Should Your Business Buy or Develop Analytics Capability? A look through the lens of the Amazon-Whole Foods deal

“It’s our recognition that if you go to bed as an industrial company, you’re going to wake up as a software company,” declared Jeffrey Immelt, Chairman and CEO of General Electric (GE) at a Gartner conference back in 2015. He was trying to note that companies should seek to disrupt themselves, making a nod to his own, GE.

Well, he certainly did not imagine making a nod to Amazon, but that comment is so apt given what Amazon did with its bid on  Whole Foods Markets.

Amazon’s acquisition of Whole Foods Markets represents an unprecedented technological investment in the grocery retail industry.  The milestone also signals an unprecedented moment for analytics being seen as a catalyst for long-term business value.

Whole Food Markets Chicago
This Whole Foods Market in Chicago is bustling with customers. The Amazon acquisition promises to help the chain refine its customer relationship through analytics.
A look at an industry and its margins

Grocers like Krogers and Safeway have sold food items and associated services with thin profit margins.  This meant goods would have to be sold at high volume for a grocery chain to be profitable.

When Whole Foods Market started, however, it developed and maintained a margin advantage over other grocery chains through its focus on offering organic foods.  Organic foods command higher prices; thus a high product margin is possible.  Whole Foods Market established a strategic advantage with its organic food focus.  In fact Whole Foods Market is the first grocer to certify its food as organic according to the Wikipedia page on the company.

In recent years, Wal-Mart and Target have begun to offer grocery, increasing competition against traditional grocery chains.  But the most striking tactic has been to offer organic foods alongside those .  Wal-Mart and other low-cost grocers drawing customers seeking bargains away from Whole Foods.

The plan has worked.  Whole Foods reported six quarters of declining sales as a result. Moreover, Whole Foods gained a consumer nick-name “Whole Paycheck”   that references the price concerns people have about its produce.

How Analytics Becomes Essential To Business Growth
Enter Amazon and its potential to give Whole Foods a leg up.

Amazon has a number of analytic solutions that benefit Amazon Web Services (AWS), a set of cloud and services for databases and hosting.  These cloud services have been geared towards either supporting Amazon services or for specific needs of the tech community.  But with the Whole Food acquisition, Amazon has an opportunity to demonstrate tangent value to a industry that consumers and Wall Street analysts naturally understand.  Consumers can see more personalized marketing, which will boost sales.

An effort to provide more value may even challenge that consumer nick-name “Whole Paycheck” nickname.

The Amazon-Whole Food deal creates a transformation for a retail business model: a retailer that has been regularly limited by margins suddenly can determine where to focus on growing customer experience and ultimately retain customers.  It can do so through applied machine learning.  A simple concept behind machine learning is applying computation software to a dataset and providing meaningful results such as personalized service for customers.  A complimentary predictive analytics model can be built to adjust operational support for that personalization service.  Ultimately Amazon can leverage discoveries from machine learning initiatives into meaningful customer and business value.

This scenario is an analytical environment that can benefit Whole Foods against fierce competitors like Target and Wal-Mart, which are already using analytic initiatives of their own.

Decide whether to build software or acquire another company’s 

The decision to acquire a company is no small feat – Amazon’s all-cash acquisition is its largest to date.   But this news places a strategy spotlight on the value of analytics.

Amazon’s growth, albeit with debate about its scale at its start, reflects a trend that scaling a business profitably is part of business growth.  Business leaders are beginning to understand analytics can become a factor for unlocking long term value.  More importantly, they are putting that understanding into action.

The growing appreciation also raises the question – should a business look to acquire a business with analytics capability or should it develop its own in-house analytic services? This dilemma is a significant twist from a classic business question – to develop in-house capability or to integrate another company capabilities that has been honed and refined.

So should companies build software as a response to competitive pressure, or should they acquire it?  There is no panacea for an answer.

Many business owners believe business growth means increasing in physical size.  But doing so increases the demand for capital, and can start a never-ending spiral to induce volume sales.

Analytics can provide the right approach to scale, a variation on Immelt’s thought regarding self-disruption.  But it can take a large costly and timely effort to implement the right solutions.

But no matter what choice managers make, companies have to analyze their strategic activity and determine how to best create solutions that customers appreciate.

