Business Location Analytics and AI: What Every Business Will Need in 2017
Did you know that technology made a hundred years’ worth of progress from 2000 to 2014? According to Ray Kurzweil, computer scientist, innovator and one of the leading AI experts in the world, the same hundred years’ worth of progress will be achieved from 2014-2021, in just seven years.
What does this mean for businesses?
In short, it means that the time has come to forget about manually working out essential business information, assessing business and sales data, finding sales correlations within the data and putting it all together in a report, which has to be updated every day as new sales data flows in, and figure out your next steps – technology is here to do it for you.
I suggest you read the long answer though, it’s much more compelling.
Location Analytics and its role for businesses today
Location analytics is the most important element for any business today – yet everybody still ignores it.
A survey amongst U.S. retail customers revealed that 35% of them shop at their favorite stores because they like the location.
On top of that, you have probably heard that 80% of all data has a location/geographic element to it – that’s an old one. Today, we believe that the number is above 95%, which makes location analytics and intelligence one of the essential aspects of business analytics. If you don’t believe us, you should at least listen to the guys at Gartner who say that by 2020 all business analytics, regardless of type, must include the “where”.
Now the thing with location and the “where” question seems to be complicated for businesses, since the first (and, most of the times, only) thing that jumps to mind is the physical location of the store. True, the physical location of your store plays a gigantic role in the profitability of your business, but that’s not the only thing that location intelligence/analytics are about.
Location data is also about customer movement and is an essential chunk of information, which can show you why and how people visit your business, or in other words, how certain business assets that affect customer movement are directly correlated to your sales.
A smart business owner would stop me right here and say that location can’t possibly be the only thing that dictates customer movements. There are also things like reasoning, prices, emotions and dozens of other stuff that is insanely difficult to analyze. You would be correct, but the beautiful thing is that all those other aspects of decision making influence the one aspect that matters the most in the end – customer movement and location.
Let me give you an example.
Imagine you have a small barber shop. You just opened in a neatly selected location and things are going well. After some time you decide to expand and get bigger since you seem to have a big customer demand (every day you get customers to visit your barber shop, but you can’t accept them since all spots are constantly full) and also throw in an interior redesign to impress and delight your existing customers. After all’s done, you have twice as much space and you can host twice as many clients as before, so it’s logical to look forward to at least 50% sales increase, but at the end of every quarter, your sales stay the same.
Turns out your sales were correlated with business assets that directly influence customer movement (inside lighting, the color of the interior design and outside parking space) and during the expansion you unknowingly changed them. Your physical location was still perfect, but after expanding, your parking lot stayed the same size, the interior redesign used a new color and the lighting of the whole place was affected, which subconsciously pushed customers away. This is why the number of your customers didn’t grow.
Notice how in the example we don’t care about emotional choices, subconscious feelings and other complicated subjects – all that matters is that the business assets of your company that affect customer movement and are directly correlated to sales got altered, which negatively affected your bottom line.
How do I know this is correct?
Well, this is an example story, which could be absolutely true for some barber shops, and wrong for others – it all depends on the specific case. However, the solution and approach to the matter is always the same – the answers to those questions are hidden inside your business and sales data, and every business can get access to those easily, using the right technology.
Knowing where your customers are and understanding what drives them to/away from where they are is the secret behind location analytics and the “where” question. If you know the answers, all you need to do is simply implement them.
Okay, so what does AI have to do anything with all the location stuff?
Before we show you the role of AI in business location analytics, let’s understand what AI really means and clear myths.
AI and its role in business location analytics
Artificial Intelligence is the intelligent behavior of computers (or software) which can execute complex and time-consuming tasks in a matter of seconds/minutes. The purpose of an AI is to help humans find exact answers to single tasks that are difficult and/or time-consuming to figure out on their own.
What AI is NOT:
1. AI is not the robotic tyrant Skynet from Terminator that’s planning to kill every human on earth.
2. AI isn’t a complex, futuristic, sci-fi concept that most people think it is – in fact, an average human uses AI multiple times during the day to perform various activities. Some of the most common examples include the calculator, your GPS and Siri.
In fact, while the usage of AI is pretty common nowadays, it’s projected to increase even more, reaching up to 37 billion dollars in worldwide revenue, with North America, Asia and Western Europe being the largest exploiters of it in the world.
Now that we understand AI a little better, let’s look at its impact on business location analytics.
If business location analytics is the key to success, you could say that the AI is the catalyst. Remember that business data is never stationary – it’s always on the move and more and more data is being collected every minute of every day.
This technically means that even if you take the time to sit down and analyze all your business data, find the sales correlations on your own and understand what to do, that information will most likely get outdated by the time you finish your analysis.
Let’s take a simple example and see how it works in the real world.
You (and most of the people around the world) use the GPS systems in their smartphones to find an easy route to their destination on a daily basis. From a technological point of view, the AI inside the GPS gets loaded with all the information that it needs (maps, business locations, street names, etc.) to calculate, figure out and present you the most optimal route.
Now, what happens when the data changes (new destinations emerge, streets get renamed, maps get updated, etc.)? The GPS simply gets updated with the new data and now the AI recognizes the new locations, roads and streets and works to give you an even more optimal route to your destination.
Morale of the story – The more data gets uploaded into the system, the more accurate answers it gives you.
Let’s point something out – the AI of the GPS doesn’t simply calculate the most optimal route – it also tells you what to do, step by step, to get to your destination (like tells you where and when to turn, how many miles to go before you need to turn, etc.).
The same concept (which has been working steadily for everybody in the world for the past decade) can be applied to business analytics and locations, and the outcomes will be more than satisfying.
A study published in Huffington Post revealed that in 2015, 90% of high performing businesses state that analytics are absolutely critical to driving the company’s overall business strategy. The same post revealed that most businesses are analyzing only 1% of the business data available to them, with 99% still being left out.
Because with the amount of business data available today (and the rate at which more data is being piled up every day) the process is simply way too time-consuming for humans to deal with efficiently.
This is exactly how we helps businesses. Our AI is capable of processing vast amounts of data and finding the sales correlations of your business assets (remember the barber shop example), presenting them to you and also giving an actionable business advice on how you should proceed in a given situation based on your data, just like the GPS.
Logically, the more business and sales data you upload into the system, the more correlations it will find, and the more accurate actionable insights will be triggered. Moreover, the data gathered from the actions you take based on the AI’s advice can be recollected, allowing to run an even deeper analysis and basically predict customer movement, giving you an immense business advantage, which you simply need to utilize. That’s what the combined effort of AI and your business data can do for you. And the best part is, this isn’t a futuristic concept – it’s available today and is called Fract.
Conclusion – The Future is already in the Present
Until a decade or two ago, businesses needed to rely on their own analytical skills (or hire analytics and experts) to dig into their business and sales data, try to identify correlations and figure out what to do to increase their profitability based on the information they find.
During the last decade, all sorts of business analytics software were introduced to the world, which allowed to turn unreadable businesses data into meaningful information, but what you do with that information, whether you understand it correctly, and whether that’s the whole picture you are looking at, was up to you.
Today, businesses have a chance to not only accurately interpret their business data and turn it into meaningful information, but also free themselves of the burden of making crucial business decisions which, if turn out to be wrong, can be fatal. If you think that this refers to only small businesses – think again. Wrong business decisions can lead to losing $5.4 billion even if you are one of the most desirable stores in North America.
Technology was meant to make people’s lives easier from the very first day it became available. The time has come to make the lives of business owners easier as well, giving them a chance to understand their business on a whole new level and make both strategic and calculated business decisions that will lead them to prosperity.