Search specialist, Charlie Silver discusses the technology that retailers need to put in place to gear up for the holiday shopping season and why this will be vital to making the sale this year
Search specialist, Charlie Silver discusses the technology that retailers need to put in place to gear up for the holiday shopping season and why this will be vital to making the sale this year
With the kick-off of the holiday shopping season only a few months away, retailers have already begun to plan direct marketing strategies designed to market the right products to the right customers, at the right time.
Charlie Silver, chief executive of Algebraix, said this is done by sorting through volumes of customer data, previous purchases, preferences, and shopping habits, and then reaching out to customers with bargains, deals, new products, etc., that they are likely to buy.
“This is no small task,” he said. “When I founded RealAge, a data-oriented new media company, I learned firsthand how difficult it was to run meaningful business analytics on massive amounts of data.”
Refining customer data analysis
RealAge was a consumer-driven site that collected personal data in order to determine a person’s ‘real’ age, based on a set of lifestyle parameters. “However, the real focus of the company was to build a vast database of consumer data that could then be analysed and sorted to effectively reach highly targeted audiences – and ultimately market and sell products better than the competition,” Silver explained.
“As we head into the holiday shopping season, retailers are struggling with the same problem,” he said. “In today’s economy, customers are buying less, and are generally pickier than ever before with each purchase they make. Case in point, a recent eMarketer survey indicated that 64% of people will be spending less on everyone this holiday season, and 42.7% will only buy gifts that are ‘on sale’.
“Interestingly, Barnes and Noble recently said it’s going to cut back on book sales to focus on the Nook [eBook Reader], and instead focus on generating revenue streams from multiple sources, including stores, the website BN.com and e-reader downloads. This requires a highly sophisticated view of the customer so that coupons, promotions, etc., can be marketed in the right channels. In fact, the company just completed a huge enterprise data warehouse deployment that replaced nine separate Oracle warehouses.
“There’s no question that data is widely available; what is scarce is the ability to extract value from it,” Silver observed.
“For retailers, the type and volume of consumer information collected on a daily basis is increasing exponentially, and analysts expect the sheer volume of information to be utterly crippling to IT in this decade unless there are fundamental changes in the systems we use to analyse it,” he added.
Overcoming data overload
“The fundamental problem is that data is still stored and accessed in a hodge podge of traditional ‘row and column’ databases, which are tantamount to very large spreadsheets. As retailers collect increasing amounts of information about their customers, the tables get larger and more complex and increasingly complex queries are needed to find the selected data.
“At RealAge, I found that to extract anything useful would take the full-time efforts of a data specialist in the IT department, sophisticated hardware and days to run the analysis. There was just too much data to be useful, and the system for accessing it was too inefficient from a time and cost standpoint to be useful for any strategic decisions we needed to make.
“At a time when many companies are competing with similar products, high-performance business analytics offer the last battleground for market differentiation,” he said. “This holiday shopping season, winning retailers will develop marketing strategies, based on extensive data, and statistical and quantitative analyses of customer preferences and broad market trends. It will be necessary to connect all of the data points to truly understand what the customer wants – and to make the sale.”
Silver concluded: “The problem is, as the number of data points continues to increase, it will become very difficult for retailers to capture valuable information about their customers and effectively market products – unless there are fundamental changes to the underlying IT technology.”
Charlie Silver is chief executive of Algebraix Data Corporation, which is developing technology that uses advanced mathematics to more intelligently search and analyse data.
