Summary: The final edition in our “Tell me something I don’t know!” series examines the last of the three main categories of discoveries that retailers are looking for in a solution. Unknown, unknowns are the things impacting the retailers business and they don’t know, what they don’t know. When the retailer is unaware that there is an opportunity, nor where to look for it and what questions to ask, is what creates the most uncertainty in the business. But it also presents a category with the greatest opportunity for interesting insight into the business. There are several examples of this category, and the key in identifying these unknown issues is through the use of pattern analysis. Automatically detecting the anomalies in the data will shed light on these previously unidentified issues. People, processes, or systems out of alignment with the benchmark give off pattern signals that become a starting point. A recent example of an unknown, unknown involved a store’s loyalty program. We came across a situation where a retailer built their own loyalty card program. Customers would receive points for every dollar spent, and these points could then be used towards purchasing other goods within the store chain. However, there was a gap in terms of how they would account for layaway purchases, and when payments are made to purchase something such as a ‘big ticket’ item. Take for example, a customer would buy a dining room table for $1000 retail and they would put down $500 as the layaway. As the program stood, the customer would receive 500 loyalty points at that time. But when the table is shipped to the house after paying the final $500, they would receive the full 1000 loyalty points at that time, bringing the total to 1500 points for a $1000 purchase. It was also discovered that customers were able to keep loyalty points from returned products. In effect, the extra points equate to “free money” for the customers to use in the stores at the expense of profits for the retailer. Pattern technology was able to align customers’ loyalty points with their purchases. The unequal correlation between the two were identified immediately. The retailer was able to readjust the program to properly account for layaway and returned purchases, saving them from giving away points, and therefore free money, which was an unknown unknown system opportunity. These unknown/unknowns are always eye openers for retailers when found, and they do exist in any complex organization and more common than most retailers realize. Using accumulated data streams by crawling through the data at the lowest level available, highlights the unknown/unknowns through pattern detections and statistics. Bringing these descriptive insights and guided actions to the right person in a timely manner to act quick and deliver the maximum value eliminates the unknowns. As the expression goes, knowing is half the battle…
