The 2015 holiday shopping season served as a litmus test for retailers, underscoring the need to deliver seamless and highly tailored end-to-end shopping experiences across all touch points and channels. By now, this practice is understood by most retailers, yet actual execution at scale remains elusive. Retailers must derive insights from vast amounts of data, often parsing natural language to gain a better understanding of consumers and their buying habits. Even the best “predictive” analytics today are challenged to truly discern behavioral patterns of individual consumers and empower the retailer with the foresight to take the right actions.
“Cognitive Commerce” is the way of the future. Built on deep natural language understanding and adaptive learning, Cognitive Commerce makes the right connections and puts them into the context of consumer behavior so retailers can make better marketing and strategic decisions. Following are several ways we see Cognitive Commerce helping brands drive consumer loyalty and revenue in 2016:
What Are The Biggest Lessons From 2015, Including The Recent Holiday Shopping Season?
One of the biggest takeaways is that some of the traditionally biggest shopping days are turning into extended shopping weeks. Retailers are offering discounts over a longer period of time, as opposed to just Black Friday and Cyber Monday, to grab consumer attention amid increased competition. We will see this trend strengthen over the next year as technology increasingly empowers the consumer to make informed decisions. While we will still see upticks during events such as “Black Friday” and “Cyber Monday,” the savvy consumer will expect deals and incentives year-round through every interaction channel with the retailer.
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Consumers are also flocking from brick-and-mortar stores to online and more specifically, mobile devices. The brick-and-mortar store has shifted from being the cornerstone of retail transactions to often being a showroom in which consumers compare products in-store and then purchase online.
According to the 2016 IBM Institute for Business Value (IBV) study, Thinking Like A Customer: Your Cognitive Future In The Retail Industry, customers say 50% of their in-store purchases will be influenced by a digital device. And 74% of U.S. smartphone owners say they would be more likely to shop at a store offering key functions and services via an app.
Smartphone and tablet screens are getting bigger, online retail experiences are becoming more user-friendly and intuitive for mobile users, and consumers are getting more comfortable purchasing on portable devices. According to IBM Watson Trend, a shopping insights benchmark tool, Cyber Monday mobile device sales accounted for 36.2% of all online sales, an increase of nearly 30% over last year. These statistics underscore a significant shift in the way that shoppers are buying.
How Are These Lessons Being Translated Into 2016 And Beyond?
The amount of change that has transpired within the retail industry over the last decade has been staggering. Retailers have migrated away from broad-based mass audience sales efforts centered around age, gender and income. Enhancements in technology, including the proliferation of mobile and social media, have led to the “empowered consumer,” whereby retailers are provided a growing repository of customer data.
It is with that information that retailers have come to be expected to target and market on a progressively micro level. As a result, customers assume increased ownership over their personal retail journeys and they demand instantaneous, transparent and customized interactions.
Retailers are challenged to identify the right value proposition that can win them customer loyalty and also provide the customer with unprecedented access to information. As well, retailers face challenges in identifying technology and innovation that can differentiate them from others.
Currently, retailers lack the capability to understand and act on the innumerable amount of critical customer data at their fingerprints, thereby creating a potential wedge between the retailer and its customers. Retailers must be able to glean actionable insights from customer data to genuinely connect with the customer and inspire loyalty.
What Steps Must Retailers Take On The Journey To Mass Personalization At Scale?
For years, retailers have relied on behavioral and demographic data and analytics to deliver an optimal customer experience, but often struggled to achieve the next level of true personalization. Retail executives agree that cognitive computing has the potential to radically change the industry. Among leaders familiar with the technology, 91% believe it will play a disruptive role in the industry, while 94% of executives are likely to invest in the technology in the near future, according to the Thinking Like A Customer report.
In 2016 and beyond, successful retailers will master the skill of cognitive computing, which will allow them to better crunch consumer data expressed through natural language, get insights to complex questions, and unlock incremental value, including:
• Personalized Experiences — the ability to see individual patterns and make connections beyond human imagination;
• Perfect Timing — delivering the right experience at just the right time; and
• Predictive And Adaptive Capability — understanding what individuals really want even before they know it and adapting to changing shopper preferences in real time.
Consumers create seemingly infinite amounts of data that can only help brands refine their marketing strategies. If analyzed and utilized correctly, this data grants retailers access to a wealth of information and possibilities. However, the tools needed to effectively harness these treasure troves of consumer data have — until now — left retailers wanting for more. That is changing.
With cognitive commerce, retailers can better understand what their individual customers are saying and continually learn and adapt to individual shopper preferences. Applying cognitive computing to marketing and retail strategies allows brands to deliver moments of serendipity to individual shoppers as a normal course of business.
Justin Norwood is an IBM Consulting Executive who has 14+ years of experience in initiatives that leverage data assets in order to deliver sustainable competitive advantage. Norwood has a unique e-Commerce background that blends expertise on the bleeding edge of cognitive, predictive analytics with more conventional business intelligence. This knowledge is critical to Retailers and Consumer Products companies that are looking beyond their ERP investments and exploring big data-fueled, cognitive era capabilities in order to drive competitive advantage through deep consumer and shopper insights. Norwood’s areas of expertise also include innovation, customer intimacy and consumer insights. He has held various consulting practice leadership roles in commerce and/or analytics spaces at IBM, Accenture and Capgemini.
