Traditionally, retailers have been heavily reliant on sales data, specifically transactional sales data, to drive many of their decisions on future pricing, cross-selling, and availability. They even use that data to make decisions about who to buy from and what collections to feature next season. But are they missing out on an ever-greater data point? By limiting their data collection and review to what did or didn't sell, instead of trying to understand what customers were really looking for, retailers are missing an opportunity to get deeper into a customer's psyche.
The online shopping experience, by contrast, provides a natural opportunity for these retailers to expand their perspectives. By taking advantage of the data surrounding online shoppers and their search behaviors, not just their buying patterns, retailers can obtain a more effective view into unmet demand.
Take, for example, a chain of brick-and-mortar shoe retailers. They likely have great insight into what shoes are selling best by region, how quickly certain sizes sell, and all kinds of tidbits of granular details about user behavior - after the sale. On the surface, that is a major improvement from the days of manual stock checking and quarterly forecasting. This data may help them reorder similar shoes, plan for sales, and even help spot trends in quicker fashion.
But what about all the missed sales whose data never gets collected? All the potential customers who left the physical store empty-handed because they were looking for the hard-to-find size, the non-traditional color, the "emerging" designer that the chain had never heard of? All of these unsuccessful interactions actually contain a treasure trove of data. For retailers willing to mine their search data, especially their data of unsuccessful searches, they just might uncover a new market or unmet need.
Two search behaviors are logical starting points for retailers looking to get more out of their onsite search data:
It's not just retailers that can benefit from analyzing their non-sales-related data to identify unmet demand. Netflix, the online TV, movie, and video game subscription service, had been in the business of distributing content online or via disc in the mail. With its uncanny ability to suggest content based on your past viewing behavior - and its speedy delivery - it was able to create a new model for distributing media. However, it was still relying on the traditional vendors to produce the media.
No longer. The same dataset that helps offer compelling recommendations also indicated there was another unmet need from Netflix's audience. A need that could not be met by its current distribution-based model. Adding more existing content would not improve these failed searches. The need: more original programming. Specifically, these failed searches and related user activities indicated to Netflix that the demand for new episodes of certain niche series was so high that Netflix has decided to make a major move by beginning to commission original programming to extend these series.
The company is so confident in its data from customers searching for shows that are no longer in production that it is actually going to change part of its business model and develop original content to meet this need. While not all businesses may have the data, confidence, or capital needed to create new products or business lines to support an unmet search, all retailers should consider how effectively they are mining their onsite search behavior to improve their product mix and customer satisfaction.
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Andrea Fishman, VP of strategy and a partner at BGT Partners, leads BGT's Chicago office and has extensive experience in marketing and management consulting. She and her team drive value to BGT's clients through the development of behavioral marketing programs, web analytics, measurement programs, industry benchmarking, competitive assessments, and the design of integrated marketing programs.
Andrea has been with BGT since 2003 and is credited with strengthening partnerships with such clients as ADT, Sony, ADP, and Avaya. Prior to joining BGT, she served as global vice president at divine, inc. She's also held strategic positions within marchFIRST, The Lewin Group, and the office of U.S. Sen. Edward Kennedy.
A graduate of Brandeis University, Fishman was awarded the Wasserman Scholarship for academic achievement and was named a 2010 Stevie Awards Finalist as Best Executive in a Service Business. She is a frequent judge for the eHealthcare Leadership Awards and is involved with the Special Olympics and Chicago Cares, a community service organization.
December 12, 2013
1:00pm ET / 10:00am PT