How Do We Turn Big Data into Big Information

Don’t&Let&Analytics&Turn&Your&Business&into&“The&Borg”!

By!Bob!Thompson!

At!the!Marketing!Optimization!Summit!in!San!Francisco,!Akin!Arikan!of! IBM!opened!up!his!talk!by!saying!that!years!ago!the!web!analytics!geeks! could!only!hope!someday!to!get!a!seat!at!the!table!with!business!leaders.!

Well!folks,!that!day!has!arrived.!Under!the!current!umbrella!buzzword!of! Big!Data!there!are!a!plethora!of!solutions!available!from!mega!vendors!like! IBM!and!SAS,!to!lots!of!startups!and!smaller!firms!seeking!to!optimize!one! thing!or!another.!If!you've!got!data,!you!can!find!a!tool!to!make!better! decisions!using!it.!

One!of!my!favorite!retailers,!Nordstrom!is!an!old!company!that!is! embracing!new!technologies.!James!Steck,!part!of!the!Advanced!Analytics! group!there,!discussed!how!Nordstrom!used!JMP!to!understand!product! and!brand!relationships.!The!idea!is!simple:!figure!how!to!promote!the! right!products!and!brands!to!the!right!customers,!maximizing!revenue!in! the!process.!

That's!not!a!simple!problem!when!you've!got!a!busy!website! (www.nordstrom.com)!along!with!225!stores!doing!about!$10B!in!sales! annually.!Using!JMP!they!are!able!to!figure!out,!for!example,!which! segments!of!customers!are!more!likely!to!buy!brand!Y!and!first!buying! brand!X.!Armed!with!that!info,!marketers!can!make!better!promotion!and! merchandising!decisions.!

M&a&c&y’s:&F&r&o&m&“Mad&Men”&to&“Math&M&en”!

At!Forrester’s!Customer!Intelligence!Forum,!the!theme!was!“how!to!create! engagement!in!the!age!of!the!customer.”!The!highlight!for!me!was!the! presentation!by!Julie!Bernard,!Group!VP!of!Customer!Centricity!at!Macy’s.! Before!joining!the!retailer!5!years!ago,!Bernard!earned!her!retail!chops!at! Saks!Fifth!Avenue.!At!Macy’s,!her!job!was!to!“put!the!customer!at!the! center!of!all!decisions.”!That!was!easier!said!than!done!at!a!150!year\old! brand!that!was!organized!around!products.!Bernard!used!her!analytic!skills! to!attempt!to!bust!myths!about!what!consumers!really!wanted!but!was! largely!ignored.!

After!banging!her!head!against!product!silo!walls!for!a!year,!the!turning! point!came!when!she!asked!for!help!from!the!CEO!Terry!Lundgren.! Bernard!says!that!he!appointed!himself!Chief!Customer!Officer!and! announced!it!on!an!analyst!call.!This!sort!of!executive!sponsorship!was!the! first!and!arguably!the!most!important!step!in!turning!marketing!from! “Mad!Men”!to!“Math!Men”!at!Macy’s.!

What!I!enjoyed!most!about!Bernard’s!talk!was!how!“big!data”!and! analytics!was!used.!Not!to!automate!or!depersonalized!the!experience,! which!has!been!the!sorry!end!result!of!too!many!CRM!and!contact!center!

initiatives.!Instead,!the!insights!gained!from!transaction!data,!loyalty! programs,!credit!card!and!more!were!used!to!“give!customers!a!seat!at!the! table.”!

For!example,!one!key!decision!they!made!was!to!first!focus!on!improving! the!products,!pricing!and!experiences!that!move!“loyals”—those! consumers!already!buying!regularly.!In!the!future,!Bernard!thinks!analytics! can!also!help!the!retailer!make!smarter!merchandising!decisions.!Each!year! Macy’s!spend!some!$40B!on!inventory,!a!much!larger!expenditure!than! marketing.!

Macy’s!has!been!doing!well!lately!and!so!has!the!CEO,!er,!Chief!Customer! Officer.!According!to!this!report,!it!grew!profits!by!nearly!50%!to!$1.26B!in! 2011,!resulting!in!a!very!nice!payday!for!Lundgren!

LinkedIn&&serves&up&personalized&experiences!

Another!interesting!example!is!LinkedIn,!which!accumulates!a!massive! amount!of!data!as!its!users!interact.!Speaking!at!the!Marketing! Optimization!Summit,!Scott!Nicholson!(Senior!Data!Scientist)!said!they!can! use!that!data!for!the!benefit!of!users!(e.g.!find!future!job!opportunities)!or! for!LinkedIn!(e.g.!present!the!right!ads!for!monetization).!

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What!complicates!matters!is!that!LinkedIn!offers!lots!of!choices—40! different!actions!according!to!Nicholson.!Using!various!analytic!techniques! too!geeky!to!go!into!here,!LinkedIn!could!serve!up!experiences!that!are! more!personalized!to!the!user,!or!ads!that!are!more!likely!to!be!clicked!on.! Side!note:!I!wish!they!would!apply!more!of!that!analytic!wizardry!to!the! user!experience,!which!I!still!find!clunky!compared!to,!say,!Facebook.!

Don’t&turn&your&business&into&“The&Borg”!

There's!a!lot!of!hype!right!now!about!Big!Data.!Please!remember!that! analytics!is!just!a!tool!and!use!it!wisely.!

In!the!CRM!heyday,!there!was!too!much!focus!on!extracting! value!from%customers,!and!not!enough!on!creating!value!for%customers.! That's!why!we!have!CEM!as!a!counter!balance.!These!examples!show!that! analytics!can!do!both:!improve!the!customer/user!experience!while!also! maximizing!revenue!and!profit.!

Here's!hoping!business!leaders!will!remember!there!are!real!flesh!and! blood!people!behind!all!that!data!being!collected!and!analyzed.!Personally,! I!don't!want!to!do!business!with!The!Borg.!Do!you?!

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Bob!Thompson!is!CEO!of!CustomerThink!Corp.,!an!independent!research! and!publishing!firm!focused!on!customer\centric!business!management,! and!Founder/Editor\in\Chief!of!CustomerThink.com,!the!world’s!largest! community!dedicated!to!customer\centric!business.!Thompson!is!a! popular!keynote!speaker,!blogger!and!author!of!numerous!reports,!articles! and!papers,!including!CrowdService:%Harnessing%the%Wisdom%of%Crowds%in% Customer%Service%and%Support%.!

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