Brick & Mortar Merchants: Time to Raise The Damn Bar on Your Expectations

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See if these metrics look familiar. We’re going to do our best not to call out a particular provider (so apologies if the UI is obviously identifying) but rather call out the industry in its entirety.

What we want to draw attention to, aside from the antiquated user interfaces, is what would be obvious to any professional outside of brick and mortar:

The lack of actionable data.

We’re looking at, as those in Silicon Valley would would say, vanity metrics. These are metrics that may give us an indication of business direction, but give us nothing to do to change it. That, in our view, is nonsensical.

You may have heard a popular axiom from Peter Drucker before:

You can’t manage what you can’t measure.

The above tools are producing measurements, but are they measurements that a merchant could use to manage their business? We would add that worse than vanity measurements you pay for are measurements that get you to the wrong destination – as is the case with many brick and mortar reporting tools.

Brick and mortar merchants have found themselves in this predicament because the majority of tools merchants use were built by former merchants. This has proven to be a massive headache in the point of sale (POS) industries, and it obviously manifests itself in other product categories as well. Because merchants rarely have outside experience, they settle for crap product that anyone else would laugh at.

Outside brick and mortar, people want to know what levers to pull, and what pulling those levers will do. In the “old days” this was done with A/B testing. Nowadays machine learning can do much of it for us, recommending a decision or simply taking the decision automatically. Hotels and airlines have been doing this forever and we copied the first link we found on a search engine just so you wouldn’t call us liars.

Instead, restauranteurs and retailers think “analytics” is a spreadsheet with colors. Just like Square bastardized the definition of Cloud POS, merchants and the lightweight “analytics” products they hocked ruined real analytics for brick and mortar. Here’s a “theoretical” conversation between a Stanford machine learning software company and a large retailer.

To set the scene, the Stanford company leaves 71 voicemails and 208 emails for the CMO of a retailer. Advisors and investors forbid the company from spending time on brick and mortar merchants ever again (for all the logical reasons they’ve discovered the hard way), but the CMO accidentally replies to one of the emails…

Retail CMO: What did you do again?

Stanford Co: Analytics to help you drive more revenue. What do you do for that currently?

Retail CMO: Oh I have an ad agency I’ve worked with for years. Their CEO takes me golfing once a month. Last year they took me to the Superbowl.

Stanford Co: Hmm so how are they proving that their advertising campaigns are working?

Retail CMO: They use analytics.

Stanford Co: Which is what exactly?

Retail CMO: Well, they have this spreadsheet with colors on it that tells me sales this year vs sales last year…

Stanford Co: And you’re able to tell which campaigns to keep running based upon that sheet?

Retail CMO: If they could do that I wouldn’t be employed, so I sure hope not!

Stanford Co: I suspect we could substantially help your business with more advanced and proven techniques that drive revenue, profit, and most importantly, make you look good.

Retail CMO: Well I already have analytics, which is what you offer, so I don’t need anything else. I’m going to be late to this tee time so I gotta go! If you need me again just call or email – I’m very responsive there.

A few things should stick out. One, this conversation is not as far-fetched as we’ve tried to make it seem: there’s an inordinate lack of fiduciary responsibility at the upper ranks of merchants and houses need to be cleaned. Two, merchants are clueless about real analytics and have zero desire to learn. That upsets too much of the status quo and there are golf balls that need to be whacked.

Which, in a classic Catch 22, is why merchants find themselves where they are.

“Analytics” tools are useless unless they tell you what to do.

“Hey my sales are up 2%!”

So f*cking what? Why? Why not 3%? Why not higher? What do you need to change if you want more growth?

Without knowing what levers to pull to change outcomes, these sorts of data points are useless.

We ask that merchants raise the bar and start demanding more from their providers. We know a great number of merchants won’t upset their golf game at the expense of their shareholders, and we know existing “analytics” providers would prefer to avoid modernizing their solutions because it’s out of their comfort zone and requires work.

But how much longer will this status quo persist with sophisticated internet businesses beating down a path to brick and mortar? Amazon, anyone?

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