lab. Others use software provided by giants such as Oracle, IBM and Microsoft, or start-ups such as Domo. Corporate business intelligence and analytics software generated $13.1 billion in revenue last year, according to Gartner, an information technology research company.
Often the focus starts with e-commerce, said McKinsey Global Institute principal Michael Chui: “Because it’s occurring online, it’s easier to track what’s going on, and tends to be more cutting edge.”
Brooks Brothers, for instance, signed on with London-based analytics firm eCommera last year. For about $6,000 a month, customers of eCommera’s DynamicAction software can automatically track and visualize large volumes of sales data, according to the company. Other eCommera customers include Neiman Marcus and Sur La
Table.
Using the new analysis, Brooks Brothers can adjust its marketing to meet customer demand, Lincks said. For instance, a suit that Brooks Brothers recently promoted was selling out faster than the warehouse could stock it, disappointing potential customers.
“Logically you’d put the suit in the first spot in the store order, but what we didn’t notice was it was being overexposed in so many places, and it was being sold out quickly,” Lincks said. DynamicAction suggested rearranging the items in the e-mail blasts, pushing images of the suit below other items in the e-mail.
The software considers factors such as inventory counts, customer views and items viewed but not ordered, among others. Lincks said she better understands which items to place on clearance based on the data.
DynamicAction provides an analytics dashboard for merchants along with a list of simple changes that could save money, ranked by profitability. Each week, Lincks and her team discuss the dashboard, deciding where marketing dollars should be reinvested.
While Brooks Brothers used to collect this data internally, Lincks estimates she would take about eight hours to calculate what the software provides automatically.
Revolve Clothing, an Internet retailer based in Cerritos, Calif., is integrating DynamicAction into its operations. Revolve Clothing sells products from designers such as Marc Jacobs, Michael Kors and Rebecca Minkoff.
In its first few weeks setting up DynamicAction, the software confirmed some trends that chief operating officer David Pujades had suspected for a while but hadn’t been able to confirm — for instance, that visitors to the site were searching for categories or fashion trends, instead of particular brands. This could change how he decides to organize the site, he said.
Instead of replacing his analytics team, Pujades said he hopes DynamicAction complements it. “Hopefully they can focus more on capturing the trends. It’s not outsourcing; we see it as more of a partnership.”
But he said he’s not sure how long Revolve will need to use the software, especially after the retailer fixes major inefficiencies.
“I foresee initially finding a lot of things, I foresee seeing some blank spots we had. As we solve those, the value of the tool diminishes to us,” he said. But he noted he hasn’t used the product long enough to know for sure.
John Squire, North American president of eCommera, said the company has been adjusting DynamicAction to increase its value to brands tempted to end subscription after fixing the more obvious inefficiencies. The product now includes an internal messaging capability, for instance, so employers can track and delegate tasks to employees.