The retail industry has many tricks up its sleeve when it comes to predicting the customer and getting a hold on accurate demand forecasting. However, most of these tricks rely on customers past purchasing behaviour predicting future behaviour. It kind of works. However, it’s outdated and there are now other means of demand forecasting that can be more accurate. The humble hashtag being one of the new kids on the block.
The Way We’ve Done It Before
Typically, we’ve used available customer data to target known customers, for example, when a product update reaches the market. We’ve tracked them as they use our website and sent them a timely email nudge to entice them to buy. However, customers aren’t stupid, and we’re seeing a rise in cynicism and therefore lack of return on these digital marketing strategies.
We’ve also been pretty ok with opening up social media as another channel for selling. However, we’ve mistaken the amount of views and/or likes our posts or products get as being an accurate indication of prospective sales for demand forecasting. In reality, it doesn’t cut the mustard.
However, we are right that social media is where we need to be looking. However, we need to get handling this data differently to understand what our consumers are actually planning to do. Furthermore, we need to use that data to be able to respond in the moment, rather than trailing along following the trend a little out of step.
Where you need to be focusing your attention is on trends themselves. This is where you keep pace with your customer. Fashion retailers such as Zara are doing this well – they see the trend rising on social media and then within a week or two it’s there in their store. And it’s not just about the products themselves, but also about understanding competitors as well.
There’s also the local factor. If a big event in one area will be pushing up demand for an item in that area, you can be responding to that because you identified it on social media. The issue is – how do you harness this data?
The Tools of Demand Forecasting Using Social Media
Harnessing the data is where that pesky little hashtag and some artificial intelligence (AI) combine to give you powerful answers. AI can help you scour the hashtag dwelling social media platforms for the right keywords and terms. Facebook, Twitter, Instagram, and SnapChat are all hives of information when used in this way.
However, this really is where human and machine need to work together. AI can harness the information, machine learning can even process some of it, but the human expert is needed to turn this in to actionable decisions. Hashtag formats frequently contain sarcasm, humour, and blind leads. You can’t be wasting time on the myriad of wild goose chases that you might end up identifying.
The Changing Consumer
You also need to work with the consumer that you now have. They may be savvy and they may be cynical, however, they also know that they can benefit from allowing retailers to have the right access to their data. It’s give and take. For example, the introduction of smart devices in the home, particularly the likes of Amazon Dash or the Apple Fitbit, demonstrate how consumers are willing to let you have the data you need, as long as they get what they want in return. You have to demonstrate that your need for data adds value to them – all the while staying safely within data protection legislation.
The reality is that the tools and techniques that were working on social media a few years ago are now nearly redundant. Therefore, whilst there is a huge amount to be gained from harnessing the power of hashtags and trends on social media now, we can also assume that this will have a limited lifespan too. In many ways, it’s simply the stepping stone to the next change in demand forecasting and consumer behaviour.
We therefore need to remain flexible in our approaches to demand forecasting and work with the social media platforms and tools available to us at any one time. We also need to understand our own industry niche, and what is important to us there, compared to other industries. It will evolve and change and we need to flex and adapt to that.
This also applies to the talent that businesses have on board for demand forecasting. The talent you procure will need to have different skillsets and aptitudes from those of before. They need to be capable of working closely with both artificial intelligence and machine learning, and social media platforms. New and old talent needs to adapt to the changes that the digital world brings to demand forecasting.
Hashtags Today, What Tomorrow?
So, whilst it’s in your interests to harness the power of social media for demand forecasting, and for today that means using AI to analyse hashtags, you need to be ready for what will come around the corner. What works today will likely need to be adapted or changed for tomorrow. At its heart though there will always be a need to know your customer, and that’s where successful demand forecasting lies. It lies in combining the intuition and experience of the talent, and combining it with the AI tools which we now have available to us.