CIA – Insight to your Customer

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With the changes of technology and the opportunities it brings with it, The possibilities of advertisement has changed drastically. Companies can benefit from the data traces that potential customer leaves in the web by using smartphones, tablets and computers. Such browsing behavior can be a valuable information for companies for Instance, When it comes to advertising products, The winner of the game is whoever makes a better use of the valuable data and not just any data and this is where the Customer Intelligence Appliance developed by IBM – short CIA – joins the game.

One solution developed by the american multinational technology company IBM to help companies to benefit from the available data (big data) is the so called Customer Intelligence Appliance.

CIA is  an analytic solution integrating online and physical customer data from a viarity of internal and external sources to improve marketing efficiency. Moreover, it’s an appliance-based solution, that provides an integrated multi-channel view of customers.

The program helps retailers to understand the value of the individual customer and customer Segments. It helps to prioritize marketing to the relevant target group. One company which is using the appliance-based system is Luxottica Retail North America. Luxottica is a closely-held retail arm of Milan-based Luxottica group S.p.A,the world’s largest designer, manufacturer, distributor and vendor of luxury and sports eyewear. They are employing over 65,000 people worldwide and reported income of EUR 6.2 billion in 2011. 

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What they wanted to do ? – The company wanted to make better use of data from more than 100 million customers to increase marketing effectiveness.

What they did ? – Luxottica implemented Customer intelligence Appliance (CIA).

What happened ? – As a result, the company can fine tune its marketing strategies and efforts. Creating individualised campaigns directed at the customers who are more likely to make additional purchases.

SWOT

Following, a SWOT-analysis of Luxottica using Customer Intelligence Appliance is conducted.

SWOT is an analytical framework identifying  strengths, weaknesses, opportunities and threats of an organization. It points out, what an organization can and cannot do, as well as its potential opportunities and threats. Whereas strengts and weaknesses are analyzing internal factors, opportunities and threaths are depending on external factors.

Strengths

Strengths describe what an organization excels at, allowing decisions on how to gain a competitive advantage.

The CIA can leverage data captured through all channels, and use it to their advantage. CIA users are finding insights and taking actions on those insights in a way that creates a direct relationship with the customer, a relationship that impacts their ability to retain existing customers and attract new ones in an optimized and profitable way. To meet the new challenges , Luxottica turns to this big data analysis solution and benefits a lot.

The main strengths of the CIA solution can be generalized as 360 degree customer view and customer value, Faster Richer Customer Segmentation and Marketing Campaign Execution & Improved ROI on Promotions and Higher understandings of motivations of conversion and retention.

CIA integrates data from all channels in an organized manner utilizing its flexible and elaborate data model to create a unified view of the customer. It also allows analytics that enables retailers to understand customer lifetime value, so retailers can optimize spend based on customer value. In the Luxottica case, CIA   provides Luxottica with unprecedented visibility into a class of customer that is of particular interest to the company: the omni-channel customer. This customer purchases merchandise both online and in-store and tends to shop and spend more than web-only or in-store customers.

CIA Leverages the analytics embedded and a better understanding of the customers, retailers can target customers much more effectively and increase ROI on offers. Also, CIA’s behavioral attributes enable quick scoring capability without sending data to another application, enabling a much faster turn-around for the retailer and faster speed to market in capitalizing on new offers and opportunities. By identifying the highest-value customers and creating individualized marketing campaigns, Luxottica anticipates a 10 percent boost in marketing effectiveness.

A complete understanding of the customer, allows retailers to understand motivation for  switching and conversion and also a deeper understanding of what it would take to retain customers. CIA analytics result in improved customer loyalty for the retailer. In the Luxottica case, CIA Identifies the highest-value customers out of nearly 100 million and targets individual customers based on unique preferences and histories and by providing those target individual customer an individualized service, a customer’s loyalty to Luxottica will be encouraged. 

Apart from the strengths above, there are some technical strengths of the CIA in data analyzing such as Speed and Simplicity.
CIA solutions comes out fast and delivers results immediately to the retailer, without excessive consulting services in the deployment process. This is quite important since a big amount of data emerge quick and become outdated quick these days.

Weaknesses

The weaknesses prevent the organization from performing at its optimum level. They have the potential of reducing progress or of giving  competitive edge to the competition. That’s why an organization should minimize weaknesses and analyze ways of improvement.

As the appliance-based Customer Intelligence Appliance has to be purchased from IBM, the costs related to the purchase and maintenance can be pointed out as weaknesses of IBM’s solution used by Luxottica.

Furthermore, when it comes to big data projects, there are always bad information such as invalid inputs and false information saved in the system. The latest can lead to false conclusions. That’s why data verification filters must be present to avoid any possibility or at least minimize the bad information added by customers.

