Listening to the “voice of the customer” has been the hallmark of successful retailers, restaurants, and service businesses for years.  Technology has greatly increased our ability to capture and analyze customer data.  With the explosive growth of Facebook, Twitter, and other networks, social media are becoming the loudest, clearest, most current voice of the customer yet!

The challenge today is finding the “signal” in the data so that we can reduce the voice of the customer to actions such as real estate planning, site selection, marketing campaigns, and assortment planning.  With data warehouses full of customer transactions, household files with demographics, and feeds from social media, it’s harder to understand what the customer is saying than to guess the Dow Jones average by walking onto the trading floor of the New York Stock exchange!

The voice of the customer is not all we need to worry about.  The voice may be the communication device, but we need to understand other aspects of the customer to make smart decisions about how to invest precious capital and operating funds.

The customer is a whole person.  He or she is not just young or old, rich or poor, married or single, urban or rural, white or Asian.  Customers are multidimensional and their voices tell us complex stories.  A dog barks.  A cow moos.  A pig oinks.  A human being shares his or her likes, dislikes, needs, wants, and aspirations, and all of these affect purchasing decisions.  Consider these “tweets” captured by the websites of a few prominent chain operators that are now available as data for customer profiling:

whitneytidmarsh Whitney Tidmarsh #tonyhsieh says @zappos is so good at cust serv, that a customer asked if they could please run an airline or the IRS. #funnyandtrue

zpower Chris Ziegler now that I know coffee is $1 at dunkin donuts between 3 and 7pm, I shall be waking up at 2:30pm on weekdays.

shayray sharayreed Why cant Walmart&Target ever just be a “trip to the store“? Why does it Always have to be an Immortal test of your self-control?

djkbreezy DjKbreezy – AndBegin The lady at Meineke just told me I can pick up my car at 5pm and that “they’re having a few beers after work.” …Did she just ask me out?

There are no secrets anymore.  But most things are still hidden because of the effort required to distill the overwhelming amount of content into meaningful and actionable insights.

Today’s mainstream enterprise databases such as Oracle, SQL Server, and DB2 have the ability to store unlimited information about customers including social media.  They even have the ability to assign a location to most data using high speed geocoders and other methods of capturing latitude and longitude.  However, they don’t have the computational power to analyze the profiles and the geographic relationships in a timely manner and provide decision-makers with information about who, when, and where.

There is a new class of data warehouse technology that makes it possible to perform high speed queries and “geospatial” computations to allow us to hear the voice of the customer.  Companies such as Netezza (now part of IBM), Teradata, and Alteryx have given their customers a taste of what’s possible.  However, It remains to be seen whether these platforms can overcome limitations that will become more apparent as the data explosion continues.  Before jumping on the bandwagon of these expensive platforms, compare your needs to key criteria such as computing speed, proprietary data formats, expensive data migration, and special hardware requirements.

Apart from the computational issues, there are “sensemaking” challenges that will keep us very busy for years to come.  This week HP bought Autonomy for $10 billion.  Have you heard of Autonomy (autonomy.com)?  Don’t feel bad if you haven’t, but now that you have, you should check them out.  The company builds enterprise search and knowledge management systems that handle unstructured data, which is estimated to account for as much as 80% of the information around us (documents, web pages, presentations, videos, phone conversations, emails and IMs) and it’s doubling every month.  These ”listening devices” will help companies hear the voice of the customer in the noise of the digital marketplace and tailor their products, marketing programs, and distribution (including stores) to delight their customers and crush their competitors.  Autonomy’s retail and consumer-based customers currently include Tesco, Avis, Virgin Mobile, Macy’s, Safeway, Costco, Northwest Airlines, and Office Depot.

What are the implications of all of this for real estate planning and site selection?  Traditional customer analysis needs to be revisited with a completely new approach and perspective.  With these kinds of data available, the limitations of aggregated customer transaction and demographic data become clear.  Trade area profiles, census tract or block group profiles, lifestyle segmentation systems, and even household level demographics don’t necessarily tell us everything we need to know about where to put stores, what to put in them, or how to drive traffic to them with marketing programs.

I haven’t seen any examples of new approaches yet.  But you can bet they aren’t far away!

Please share any ideas you have on this subject in the comments section below.