Social Media Tips: 10 Best Ways To Generate Traffic for Your Blog

Boston Traffic Social Media
Boston traffic is a great metaphor for traffic flow, but for digital, you must make plans to make that traffic happen. Social media is perfect for those plans.
After every website launch, there should be a plan for generating traffic to a site. Especially if that site is a blog.
So the magic question is: How does one build visitor interest in their blog?
Well, fortunately a lot of ways exist to build traffic.  The key for selecting the right way is to  for a small business or organization, here are a few starter was to get that traffic going!
  • Submit site posts to content aggregator – AllTop, Growth Hackers, Hacker News and inbound.org are starting places to share content, Many of these will syndicate content, meaning that the posts will show on their networks. Allot, for example, will tweet posts
  • Create a video version of a blog topic – from YouTube to Facebook Live, you can create a live version for
  • Social Media sharing syndication is a long word, but it serves an important purpose.  It can automate new posts and ensure that they are available for other to see later.  dlvr.it and IFTTT are examples of these syndication tools.
  • Dedicate an email to a post topic – share a snippet of content can create interest in a new blog
  • Share for community participation and events – People research the communities profiles online in Twitter and Google Plus.  MeetUp is also a good site for meeting announcements, and learning about a group through the images they share.
  • Repackage content as a presentation. The slides can then be hosted as a Slideshare presentation or as a pdf which can be downloaded at another site.
  • Guest Blogging – appearing on other blogsites is still a good way to generate interest on your own, provided that the hosting site is a high quality site.
  • Appear on podcasts or video newscast, mentioning in talk about a related blog post. Doing so can be as effective as providing a link from a guest post.
  • Talk about tools of your trade, such as this post for Small Business Trends. Solution providers of those tools will appreciate your mention and post a link to the podcast (or blogpost).
  • Posting a link in a Reddit community relevant to your site or topic.
  • Create a slideshare version of the post, highlighting a few key points from the post.  Doing so will give another set of content that can complement a post without mimicking all the content.  So for example, a slideshare of top 10 tips for a better website could complement a post on why a site update is important to a business.
One follow up idea – make sure you are periodically checking the demographics and affinity reports in Google Analytics.  Doing so can reveal a rough estimate on the traffic quality that is arriving onto your site.  Checking the results in the affinity reports can verify traffic quality as it relates to your site topic.  The Affinity Report results can also spark some ideas for your blog topics.  Just look for what is consistent in a 30-60-90 day period (You can also decide to work on countering the resulting topics, if they are not what you want.
Overall there are a lot of ways to make traffic to your site with social media!

Managing data is now paramount for building businesses effectively – A Perspective

This image is just notes from my pad, but one comment is a crucial aspect that is really important in business today – the idea that the team that manages all its sources of value has a significant advantage.   Those resources are become digitalized, represented as data.

The end result is that analytics becomes central in building a strategic advantage.  For probably the most dramatic example of what analytics can potentially do, check out my CMSWire post on the Amazon-Whole Foods merger.   The grocery retail industry has operated on thin margins. Whole Foods Market has been the noted exception for years, thanks to its emphasis on organic foods. Organic foods have traditionally carried a higher price, so its contribution margin is higher than common goods.

But during 2016, Whole Foods saw competitors begin to also offer organic foods. The most notable is Wal-Mart. Wal-Mart has offered groceries at lower prices, putting earning pressure on Whole Foods.  It experienced 6 financial quarters of declining earnings, due in part to the increased competition.

Analytics can not fix a bad business model, but it can make an effective one better.  Whole Foods has an effective model, and Amazon’s ability to leverage wholistic analytics on its cloud technology and operations can offer new ways to Whole Foods to cut costs where possible.

–Pierre DeBois

Analytics Tips: Using Affinity Reports and Second Dimensions In Google Analytics to Learn Consumer Interests and Mobile Strategy

Google Analytics Affinity Report

Segmentation has always been the raison d’être for analyzing data. After all, analytics is greek for “breakdown”, and businesses are trying to breakdown data into segments that can reveal ideas to serve customers easily. Understanding data segments reveal the kind of customers who are discovering your online media…and thus, discovering if your business is a good one to do business with.

But when it comes to data segments created from traffic sources to a site or app, mobile data drives the heart of the analysis especially if there is an Internet of Things influence in the strategy, such as beacons in a retail location.

So how can a business direct its analysis to make an IoT strategy better?

The best answer comes from combining Affinity reports and second dimension to know where people are coming from when they arrive to your site and to learn how people journey in general.

Affinity reports are useful in discovering new sites and topics that customers hold an interest.The Affinity and In-Market Reports offer lifestyle (Affinity) and purchase-intent (In-Market) topics that attracted an audience to a measured site or app.

But sometimes reviewing Affinity report results on one dimension does not reveal a pattern or a trend that tells the user something meaningful.   Selecting a relevant second dimension can help reveal more information to help the user see a pattern and make decisions.  (This Zimana post talks about second dimension selection in more detail.)

So where to start first?

Go to an Affinity Report and determine what topics are typically of interest to your site traffic.

Next set the Second Dimension in Affinity Reports to one of the following, based on the purpose of what associated information appears with the results in the Affinity Report:

Device

  • Devices highlight  the topics are accessed through a tablet or smartphone.  The highlights can spark ideas for planning AdWord campaigns for mobile versus desktop/laptop.

Time

  • The time selection highlights if the topics in the affinity report are accessed at a particular time.  The highlights can spark ideas for planning adword campaigns for when people view the ads the most.  You can examine time to see if people are arriving during a particular part of the day, or if there is some variation in topics between time periods.

Age Range

  • Can give an ideas of topics and source sites that are age appropriate  – useful for sites contain content suitable for children, young people, or a certain age demographic for the site owner. Use age range to know you are seeing activity from the intended group.

Verifying attribution can help you see if your media usage is in step with an target audience or within your industry.  You can do so with the Google Customer Journey Tool (I explain how the tool works in my CMSWire post – Pierre). The purpose of the tool is to see how customers general use different channels in a sequence before they purchase.

After planning the strategy marketers can set the reports that will be accessed frequently. Dashboards permit a view the most important reports in a glance, while Shortcuts permit faster access to the reports you use most often.  Dashboards can be viewed in the Google Analytics app easily.

 

Pierre DeBois in the Chicago Sun Times
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Zimana founder Pierre DeBois profiled in the Chicago Sun Times

Pierre DeBois in the Chicago Sun Times
Zimana founder Pierre DeBois was featured in Chicago Sun Times
On January 1st, the Chicago Sun Times published an interview with Zimana founder Pierre DeBois.  The interview covers how Pierre made a transition from his early automotive career to a leader in the analytics field.
You can read the interview at this link, and can check out the accompanying video below.