Customer data doesn't reveal everything

By Bob Lewis, InfoWorld |  Business

MANAGEMENTSPEAK: Think outside the box.

TRANSLATION: There's no money in the box.

--This week's contributor figured that by remaining anonymous, he could avoid the box altogether.

IN THE MINNEAPOLIS winter, hot soup makes an appealing lunch. At a local eatery specializing in such fare, I learned an important lesson for IT.

This restaurant serves soup in bowls and "bottomless" bowls. Bottomless gets you unlimited refills. Here's your challenge: As an IT analyst, devise a system to keep track of who's entitled to those free refills. How would you do it?

Would you print a card at the register with a bar code to be scanned to verify which customers should get refills? Would you ask bottomless customers to show their receipts each time they return for another helping? Or ... Design your solution before you read how the restaurateur handled the problem.

OK, ready?

Bottomless customers get a differently shaped bowl.

Every time I eat there I wonder if I'd have found this simple solution. Ask yourself, and ask your analysts and designers, too, because if they restrict their thinking to IT, they can cost you a lot of money. Sometimes, a second type of "bowl" can replace a million lines of code.

Whether you're selling soup or silverware, hardware or handbags, you're in retail. And although IT has tremendous importance in the retail back office, in the store itself its importance is limited, which is ironic because CRM (customer relationship management) is one of the hot applications of IT these days, and most retailers live or die on good customer relations.

Take data warehousing, one of the most important tools in what we usually think of as a CRM implementation. You can use data warehousing to collect terabytes of customer information and slice it, dice it, cross-correlate it, and do multidimensional scaling if that will teach you anything.

When you're done, you'll learn (among other things) which customer segments, and maybe even which individual customers do and don't buy what products from you.

Pick up a copy of Paco Underhill's excellent book on retail, Why We Buy, and you'll see the importance of watching shoppers shop. If you watch shoppers in action you'll learn something data mining can't teach you: Why (for example) your older customers aren't buying concealer from you. It isn't their demographics or your branding. It's a merchandising problem: You've placed the concealer on the bottom shelf. Shoppers have to bend down for it, and it's in a high-traffic area where other shoppers brush by them. For older shoppers bending down is bad enough. Being "butt-brushed" (Underhill's term) makes it intolerable, driving them to forgo the concealer despite their need for it.

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