Last week, IBM announced the creation of a global consulting unit that will help customers make better use of sophisticated data analytics coming from IBM’s legendary research labs to inform design, customer interaction, and business decisions.
IBM Interactive Experience, as the consulting unit will be called, will more closely integrate the work of design and user experience experts from IBM Interactive, the company’s digital agency, with the data expertise of more than 100 IBM researchers in its’ Customer Experience Lab.
“Many of us are seeing clients’ need to leverage data as a source of competitive advantage. There is less of distinction between business model design, analytics of data, and the design of the front-end user experience. We don’t see them operating in their own lanes. Clients want to work with us across all three of those dimensions,” says Jade Nguyen Strattner, vice president at IBM’s Customer Experience Lab.
The first step toward achieving this was already taken last March with the launch of the Customer Experience Lab, which gave chief executives (CEOs), chief marketing officers (CMOs), and other high-level executives direct access to a virtual team of 100 IBM Labs researchers.
Projects taken on included helping an airline redesign the cabin experience, advising a bank on transforming its banking centers, helping a retailer in Europe create extreme personalization for its customers, and devising a way for a South African loan company to better target clients at low-risk.
The creation of the new global consulting unit, however, is firming up the focus on integrating IBM research more consistently into customers’ business strategies, IBM executives say. Among the customers that are officially on board are Australian retailer David Jones as well as Jaguar. Neither could be reached for comment.
“We’ve been acting in collaboration on behalf of our clients for a while, but it has been more the exception,” says John Armstrong, IBM partner of customer innovation and growth with IBM Global Business Services. “Providing real-time engagement with customers is a challenge and brands who have built great loyalty predicated on human delivery are concerned about how they can exhibit that in the digital realm.”
Nguyen Strattner says the practice worked with more than 100 clients last year that are “at the bleeding edge and they want to go further than what is commercially available. Over the past year, we have noticed an explosion in data-driven by social network growth, mobile, the cloud, and data analytics.” But the new unit will also be able to serve small and medium-sized business through its cloud offerings, the executives say.
IBM Research, which invests approximately $6 billion each year in innovation, is made up of about 3,000 Ph.D.’s in 12 different locations. The labs are famous for some big technological advancements such as the computer language Fortran, the relational database, Lasik eye surgery, and Watson, an artificially intelligent computer system capable of answering questions posed in natural language.
The new unit will use emerging techniques from the labs designed to help them personalize offers to their customers. That includes:
- Life event detection, a technology that analyzes unstructured social media data such as tweets and blogs to detect important events in customers’ lives, such as when they are getting married, celebrating a birthday, or having a child, and allows companies to tailor their interactions with these companies.
- Behavioral pricing, an algorithm that combines behavioral models on consumer response to pricing, such as their joy in getting a bargain, with historical transaction data. This is designed to help retailers, for example, design personalized pricing strategies based on an understanding of the customer’s behavior and psychology. “This harnesses the latest thinking in pricing psychology to help companies decide the optimal price and discount for each customer.”
- Psycholinguistic analytics, which combines the psychology of language with social media data to understand inherent personality traits of individuals and identify their preferences. “This came out of Silicon Valley, based on decades of research on psychology and how people use language to reveal their personality, whether they are introverted or open to change, for example. This technology helps customers more deeply understand their consumers beyond transaction data,” says Nguyen Strattner.
According to a new IBM study based on interviews with more than 500 CMOs, 94 percent of market leaders believe advanced analytics will play a significant role in helping them reach their goals. Yet 83 percent of those polled believe their organizations are under-prepared to capitalize on Big Data, compared to 71 percent three years ago.