Cognitive Computing Transformed Online Retail - What's a Physical Store to do?

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Online retailers are coming after every single brick-and-mortar retailer.  

In addition, the brands you carry and made famous are leapfrogging over your store to sell directly to the consumer. Think Nike, think Ralph Lauren, think Canon.

And why not?

Most brick-and-mortar retailers are still ignoring the shoppers who make the effort to drive to their locations and come through their doors.

Online retailers are now using sophisticated predictive analytics to customize and personalize every offering, every email, and every page to connect with every single one of your customers even better.

I’ve seen the future, and it’s pretty amazing…

Cognitive computing in retail is the next big thing

I spent a week with IBM at their premier event, Amplify, in Las Vegas. IBM went all-in with Watson, their data analytics tool, to power everything from websites to healthcare to online retailers.

IBM has two options. You either use their out-of-the-box tools by installing the Watson code on your site, or you use an API to access Watson from either your on-site servers or the cloud.

An API is used to learn, for example, how to detect melanomas by learning all the best medical journeys or how to prepare taxes by learning the entire tax code.

For smaller clients, the suite of IBM services has Watson listen. Using machine learning, finds patterns to everything from the customer journey to friction points visitors left your site to the five best determiners of purchase with incredible accuracy.

But it doesn’t stop there…

As Watson continues to learn and use "augmented intelligence" – they don’t like to call it artificial - the patterns become more apparent, and better suggestions are made.

From that comes the idea of "cognitive computing," which goes further than old spreadsheet forecasting could ever have done.

What is cognitive computing?

Cognitive computing begins with machine learning systems that use data mining to detect patterns that mimic how our brains work.

  • Why is everyone in every industry using this?
  • Why are so many online retailers adopting this?
  • And most importantly, why should it matter to you?

Speed and personalization

Speed is becoming the currency of marketers and retailers.

Here’s just one example…Say you have 200 new products to place on your site for the coming month.

In the old days, someone would have to look at each image and tag it so search engines knew accurately what it was and how to find it. That could take weeks and be highly subjective based on the individual tagging the images.

With Watson content hub, you simply import all the images into the Hub.  Using all its machine learning, Watson can tag photos at something like 95% accuracy and with many more tags than a human.

That saves the marketing person time to be creative in what they say to their customers.

Watson Analytics further notes every image used and how well it resulted in conversions on the web, in email, social media – you name it.  It leads to higher satisfaction and higher engagement with the content.

Marketers and online retailers are obsessed with such things because cognitive computing in retail is in its infancy. There’s no telling how many additional connections Watson can make from seemingly unconnected-to-the-naked-eye data.

Do you know why that is?

80% of the data businesses have is dark data

The data is there, but no one knows how to get value from it – except Watson and a few upstart competitors.

As Watson learns, and for example, overlays weather data from the Weather Channel, it can help buyers predict more accurately when people will need coats, when it’s the best time to display swimsuits, etc.

And this isn’t based on the old price and promotion model.

A few retailers have it so dialed in that they will change the front of their store displays based on Watson’s weather recommendations.

That isn’t the future - that’s now. Very smart.

Is cognitive computing creepy?

I don’t think so.

What would you do if you could start from "What I’d like to be able to do is X" and then query Watson on how to accomplish it? Do you think that could produce a higher ROI?

You bet it could.

That singular focus on understanding every interaction and touchpoint leads to understanding how to take the shopper’s general interest to make a purchase.

And yet…

Do you pay attention to every customer?

I walked up and down Chicago’s Miracle Mile one day. When I entered some of the best-looking stores in the world, all I could hear were occasional "I’m just looking" and "No’s "  from shoppers toward the over-anxious greeters.  

And as I walked in the door at Under Armour, a guy said…to my back… “So, what brought you in today?”


Salespeople have been trained to greet everyone, but that training didn’t appear to be working...anywhere. Not from the conversations I overheard in-store.  

“Retailers that don’t think bridging the on-and-offline world is important better think again. Companies with omnichannel customer engagement strategies retain on average 89 percent of their customers.” 

- Harriet Green, General Manager, IBM Watson Customer Engagement

My point is it's not about the product.

Since you’ve read this far, let’s be honest with each other: there are too many places to buy too much of the same stuff.

There was NEVER the demand for all the strip centers at every freeway exit with either a Michael’s or Bed, Bath and Beyond, a Home Depot or Lowes, or a Starbucks or Panera Bread.

What’s the answer?

Brick-and-mortar retailers must be just as obsessive about studying their human customers when they enter a store.  They have to obsess over every aspect of the shopper experience, from beginning online to leaving the store with a purchase to being able to brag about it online.

Online retailers obsess about the first time a visitor lands on their site and follow every clue to get the prize - your customer- like a hound on a hunt.

A big part of crafting an exceptional experience in a brick-and-mortar store is a solid retail sales training program that truly engages a shopper before ever trying to sell anything.  

That’s why they call it personalization - unique to every person. To think of it another way...

Retail sales training is the gas powering the car

Without it, you’re nowhere.

I mean...

Does the electronics salesperson even notice the customer who picks up three different laptops? And if they do, do they go over to begin a conversation and not just blurt out the prices?

Does the apparel store associate understand their #1 goal is to get people into a clean fitting room?

Does the art gallery welcome every customer to educate them on what they are looking at?

I would say no.

They seem to think it doesn’t matter. Nothing could be further from the truth.

See also: How to Approach A Customer in a Good Way

The band-aids of customer services don't increase overall sales

Free Wi-Fi, special events, and BOPIS don't improve your bottom line.

Retail needs nothing less than a brand new interpretation of the customer experience for every customer at every moment in your store.

Your store must be more engaging, personable, and human than any online retail experience can be, with or without cognitive helpers.

There’s nothing you sell that a shopper can't get online already

The shoppers who still come to you do so because they hope for a better, more engaging customer experience.

Where online retailers see every shopper as a data point and connect every one of those points to their merchandise using an algorithm, you have to do the same thing using your own brain and humanity to create a personal, exceptional interaction.

Deliver that, and you can raise conversions... even with lower foot traffic.

Miss how to engage, and you’ll end up in the heap of other also-ran retail brands who figured price and promotion would be their savior from the savvy online merchants.

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