While integrating and identifying customers across all channels from data created by online and offline channels, actively listening for “triggers” to launch offers instead of pushing mass campaign emails and creating a personalized experience for every customer using CIA, leads to an improvement of campaign responses and an reduction of the company’s marketing costs. A incorrect output of CIA could cause even the lost of customers. The system is based on understanding the value of individual customers to the business by segmenting customers and prioritizing the segments. Furthermore, according to the segments marketing expenses and individual marketing approaches are chosen. Therefore, a false customer segmentation could lead to customers’ dissatisfaction or even losing customers as the marketing approach does not meet their needs or as they are not even reached by the customized marketing as they are not prioritized.   

Opportunities

Opportunities are the external factors of/in the project that can be capitalized on or can be used to its advantage. It usually confused with the strengths but, it depends on how the company uses the resources to get the maximum result in terms of economic development along with its fame and name in the market.

The biggest opportunities you can reap from the data analytics, is the faster international expansion, by launching the products at the right time, for example a product to be launched in USA would be best on BLACK FRIDAY while, something in India can be launched in festival season like of Diwali.

Similarly, when you have the data available that tells you, what the customer wants then, it’s easier to make original and unique products. Well, of course when you are making products for a large community, so you need not advertise a lot as you will get a word of mouth campaigns. Working on quantity is the new big thing where the company works hard for making a product which a huge chunk of people need.

This makes a global influence of the company and the expectations gives way to the innovations in the next original product. Further making the company’s name good in the market in order to help it get the equilibrium in the acquisition synergies which may lead to better and bigger mergers in the future. Online market shows the trends and personalized shopping experience is what almost everyone wants, hence giving the company an opportunity to give/show the products which actually matches the customer’s search history.

As the need of the hour is that people all over the world, wants one thing, that when they go online, they should see what they want to see, which they cannot experience when they go physically to a store/showroom as the kiosks are fixed, however, with the advent of the technology and data analytics the opportunity to use algorithms in order to predict the behavior of the customer to either present a product which is similar or to research on the product which can be made for him is what makes the company earn a lot of money and simultaneously make a difference in the market with their innovations.

Threats

Threats include factors referring to the potential of negatively impacting an organization.

In the case of Luxottica the feeling of surveillance of people after Snowden event, data base conclusion threats and discrimination threat, treating people differently on the basis of information collected about them can be Pointe out as three main treats of Luxottica using CIA.

CIA is one of the big data analysis approach. A huge amount of the customer information is collected, aggregated and stored. Customers will feel that they are under a certain degree of surveillance, since their online visits to some certain websites can be traced. After the Snowden Event, most people is becoming more and more alert and more careful about their personal information.

Since such amount of information is stored in a certain database, the security of the database could be a big problem. The company is forced to put more money into the security system of their database incase identity thieves who successfully hacks into a database would take advantages of their customer’s information.

When doing the analysis, there is some protected class, such as race or religion that may generate discriminated membership. Consumers usually have a visceral reaction against certain forms of price discrimination, even when based on nothing like race or religion. For example, if most people from Group A buy stuff of price under 1000 EUER, then a A Group customer may feel discriminated if the company only provides cheap goods to him/her, furthermore, the customer may feel there is a discrimination on A Group.

Conclusion

As was illustrated by this case study, big data can be used for tracing and analyzing customer behavior, identifying potential customers and furthermore identifying and prioritizing customer segments. After conducting a SWOT analysis and analyzing both positive (strengst, opportunities) and  negative effects (weckendes, threaths) of Luxottica using CIA an overall benefit for the eye-wear-fashion company can be  concluded.

References:
http://www.investopedia.com/terms/s/swot.asp
http://knowyourcustomer.com.au/pdf/Luxxotica%20Case%20Study.PDF
http://documentslide.com/technology/big-data-analytics-and-the-retail-industry-luxottica-5584a54faa006.html
http://www.ibmbigdatahub.com/presentation/big-data-analytics-and-retail-industry-luxotticahttp://www-01.ibm.com/common/ssi/cgi-bin/ssialias?htmlfid=IVC03009USENhttp://www.slideshare.net/IBMBDA/big-data-analytics-and-the-retail-industry-luxottica-33623816http://www.networkworld.com/article/2973963/big-data-business-intelligence/5-problems-with-big-data.htmlhttp://www.business2community.com/big-data/top-5-problems-big-data-solve-01597918#LF2uW2BDx1XkbwJM.97

 

Ahmed Elshayeb – Jiawei Li – Sahil Bhagat – Anna-Kristina Zimmer

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One thought on “CIA – Insight to your Customer

  1. A very interesting topic! Thanks for the insights. I think though that ethical concerns about storing this large amount of customer data could have been mentioned and discussed.
    Furthermore I would suggest next time you re-read you blogpost before submitting it, paying attention to grammar and phrasing making sure you get your messages across. Unfortunately more than once it was really hard to read on and I was not always sure what you were trying to say.

    Like

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