Customer-centric Service: Revealing Consumer Desires
Second Conference on Advances in Retail Supply Chains

IBM T. J. Watson Research Center
Columbia Business School W. Edwards Deming Center

January 12th, 2001
IBM T. J. Watson Research Center
Hawthorne, New York, USA

With advances in the Internet, global communications and transportation, consumers today have more choices than ever before when it comes to purchasing a product. Using a simple computer screen, one can order a product from anywhere in the world and, within two days, have the product delivered to a location of choice. The ease with which consumers can make purchases has driven retailers to fiercely compete for consumers' attention, trust, and ultimately their wallets. Retailers must identify and develop strong relationships with key consumers by providing immediate and personalized fulfillment of these consumers' desires. The current multi-channel environment provides retailers with many different opportunities to offer consumers personalized information and shopping experiences. On the other hand, this new multi-channel environment brings the challenge of achieving the level of customer intimacy attained in more traditional retail settings, where a single person or a small group of people serves each customer.

To meet this challenge, retailers endeavor to provide a consistent, quality service experience regardless of the channel customers choose to use when they shop. Each customer contact provides a retailer with an opportunity to demonstrate the value of his service and to increase customer loyalty. Retailers can benefit from customizing each customer's shopping experience according to the individual customer's preferences. Toward this end, retailers must utilize all available information sources to learn about customer desires. Today, retailers gather large amounts of data from point-of-sale transactions, customer inquiries placed to retail call centers, and clicks on a retailer's web site. Reports generated from the raw data provide weekly or daily transaction counts and other summary statistics. But the knowledge contained in this data is far richer. For example, retailers can match data generated by individual customers over multiple visits across multiple channels. Many retailers already capture much of the information they need - what's moving, who's buying it, what is in the shopping basket, and which promotions have been applied to any particular sale. The challenge is how to used this data to make better decisions to drive improved business results.

In this conference we will discuss how retailers collect and use data to gain insight into customer preferences and behaviors. Speakers at the conference will be representatives from companies who recognize the hidden knowledge buried in the wealth of data that they collect every day, and who grapple with the challenge of using data to understand customer needs. We will also discuss how advances in technology contribute to the ease with which retailers can successfully use data. The goals of this information exchange are to raise awareness of the challenges and benefits of using data to gain insight into customer behaviors, and to identify meaningful directions for extending the state of the art for the industry.

INSTITUTIONS REPRESENTED:

PRESENTATIONS:

The meeting (see agenda) took place on Friday, January 12. It began with introductory remarks from Alfred Spector, Vice President of Services and Software, IBM Research. It continued with seven presentations discussing how retailers and service providers can customize services by using the large amounts of data collected on a daily basis about customer preferences and behaviors. There were also a number of demonstrations of state-of-the art technology aimed at improving customer experience.

Pat Mene
Vice President of Quality, Ritz-Carlton Hotel Company, LLC
Data-driven Customer Intimacy: Using the Customer and Market Focus Criteria
Abstract:
For more than 10 years Patrick Mene, Vice-President of Quality at The Ritz-Carlton Hotel Company has applied the values and concepts of the Malcom Baldridge National Quality Award to the specialty of hotel management. Mr. Mene's presentation will address data-driven customer intimacy, using the customer and market focus criteria, Section 3 of the MBNQA application summary.

Peter Kolesar
Professor, Graduate School of Business Columbia University
Industrialized Intimacy: A Framework for Customer Service in the Information Technology Era
Abstract:
Industrialized intimacy is a strategy for service delivery that exploits information technology capabilities to efficiently create and deliver appropriately familiar and customized customer services. It builds on the service factory concepts of Levitt by systematizing customer knowledge and processing and distributing it as needed throughout the service organization. The industrialized intimacy strategy can enhance both the productivity of service processes and the value they deliver to customers. Examples of companies already implementing the industrialized intimacy approach will be discussed. This work, done jointly with Garrett van Ryzin and Wayne Cutler, was a collaboration between the Deming Center of the Columbia Business School and operations management practice of Booz Allen and Hamilton.

