The buzz about analytics — predictive, historical, diagnostic and other kinds — continues to swirl around any retail event or industry conference. And now is an exciting time in retail, to be sure: Companies have the ability to collect nearly any piece of data or trend on their consumers or their own business operations.
As enticing as it is to know every facet of your customer and business, I often see a gap between what a retailer wants to know and what's truly important to their operations — along with what's realistic with the systems and technology in place.
Knowing the why and the how
You can spend significant resources working with analytics firms to develop plans for the KPIs you want to know, gather and measure about your operations and your customers. To put this plan into action, however, you should have a good grasp of the why and the how of your plan. Your system integrator can assist with the technicalities of the how, but it's important to bring that partner into the picture early so your goals are aligned with your current environment.
Let's look at the why first. Whether you are in the midst of executing a KPI plan or are simply thinking about developing one, make sure you pause and answer these basic questions: Why are these KPIs important to my business? Will they help me reduce costs or improve sales?
A consulting company will typically provide you with a list of industry KPIs, but you'll need to figure out how to gather them and apply them to your business. Plus, keep in mind that the standard list is just a broad brush stroke; it may or may not be applicable to your goals. Therefore, it's still important to think through: Why will knowing this information affect my costs or my sales? What action could they prompt me to take? How will they impact my bottom line? Don't necessarily take industry standards at face value; know how and whether they apply to your operations and objectives.
You also need to understand the how of your plan. How will these KPIs be gathered? Do your existing systems have the data to support the defined KPIs and at the right level? And is the data clean enough to provide consistent results? Are you able to access the data easily? Are there single-source systems (single versions of the truth) for the data?
After settling on which KPIs are the most relevant to your goals, decide how to execute the plan of analyzing them. Your system integrator can help you determine whether your current technology infrastructure will support that plan.
All roads should lead to action
The data you gather must be consistent and reliable in order to inform an accurate analysis, and that analysis should lead to action. What action can you take with the intelligence that you're gathering, and how can you execute that action? Drilling into different data sets and having dashboards are important, but the ultimate goal should be an understanding of what your next steps are. What specifically do you need to address to hits your KPIs?
Train and empower. Your team will need to be trained on how to respond to the data coming in; how to analyze it and have the confidence (and your trust) that they can take action based on what they've uncovered. Best practices can help you formulate initial training needs, and your system integrator can provide more specific guidance on what's relevant for your organization.
Keep an eye toward the future
Many retailers are taking close look at artificial intelligence and its use in predictive analytics. For instance, humans are mostly analyzing the data now, but in the not-so-distant future we'll likely see AI analyzing it and recommending action. This scenario not only improves the responsiveness to analytics, but the productivity around the often time-intensive process of analysis as well. The industry's move to AI won't be a sudden shift, but I expect we'll see more retailers adding it incrementally to their operations and experimenting with its benefits.
Ensure your technology matches your goals
Analytics can transform your operations, so it's critical to understand the why and how of your KPIs — and how you can act on that intelligence with your current infrastructure. With your partner, start the conversation and planning early to ensure your KPIs address your bottom line and that you have the technology infrastructure required to transition those plans into reality.
By Tom Schoen, president and CEO, BTM Global
Source: Dale Furtwengler.