Cognitive Computing Is Transforming Online Retail - Where Does That Leave Physical Stores?

cognitive computing online retail Watson

cognitive computing online retail WatsonOnline 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 direct 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, every page to connect with every single one of your customers even better.

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

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

I’m sure you saw the H&R Block ad during the Super Bowl.

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, and using machine learning, is able to find 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 clearer and better suggestions are made.  From that comes the whole 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 the way 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 tasked with tagging the images.

With Watson content hub, you simply import all the images into the Hub.  Watson, using all its machine learning, is able to tag photos at something like 95% accuracy and with many more tags than a human.  That saves the marketing person time to actually be creative in what they will say to their customers.

Watson Analytics goes further to note each and 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 is in its infancy.  There’s just no telling how many additional connections Watson can make from seemingly unconnected-to-the-naked-eye data.

You know why that is?

Because 80% of the data businesses have is what is called dark data. It’s there, but no one knows how to get value out of it – except Watson and a few upstart competitors.

As Watson learns, and for example, overlays weather data from the Weather Channel, it can now 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 that creepy?

I don’t think so.

What would you do if you could start from What I’d really 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 to understanding every single interaction and touchpoint leads to understand how to take the shopper’s general interest all the way to making a purchase.

And yet…

How many retailers pay any attention to anyone coming in their physical store?

I walked up and down Chicago’s Miracle Mile last week. When I entered some of the best-looking stores in the world, about all I could hear were the occasional I’m just looking and No’s from shoppers towards the over-anxious greeters.  And as I walked in the door at Under Armor, a guy said…to my back… “So what brought you in today?”


Obviously salespeople have been trained to greet everyone, but that training didn’t appear to be working...anywhere. Not from the conversations I overheard instore anywhere.  

Harriet Green, General Manager of IBM Watson Customer Engagement said, “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.”

My Point

Since you’ve read this far, let’s be honest with each other, there are way 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, or a Home Depot or Lowes, or a Starbucks or Panera Bread.

What’s the answer?

Brick and mortar retailers have to be just as obsessive on studying their human customers when they enter a store.  They have to obsess on 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 like a hound on a hunt, follow each and every clue to get the prize - your customer.

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 them anything.  

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

Retail sales training is the gas that powers 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 then 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

In Sum

The Band-Aids of customer service from free Wi-Fi, to special events, and BOPIS aren’t lifting overall sales. Retail needs nothing less than a brand new interpretation of what the customer experience must be for every customer in every moment in your store.

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

Look, there’s nothing you sell that a shopper needs to go to your store to get.

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 everyone 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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