“Retailers want to understand what their customers will buy- before they commit millions of dollars of inventory on a new product,” says Petro. By applying proven predictive analytics to the voice of the customer, CIOs can increase customer engagement, while harnessing the power of Big Data to support fact-based decision-making throughout the enterprise. “To create actionable insights, the right kind of predictive analytics must be applied to Big Data at the right time,” Petro adds.
The First Insight solution applies predictive analytics to data collected from thousands of consumers in real-time, extracting insights at a high level as well as a granular level. For instance, from millions of data points it collects every month, the company found that 11 percent of all new products can bear a higher price than the retailer originally expects. “Insights like this enable retailers to specifically ascertain which of their products can command a higher price and what that price should be, based on a forward view of price elasticity,” claims Petro.
Another trend ruling the retail sector is the high level of connectivity among consumers, promoted by the proliferation of the smartphone.
“These devices create a two-way path: Consumers talk and retailers listen. Leveraging this trend, First Insight’s mobile enabled gamification platform lets the retailer reach their consumers and deliver outbound messages and offers. It also enables retailers to listen to consumers and collect essential data on consumer preference and valuation of new products,” states Petro.
Our solution applies predictive analytics to data collected from thousands of consumers in real-time, extracting insights at a high level as well as at a very granular level
At the core of First Insight’s solution is InsightSelection, an application that delivers clear guidance on which products will perform well in the marketplace, so that retailers and manufacturers can make investment decisions with confidence. A series of simulations from First Insight’s analytic models help determine the optimal inventory allocation for a selected group of products. “First Insight’s process is very straightforward, as our customers select the items they want to test. These new items have no sales history and can be sketches, CADs, or images of samples. So we engage with consumers through online games and gather real-time feedback,” informs Petro.
One retailer recently increased their forecast accuracy by more than 20 percent and decreased time to market by 3 months using First Insight’s solutions. The client was also able to reduce in-store testing costs by more than 20 percent. The result was an increase in revenue by making deeper buys on “winning” products. “As evidence of the rich functionality of our solution, we recommended another retailer to raise the price of an item which was planned to launch at a lower price. Even with a 20 percent increase in price, there was no resistance; this resulted in incremental gross margin of $500, 000,” says Petro.
First Insight wants to liberate companies from the traditional methods of selecting and pricing new products using historical data, intuition, surveys, and instore testing. “You don’t drive a car looking in the rear-view mirror and you shouldn’t take a risk on a new product by looking at historical data,” concludes Petro.