Last week marked my 24th visit to the National Retail Federation Annual Conference, a/k/a The Big Show. In a strange way, it made me feel old and young at the same time. The Big Show takes up two halls at the Javits Center in New York, and it attracts the biggest of the big and the smallest of the startups in technology, retail services, and consulting. Lots of deals get done in the private meeting rooms at the back of the hall, as well as in the city’s amazing array of trattorias, steak houses, cafes and watering holes. Private receptions vie for retailer attendees on Sunday and Monday nights. In keeping with the theme of Bigness, the opening keynote was delivered by part time New Yorker W.J. Clinton. Oh, and there is a pretty significant educational program with dozens of sessions to choose from. It is an event with a consistent level of buzz, excitement and quality, year after year.
Others have accurately commented on the increased presence of digital signage on the trade show floor. In reality, the variety of offerings was only slightly higher than the past two years, but the more positive sign was that retailers were talking about it and demonstrated some understanding of how it fits in. In a comprehensive review of the buzz at the Big Show, two out of four editors from Retail TouchPoints listed digital signage as a significant theme. That’s great progress and a good indicator of interest. As exciting as it is to have digital signage beam its way into the general consciousness of retailers, the overwhelming theme that I noticed at the Big Show was Big Data. And when retailers figure out digital signage’s role in that arena, things will get really interesting.
Big Data has exploded as a tech meme in parallel with the growth of ever richer sources of data from ever expanding sources. If you have seen the IBM ads with the “smarter planet” theme, they are based upon the use of Big Data. If you have watched the popular TV series Person of Interest, “the machine” churns out insights based upon the analysis of Big Data. Essentially, the challenge of Big Data is the management and analysis of a huge number of disparate data points in a manner that makes connections that lead to insight. That can be applied to managing traffic patterns, power grids and medical records. But in the world of retail it is all about managing merchandise and customers: Operations and Marketing. The merchandising and operational opportunities are the easier targets, and most of the solution providers churning out Big Data stories were focused there. Retailers can taste the ROI on price optimization, smarter merchandise allocation and supply chain improvements. Yet the customer marketing piece provides what may be a much larger payback.
The old database marketing standard for stratifying customers, RFM (Recency, Frequency and Monetary Value) is as valuable today as it has ever been. But RFM has been traditionally applied in a world where direct marketing offers (think catalogs, direct mail) are costly to produce and distribute and where it makes sense to make those offers only to those prospects most likely to respond. Technology advances allowed for a variety of offers and tests to be managed, but analysis was always applied to what a customer had already done, not to what they are doing. Today, the customer databases filled with transactions are augmented by volumes of data from web encounters, mobile encounters, and increasingly, in-store media encounters. Today’s imperative is to make relevant offers to customers in near real time based upon who they are and what they are doing now. Big Data gives rise to Big Questions. What store is the customer in? Have they launched the retailer’s smartphone app? What part of the store are they in? What media was playing on the digital signage display when they reacted to an offer? When was their last visit? How can we tailor an offer to this customer to optimize this visit? How can we drive loyalty?
The ability to make enough connections from all the data points and to align them with insights on customers themselves in sub-seconds may very well be a differentiator between the winners and losers in retail and food service. Pulling together all of the relevant data points is part of the job. Figuring out how to stratify customers in a more useful way is another. Being able to operate a virtual offer engine against that data and segmented customer base is where it needs to go. One offer has never fit all customers. Direct marketers have known this forever. Now we operate in an environment where offers can be made at little cost to customers holding the delivery device in their hands while they are at the point of purchase! This is transformational, and a technical and marketing challenge of the highest order. Digital signage will play a role as an activator and as one delivery channel for offers. Data coming from media players will make marketers operating their offer engines that much smarter. Content reacting to intelligence about who may be watching becomes more relevant and effective. Big Data leads to Big Questions and Big Opportunities. The future belongs to the marketers.