The topic of innovation is everywhere. Many of us cannot go a week without hearing about a new platform or product claiming to help drive efficiencies, productivity or solve a real dilemma. But despite our 21st century love for continuous improvement, innovation has been at the core of many great companies for decades.
Imagine how forward thinking the owner of Southland Ice Company must have been to his small community back in 1927. In an era where you purchased ice for the icebox, Southland began carrying every day convenience products on evenings and Sundays when local grocery stores were closed. After several name changes and continued growth, this small business would become the largest recognized convenience store around the world: 7-Eleven.
Today, there may be no better example of innovation than Amazon. Founder and CEO Jeff Bezos correctly predicted that customers would want to purchase more than just books online. Amazon combined a vast array of products, pinpoint distribution, great prices and free shipping. Who would have known that customers would be willing to pay a monthly subscription fee for Amazon Prime? In April of 2017, Fortune Magazine reported Amazon had more than 80 million members!
Of course, this new way of purchasing products completely changed the retail landscape, and many traditional brick and mortar businesses are still scrambling to survive. One thing is for certain; regardless of industry, company size or how long an organization has been around, these innovations all had one common theme: The customer.
Building a great customer experience is central to strategic and technological innovations. The lens of the customer has become a magnifying glass for how companies define and refine their brand and vision. To further accelerate great customer experience, retailers have been leveraging disruptive technologies to create a competitive advantage.
According to a recent article in Harvard Business Review, “four technology tidal waves are gathering momentum: artificial intelligence (AI), robotics, big data and internet of things (IoT).” Each of these big-hitters support innovation in unique ways. AI attempts to make life easier and more convenient for consumers. Siri, Alexa and self-driving cars are all pioneering examples of artificial intelligence in use today. On the other hand, robotics to increase productivity levels, quality and speed to market can best be seen in manufacturing plants around the world.
A newer technology, IoT, describes devices that are connected and capable of transferring data to other devices. Gartner, a leading research firm, predicts that by 2020 there will be more than 20 billion connected devices transmitting data to one another. For consumers, the main types of connected devices will be vehicles, smart TVs and digital set-top boxes while business use will be dominated by smart electric meters and commercial security cameras. Even with a sea of information, how can organizations leverage big data to improve customer experience and create a competitive advantage?
Most senior executives will agree that the amount of data at their disposal can be overwhelming. On its own, data cannot accomplish anything. The key is understanding data in a way that can drive commercial insights, and those insights must enable one’s overall corporate strategy. Examples of insights in the retail sector could be product driven buyer habits such as product bundling, sequencing next best options or even buyer frequency.
Customer insights can be slightly more nuanced because consumer behavior, although somewhat predictable, can be influenced by many external factors. Nonetheless, successful organizations have been able to answer these key questions about their ideal customer: Who are your customers? What customer need does your product satisfy? How do your customers feel about your competitors? What keeps your customers coming back for more? How do you reach your customers?
Why are these questions so important? Because good customers buy from you yet great customers demonstrate brand preference.
The best metric to measure brand preference is share of wallet. We have evolved from looking at basic client demographics to a deep understanding of buying patterns and triggers, and how those are influenced in different environments. Today’s leading organizations use descriptive, predictive and prescriptive analytics as key data points for building client experience. Understanding “what has happened,” “what could happen” and “what can be done to influence the outcome” is vital to any long-term client strategy.
Prescriptive analytics provides retailers with specific actions that can increase future revenues. This can be based on product selection, purchasing preference, digital marketing channels and many others. Think of it as a cause and effect. Companies that can successfully deploy prescriptive analytics have the ability to influence buyer preference. Prescriptive analytics can definitely by a competitive differentiator and worthy of major investments in analytic platforms.
Drew Kirin is a business development executive for Vixxo Corporation.