Having reviewed "The Long Tail" and written a long piece about how decision management can help build the systems the Long Tail requires, now I have to register a complaint. In the book Chris talks about the limitations of physical stores and uses as his example Best Buy. He discussed how they have to distribute supply across stores "hoping to guess roughly at where the demand will be". In fact, this is far from the truth.
In fact retailers like Best Buy are treating these decisions also as opportunities for analytic improvements by thinking about store layout not as a single decision but as a store by store decision. While it is true that stores, unlike websites, must obey physical laws - they cannot reconfigure store around each customer - it does not mean they can do nothing. As it says in "The secrets of capitalizing on customer insights", Best Buy is using analytics to reconfigure each individual store based on local demographics. As Fair Isaac noted in a piece on Best Buy:
"the realignment and reconfiguration of stores to local neighborhood demographics, leading to an 8.4% increase in same-store sales (compared to 2.3% for traditional stores)"
Indeed in a recent interview Best Buy talked about using analytics to gain a complete understanding of which customer transactions trigger the purchase of additional items and at what point in time, enabling them to generate targeted, customer-centric marketing, merchandising and in-store decisions. While, as Chris says in the book, "As a store manager you have to guess as to where most people would expect to find a windbreaker" you don't have to guess where most of the people in a specific store might expect to find it or what they might want to buy with it. That you can calculate.
The moral of the story? Always try and break down decisions into more granular ones. Don't send a letter to a group of customers where you could tailor the letter for each of them and don't make all your stores the same when you could segment them based on the kinds of customers they attract.
Technorati Tags: analytic application, best buy, customer experience, customer segment, decision automation, long tail, niche marketing, predictive analytics, retail, segmentation, customer insight
