By Rob Garf, Associate Partner and Global Retail
Industry Strategy Leader for IBM Global Business Services
Anyone watching Watson’s victorious performance on Jeopardy! couldn’t help but be wowed by the machine’s ability to answer really difficult questions on many different subjects. Retailers are no different. In fact, many of them believe that Watson can help them achieve one of their most elusive goals: How to better understand and serve consumers.
It’s no wonder that merchants are grappling with the issue of customer insight. IBM recently completed a study of 30,000 consumers in 13 countries to find out how technology is transforming the way people shop ― and the results were eye opening.
Nearly half of the respondents use two or more technologies to shop. These smarter consumers are less responsive to traditional advertising campaigns and are listening directly to their friends, family and peers through social media such as Facebook, FourSquare, blogs and YouTube to learn about where to go and what to buy.
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In fact, only 18% rely on retailers and manufacturers when they want to know more about products they are interested in purchasing. Control and influence has certainly shifted to consumers.
On top of this, a growing number of people are shopping for a much wider range of family members. This is partly because the family unit is changing ― 25% of respondents have parents, adult children or grandchildren living with them. But it is also because many consumers are making purchases for relatives who don’t even share a roof. More than 30% of respondents regularly buy clothing, groceries, consumer electronics, entertainment products and personal care products for their parents, whether or not they live together.
This new reality has made it harder than ever for retailers to understand consumer needs and, in turn, to communicate with those consumers in a valuable way.
Enter Watson, which represents a tremendous breakthrough in the ability of computers to understand human language. It can analyze terabytes of data, the equivalent of hundreds of millions of pages of material ― books, reports, articles and so on ― in three seconds or less. It can find the correct answer in an ocean of information.
This technology could be integrated into a retailer’s core systems and databases, including customer management, analytics, merchandising, inventory and order management ― plus all interaction points with customers. Watson could listen to and understand what customers are saying about a retailer’s products, brands and services. It could also enable businesses to ask a virtually unlimited series of questions, instantaneously, about individual customers. Such as: “What is the next contact we should make with John Smith? When should we reach out to him? What should we say? And through what medium?” Retailers could use Watson to analyze all the profile and preference information regarding that customer, integrate it with product data, and trigger the right “answer” or “interaction”: Tell John about the availability of a new product with a specific warranty plan and free installation. Give him this message in the evening as a notification on his iPad app, and offer pre-purchase with free delivery.
In the same way, Watson could empower virtual and physical service associates to interact more effectively with consumers by giving them real-time coaching about John ― turning him from perpetual stranger to recognized and known regular customer being engaged on his terms when he has a need.
Watson could also eliminate those frustrating automated customer service experiences, which waste time and can even impact customer loyalty.
We’ve all used these automated phone systems. Push 1 if you want X, push 2 if you want Y, and so on. Making a selection just leads to another question and then another.
Equipped with encyclopedic knowledge of a company’s products, Watson would be able to answer the most difficult questions immediately: “How do I connect the Blue-Ray to the TV? What about the Internet? Do I use the white cables or the blue cables? How do I install the security software on my laptop? What’s wrong with my cell phone?”
Everyone wants to be understood and to feel like their needs are being met ― 30,000 consumers worldwide told us the same. Watson could be a powerful tool to help retailers better serve each customer, establish stronger relationships, and capitalize on the smarter consumer.
Rob Garf is an Associate Partner and Global Retail Industry Strategy Leader for IBM Global Business Services. IBM is celebrating its Centennial Anniversary this year.
