Money Ball, the Presidential Election and Retail!
What a relief to be rid of the incessant political ads and return to the normal drivel on TV. Almost as upsetting as the negativity of the ads were the pundits who kept interpreting for us what we just saw or heard. Cable television has created so much air time that it has to be filled with airheads. The two weeks prior to the election I stopped watching anything political on TV and focused on a guy named Nate Silver. Silver is a “Quant” which is short for a quantitative analyst. He originally developed an analytical program for evaluating the worth of baseball players based on a wide range of statistical analysis, called Sabermetrics. Sabermetrics was the basis for the book and movie Money Ball.
Silver did data modeling for the 2008 elections and his predictions were virtually 100% correct. This year he became the laughing stock of various pundits who characterized him as a “resident of silly land and delusional”. He didn’t have their experience in understanding how to interpret the polls or the “gut instinct” based on years of experience. Using his “Quant” skills and data he correctly predicted the following results of the presidential election: The winner in all 50 states, the exact Electoral College results 332 to 206 and he was .04% off on the popular vote. What this proved that data is the key to predicting results. The tie into retail is obvious, gut instinct and past experience counts but the basis of making good business decisions in retail is data driven. When I’m engaged by a new client to assess their current POS system and how they can better utilize it one of the first things I do is get copies of all the reports they use to make decisions. Normally what I find is that people are wed certain reports which they’ve become comfortable with over time. The problem is that they tend to get a one dimensional view of data. A fundamental to be effective in retail is knowing the key numbers you need to analyze. Equally important is digging into that data to find the gems that drive results. Experiment and format some new reports on both your inventory and customers, guaranteed you’ll find real valuable nuggets of information. Don’t ignore your gut instincts but reply on the numbers.