Enabling Personal and Relevant Engagement
ShiShWorldwide Director, Analytics & IoT, Retail Sector,
Microsoft Corp
Machine Learning & Retail
What product is Joe most likely to buy?
Will Sarah come back to shop with us next month?
What advertising would be most effective to get Johan’s attention?
Listening to the voice of the customer
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Sales Forecast in 1999
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What Really Happened
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Retail has a multitude of devices that
generate petabytes of potential insights
Monitoring and mining social media data
enables retailers to enhance customer
insights
Open data sources and internal sources enable retailers to better understand
customers
Democratization of data
Cortana Analytics
Information Management
Big Data Stores
Machine Learning & Analytics
Visualization
Democratization of Tools
Machine LearningData
ProgramOutput
Data
Program
Data
OutputProgram
Put customers first with technology that learns, predicts, and engages
at a personal level
» Predict what customers want before they tell you
» Engage with customers at the right time, right place with the right offers
» Personalize the customer experience across channels
» Improve loyalty, "share of wallet" through hyper-local assortments and inventory
Foodservice retailer built brand loyalty with a cloud-based mobile app
Challenge • Improve
relationships with customers.
• Build upon a successful brand app to reach more customers.
• Generate upsales and cross-sales.
Strategy• Added an analysis
and insights system based on Microsoft Azure.
• Gathered data on customers’ behaviors and preferences through their app use.
Results• Expanded app use to millions
of customers in five countries.
• Enabled personal, relevant, contextual content that adds value for the users.
• Improved customer loyalty.
Demo
Key Driver Analytics
Regional Retail Store Beverage Sales Overview – 1
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Sales for Northwest Territory retailer
Seattle is facing sales problems
Problem: Seattle is not selling to forecast
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Seattle soft drink segment sales fell below expectation
When we drill down to Seattle, we can see a problem in soft drinks
Click and see further details of Seattle sales
Regional Retail Store Beverage Sales Overview – 2
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Powerful Solution with Advanced Analytics• Question: OK, now we know we have a problem but how can we solve it? • Answer: “With advanced analytics!”
Sales driver analysis– build a model that explains
what drives sales
Sales delta analysis – use the model to see
problems
3. How can we fix sales?– apply the model to fix the
problems
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Start with internal transaction and marketing data to get part of the picture
Sales Driver Analysis – 1
25.6% variations explained
Internal transaction and marketing data include variables as:- Stock Up- Price Elasticity- Radio
Advertising- TV Advertising- SKU presence
Transaction dataset in AML
experiment
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Add external data to and now the model accuracy is improved Sales Driver Analysis – 2
Variations explained
improves to near 50%
External weather, demographic, and competitor data include variables as:- Temperature- Precipitation- Household
size- Annual Income- Competitor
Price Gap
Transaction dataset in AML
experiment
External dataset enters the
model in AML experiment
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With IoT, research, and online activity data, we can build sales models of unprecedented power for end users
Sales Driver Analysis – 3
IoT dataset enters the
model in AML experiment
Variations explained
improves to 89%
New IoT, research and online activity data include variables as:- Survey research- Web traffic- Social media
traffic- Mobile traffic- Store traffic- Shelf traffic
Transaction dataset in AML
experiment
External dataset enters the
model in AML experiment
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Analyze impact of key sales drivers over the last one monthSales Driver Impact - 1
Monthly ∆ by sales driver
Let’s first zero in on the sales impact of price gaps, as they are the biggest problem
Competitor price gap caused 7,598 less units sold than previous month
Click one of the controllable variables to see what would happen if we take some actions
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What would be the impact on sales if I adjust my pricing?Sales Driver Impact - 2
See the impact on physical sales if we reduce the price gap by different levelsSee the impact on profit if we reduce the price gap by different levels. When it is reduced by 15%, we would be able to achieve 4.5K incremental profit.
Select competitor price gap as it is a controllable variable
It would be recommended to decrease the competitor price gap
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What would be the impact on sales if I adjust my pricing?Sales Driver Impact - 2
See the impact on physical sales if we increase social media engagement by different levelsSee the impact on profit if we increase social media engagement by different levels. When it is increased by 20%, we would be able to achieve 12.6K incremental profit.
Select Social Media Engagement as it is a controllable variable
It would be recommended to increase social media engagement
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What would be the impact on sales if I adjust my pricing?Sales Driver Impact - 2
See the impact on physical sales if we increase advertising by different levels
See the impact on profit if we increase advertising by different levels. When it is increased by 20%, we would be able to achieve 7.1K incremental profit.
Select Own Brand Advertising as it is a controllable variable
It would be recommended to increase our own brand advertising
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IoT Driving Insights, Decisions & EngagementIoT in retail could have an economic impact of $410 billion to $1.2 trillion per year in 2025
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