Apparel Thing caught up with Jim Shea, Chief Marketing Officer, First Insight to find out more about predictive anaylytics and the InsightSuite…
AT: So, first up, introduce us to First Insight – what is it and what does it do?
JS: Over 50% of new products fail in the retail industry. The result is over €1.1 trillion ($818 billion) lost each year due to excess inventory, markdowns, and missed upside due to stock-outs from not buying deeply enough on winning products.
We are a technology solution provider that empowers retailers and manufacturers to drive new product success by introducing the right new products at the right price. Our cloud-based software solution gives retailers and manufacturers insight into expected product performance and optimal entry price points for new items that have no sales history, all within 48-72 hours.
AT: What is Crowdsourcing and how is this methodology applied within First Insight?
JS: By definition, crowdsourcing is using collective intelligence gathered from the public and using that information to complete business-related tasks. The “intelligence” gathered is referred to as “The Wisdom of Crowds.” When capturing this input, you have to focus on three main factors:
- Diverse Opinions
- Decentralized Concepts
- Independent Thought
The results are stronger when you value diverse and subjective points of view. Knowledge needs to be collected from the bottom up, and most importantly, you must encourage disagreement vs. conformity. First Insight provides a platform that aggregates the information gathered, creating actionable insight from collective intelligence.
First Insight accomplishes this through a scalable platform that enables thousands of consumers to evaluate hundreds of new products through online games that are presented to them via social media, websites, emails, and on mobile devices.
AT: Who is First Insight aimed at?
JS: Retailers and brands use our solution – specifically designers, merchants (buyers) and planners. We help them develop, select and price more winning products. Often we can enable a company to double its win rate on new products.
AT: How is First Insight typically implemented and what platforms can it work on?
JS: We are a cloud-based platform that means at no time do we touch the customer’s network. We work directly with merchants, marketers and planning and allocation personnel to determine which items are appropriate for testing. The First Insight solution is typically delivering actionable results in the first two or three weeks.
AT: What tools are provided to aggregate and analyze the data?
JS: The tool we provide is a set of proprietary predictive analytic algorithms that analyze the data once it has been collected from consumers. Our analytics filter and weight consumer input, ensuring that our clients are listening to the right consumers.
AT: Can you provide examples of how this data can be used?
JS: Our data collection process is called an “Insight.” Once the Insight is complete, our platform, InsightSuite, is leveraged by our customers through one of four modules:
InsightPricing enables retailers to determine optimal opening price points and forecast average unit retail prices (AURs) before the product hits the market. In addition, InsightPricing empower retailers to:
One of the biggest discoveries we have made from the data we have collected is the missed upside on new products. We collect millions of data points each month, and from that data we have uncovered the fact that approximately 11% of new products can bear a higher price than originally thought. In a time when many retailers are in a “race to the bottom” to meet or beat a competitor’s price, we have shown them how to avoid this race and instead lead the pack when it comes to new product success.
InsightSelection allows retailers and brands to identify winning new products and design elements, before investment decisions are made. Capabilities within InsightSelection include:
- Selecting new products and determine buy depth with confidence, armed with predictive consumer data.
- Modifying new designs early in the development cycle to improve performance.
- Understanding which new categories represent the best opportunity for brand extension.
- Identifying regional and segment-based preference, informing inventory allocation.
InsightMarketing lets retailers know which customers will buy their new products, well before they hit the stores. This is accomplished by:
- Identifying groups of consumers that are most likely to buy a new product.
- Finding optimal new product sets to market to specific customer profiles.
- Isolating regions where new product will resonate with customers.
- Picking the right product to feature in catalogs, circulars and websites.
InsightPlanning lets a buyer or planner optimize overall assortment gross margin for a selected set of products by determining the proper buy quantities for each item.
First insight’s InsightPlanning solution not only lets companies select the right products and set the right entry prices, it lets them buy the winner at the right quantities. This results in:
- Reduced stock-outs on winners.
- Reduced excess inventory on slower moving items.
- Higher overall assortment gross margins.
AT: How is best to decide which items to consumer test? What is most effective?
JS: The determination as to which items to test falls on the merchants and their desire to launch new winning products. Keep in mind that First Insight is focused on the design, selection and pricing of NEW products. As such, we do no rely on historical data to make these decisions. The proposed new items are those that the merchant believes will resonate with their consumers. Historically, merchants have relied very much on intuition to select new products. But as mentioned earlier, greater than 50% of those new products fail. We provide an added level of confidence in their selection process based on real-time consumer feedback.
AT: What in-house skills to you need to deploy and then manage First Insight?
JS: Due to our solution being a cloud-based model, there is little to no administration needed to maintain a First Insight implementation. The primary users are merchants and planners and members of any in-house testing team.
That said, the only in-house skill needed to work with First Insight is a desire to avoid the status quo and think differently when it comes to picking new products.
AT: What ROI can customers expect to achieve and in what time frame?
JS: With over 35 proven case studies, we have delivered sales increases from 3-9% and gross margin dollar increases of 4-9-% for all of our customers. Based on the customer’s challenges and goals, our solution can impact a retailer’s business in a number of areas. For example, one customer increased their success rate on new products from 35% to 80%, which equated to an increase in over $7 million in gross margin.
Another customer experienced significant gains in a few areas including:
- Increased forecast accuracy by 20%.
- Decreased time to market by 3 months.
- Reduced in-store testing costs by more than 20%.
- Increased revenue by making deeper buys on “winning” products, resulting in a 120% increase on one product alone.
AT: Which PLM systems have you integrated First Insight into before?
JS: Our PLM integration partner is PTC. By combining First Insight’s solution with PTC Windchill FlexPLM, product developers now have a seamless solution for including the voice of the customer in the new product development process. Developers can test CADs from PTC Windchill FlexPLM early in the development cycle, eliminating poor performing styles before they reach the sample stage. Testing can be performed again once samples are available, further narrowing the assortment to the highest performing products.
The integration of First Insight and PTC Windchill FlexPLM reduces the workload on the merchants and product developers when running First Insight tests (Insights). Data needed for Insights (CADs, sample images, product descriptions, target price and cost) typically resides in PTC Windchill FlexPLM. The integration of the two systems will make it possible to automatically extract the needed information from PTC Windchill FlexPLM and import it into First Insight, enabling testing to be performed quickly and frequently.
AT: When was First Insight first developed and what was the inspiration behind the concept?
JS: Our President and CEO Greg Petro started First Insight back in 2007. With an extensive background as both a retail merchant as well as a retail technology expert, Greg saw the need to bring retailers and their customers closer together. As retailers continued to grow, it became much more difficult for retailers to stay in tune with their customers. Greg’s vision was to close the gap to ensure retailers were thinking like their customers.
AT: What technology is First Insight built on?
JS: Our platform is proprietary.
AT: Does the customer have to invest in specific hardware to run First Insight?
JS: As previously mentioned, we are a cloud-based solution and so there is no additional hardware required to run our solution.
To see First Insight in action check out the video below:
For more information visit www.firstinsight.com