Tuesday, January 5, 2010

The decade of analytics.

I believe the new decade will be defined in marketing circles as the analytics decade.

Over the past ten years marketers have become adept at using ones and zeros to market to customers.  We now must use these same digital tools to learn more about satisfying our customers.

Traditional forms of market research have long revealed the chasm between what customers say versus what they actually do.  What people say in focus groups is often quite different than how they actually spend their time and money.  We often find clearer insights when we observe real behavior.  We used to rely solely on field work to see consumer-erectus in its natural environs.  Now we can use their actual online shopping behavior to get a real-time fix on their behaviors, wants and needs.

A recent NY Times article ("A Data Explosion Is Remaking Retail") illustrates this point in action.

I particularly like the example of Wet Seal, the teen fashion retailer, which bases its merchandising and inventory decisions on the trends it observes when customers use the Outfitter feature on its website to see how different items might look when paired together -- e.g., which tops go with which jeans, color combinations, dressy/casual mash-ups, etc.

To be sure, we've long been able to gauge behavior by looking at what people buy online.  What's interesting about Wet Seal's Outfitter application is its ability to analyze what people would like to buy in the future, based on real behaviors on the retailer's website.

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