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Watson And The CMO’S Dilemma

By Dr. Michael Haydock 

The chief marketing officers I know have a bunch of questions they’d like to ask Watson, the Jeopardy!-winning computer ― and none of them are about literature, history or science. No, these CMOs ― who have the amazingly complex task of allocating finite marketing budgets in a way that maximizes revenue ― would ask questions that result in greater insight about their customers’ needs. 

The good news is, Watson can do that. Watson represents a tremendous breakthrough in the ability of computers to understand natural language ― which humans use to capture and communicate knowledge ― as opposed to computer language. Using the power of deep analytics, it can evaluate the equivalent of hundreds of millions of pages of material – books, reports, articles and so on ― and come up with the right answer to a question in three seconds or less. 

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 This is all music to CMOs’ ears, of course. These executives have lots of questions about their customers as individuals ― and most still go unanswered. With many of today’s merchants serving tens of millions of people, CMOs have no way of understanding their customers’ individual desires, tastes or what they might want to buy next. 

Watson technology could be integrated into a retailer’s core systems, including databases, CRM, analytics systems, inventory and order management, market data, plus all points of interaction with customers. Watson’s prowess could give retailers the insight to make far better strategic decisions.   

A great example: I produce an analytics-based forecast of consumer electronics and appliance sales for industry executives; and, in addition, I track a wide range of other data, including disposable income and statistics on the personal savings rate. The forecast recently revealed that the February/March period ― traditionally a lull in the retail world — is becoming a powerful new season for consumer purchases. 

Watson could integrate that valuable information with all the data a retailer has on each individual customer ― purchases (and returns), brands the customer usually buys, the complaints he has made and the type of customer he is (for example, a loyal customer … or only shops sales … or prefers shopping the web rather than the store). 

It could then marry that information with massive amounts of product and market data and determine which customers are most likely to be shopping during this new February/March “season.” And, just as important, which products these customers are most likely to purchase.

These, of course, would be extremely valuable insights that could guide the retailers’ strategic decisions. Such information would enable retailers to make hyper-focused advertising and marketing decisions for February and March ― like creating ads that are custom-tailored to specific customers.  The deep understanding provided by Watson would enable retailers to make far more informed decisions about staffing, store design, which products to stock as well as inventory levels for each ― you name it. 

The CMOs that I work with are hungering for this type of capability ― a leap forward in customer and market insight that will enhance their brand, competitive position, and success in the market. IBM, which celebrates its centennial this year, has developed major innovations for the retail industry ― including the Universal Product Code, magnetic stripe technology, and e-Business. Now, Watson is poised to transform the shopping experience ― for retailers and customers alike.   


Dr. Michael Haydock is chief scientist and retail analytics leader for IBM Global Business Services.

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