If you’re going to collect data, use it like Stitch Fix

A recent Gartner L2 report highlights how much value a data-first approach can deliver and, in some industries, how rare it remains. The retail industry, while collecting a ton of customer segmentation data on websites, is lagging in deploying this data to personalize a feed for a customer. This matters because the ability to magically show a customer something that they love increases loyalty. Only a quarter of specialty retailers actually deploy the data they collect to personalize the customer experience.

L2 stitchfix

Image: Gartner L2

What’s at stake here? Growth.

A great example is Stitch Fix, the personal shopping service that, last month, announced that it beat earnings and sales expectations in an environment where their competitors face growth challenges. Stitch Fix is innovative in retail because of its AI – how it personalizes the experience for customers. This results in over 80% of users returning for a second purchase within 3 months, according to L2.

The Stitch Fix Style Space is a vast hyperspace of styles, personalized for each customer. It shifts and changes as customers select styles they like or don’t like, using a game-like app called Style Shuffle. Here’s a zoomable version of the Style Space mapping. Pretty cool.

Stitch Fix’s AI is, in some ways, better than Netflix’s or Spotify’s recommendations because, for Stitch Fix, showing a customer something they don’t like is almost as valuable as showing them something they do like. If a customer gives a “thumbs down” on a paisley pair of pants, this can reveal a lot about their preferences for other purchases. In a recent Quartzy article, Liz Webber showed off her personal Style Space.

“In the map below of my Style Space, based upon over 9,000 of my ratings in Style Shuffle, each dot represents one item. Regions with items that I liked have a blue hue, while those I disliked are shown in red. The darker the color, the stronger my feelings about that type of clothing or accessories. By comparing it to the full zoomable version, it’s possible to see which parts of style space I love, and which I would never be caught dead wearing.”

stitch map

Image: Quartzy

The Stitch Fix data science team is big – one of the biggest in the industry with over 100 data scientists, the kind of investment that’s required to make the transition to data-first.

There’s a lot at stake. The L2 research shows how big the gap is between data gathered and data used for valuable functionality. Companies need designers and product managers to understand what’s possible with AI then prioritize buying, building and executing well on AI that increases revenue and customer loyalty.

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