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Winning Requires a Unified View of Your Customer

By Kevin Sterneckert, Chief Strategy Officer 

How did Amazon pull away from the pack? There are many reasons, however, one key ingredient is a comprehensive understanding of their customer. Consider your interactions with Amazon. They know you; they know your preferences, they know what will motivate purchase, they know which items to feature for you and they even know when to offer payments options. This keen understanding of the customer allows Amazon to ship merchandise to local fulfillment centers before it is even ordered by their customers. 

Knowing your customer, however, has become an incredibly difficult pursuit for retailers and CPG manufacturers. Covid, inflation, supply chain disruptions and the next events of change all contribute to consumer behaviors that are now vastly different from one year to the next, and they change rapidly in ways that are difficult to identify with traditional methods of demand estimation and prediction. 

Understanding your customer begins with a unified view of all relevant influencers. What does that mean? I submit that it means that all relevant data is collected and considered for each decision point and the results of decisions that are planned are visible to any other decision. In the world of the six Ps of retail – People, Product, Place, Price, Promotion, Presentation – there are mountains of data to consider: 

  • Point of Sale transactions 
  • eCommerce transactions 
  • Product information 
  • Vendor information 
  • Competitive intelligence 
  • Customer intelligence 
  • 3rd Party data (i.e., weather, events, and other causal data) 

When a six P decision will be considered, a full and unified view of this information must be available to accurately describe the customer and all relevant influencers of behavior. This data must be considered simultaneously. The size and complexity of simultaneous real-time calculations require a cloud-native, data science platform that includes AI (Artificial Intelligence) and ML (Machine Learning). 

How do you know if you have a unified view of all relevant data? There are two simple tests: 

  1. Do you have a single repository that is shared across all the Ps, or are there independent data marts that support each individual P of retail? 
  1. Do you have a common forecast that includes each P decision, or do you have independent forecasts for each of the six Ps? 

Examining your current conditions or those of solution providers under consideration is key. 

Failing either test will result in a failure to accurately understand your customer and result in decisions that look good on paper but miss the mark with your customer as they patron your business. 

Consider the ramifications of unified data that is imputed simultaneously by a sophisticated AI/ML platform. 

For example, as it relates to price, promotion, and clearance/markdown. When the customer is viewing products online or in your physical stores, they see all the six Ps simultaneously. They do not divide the items into each P of retail, separating the items that are everyday priced from those that are on promotion or markdown. Further, each item, the in-stock condition, the presentation, and placement on the shelf are all considered simultaneously. An accurate understanding of the customer considers all simultaneously along with external influencers like weather and competition to accurately describe and predict behaviors. 

When the decisions of everyday price are recommended, the impacts of promotions and markdowns as well as the future plans for each must be considered. This is further complicated by the need to understand all items in the full assortment. Simply, this is not an exercise that non-AI/ML systems can impute and is only accurately accomplished when the data science platform “sees” all relevant data simultaneously.  

Knowing your customer requires a sophisticated, comprehensive, and unified understanding of all relevant data that are known to influence behaviors. When achieved, the forecasts of customer behaviors become fully accurate and can be used to inform upstream and downstream systems such as the procurement systems and the supply chain fulfillment systems. 

I urge you to test your current capabilities or those of the solution providers you are evaluating. If this unified view cannot be validated, you will fall short of your potential to understand your customers and to serve their needs in the rapidly changing world in which you compete today – and in the future.