Syed Ahmad Syed Salim
Chief Operating Officer, Malaysia Airlines Golden Boutiques
Extending the Customer Loyalty Program: Malaysia Airlines Golden Boutique Buy N Fly Program
Abstract:
Malaysia Airlines Golden Boutiques is a duty free in-flight shopping cum mail order business that leverages their Customer Loyalty database of over four million shoppers. Topics covered will be engaging technologies like smart chip, and how to collect data to gain insight into customer preferences and buying behaviors.

Deb Campbell
Project Manager, Business Intelligence Fingerhut Companies, Inc.
Best of Breed Modeling Techniques for the Direct Mail Industry and Beyond
Abstract:
In order to capture decades of data mining and modeling experience, Fingerhut's Business Intelligence group has built a Best of Breed (BOB) modeling tool. The tool utilizes homegrown techniques as well as packaged software in preparing data, finding relevant data, modeling and comparing and evaluating models. With BOB, Fingerhut can utilize their breadth of experience in each and every modeling effort, provide process standards, train new analysts, build models efficiently, and offer a tutorial on best practices. The Business Intelligence group assists in supporting the Fingerhut catalog, telemarketing, Internet and credit businesses, Fingerhut subsidiaries and affiliates, as well as Federated's retail businesses. BOB can be incorporated into the support process across all of these divisions. Looking forward, the BOB tool can be utilized in a wide variety of both modeling applications and industries beyond Fingerhut and Federated.

Corey A. Perine
Executive Vice President i-Open, Inc.
Julien Bramel
Director, Internet Consulting Axioma, Inc.
Store-Specific Marketing: Promotion Optimization using Digital Signage
Abstract:
In this talk, we will present new approaches to store-specific marketing. i-Open has developed an Internet-enabled in-store advertising medium, which has been enhanced using Axioma's optimization technology and experience in developing optimization and revenue management applications for different industries. i-Open's new medium, combined with Axioma's technology, can dramatically improve customer conversion rates, increase revenue, and fundamentally change the way marketers conduct advertising campaigns. Using the power of the Internet, the two technologies can synthesize advertising, point-of-purchase promotion, and inventory management to deliver precisely targeted messages to consumers in high-traffic public spaces. i-Open and Axioma are proposing a controlled experiment to measure and prove the effectiveness of the combined technologies in a retailer environment. This talk will present the two technologies and describe parts of the study.

Lou Carbone
Chief Experience Officer and President ExperienceEngineering, Inc.
Experience Management Systems in the 21st Century
Abstract:
No organization can avoid providing an experience. The question is, how haphazard or how managed is the one your business is delivering? To affect strong customer and employee loyalty, market leaders in the 21st century will become "experience enabled enterprises." They will utilize Experience Management Systems that provide the focus and practical tools for consistently delivering preference-building experiences in order to build a company's brand experientially.

Vicki Raport
Vice-President Benefits Realization Retek Inc.
Customer Driven Retail: Maximizing Market Opportunity
Abstract:
The single greatest opportunity for retailers to drive growth, revenue and profit will come from the effective use of customer information as part of their core selling, merchandising, marketing and supply chain processes. In addition, consumers are now forcing retailers to a more customer intimate business model, thus demanding that retailers leverage their customer and transaction information for delivery of products and services. The successful retailers of the 21st Century will be multi-channel and they will use customer information for a 360-degree view of activity and opportunity both within and outside of their existing customer base. However, most retailers are far from leveraging this asset as a key component of their business. Many retailers do not collect customer specific information and most who do, haven't put it to good use in their business. This presentation will discuss the current customer driven retail environment, the opportunities for value in the marketplace, the Retek vision and approach to delivering customer knowledge, critical technologies and several customer stories where retailers are turning information into action.