Join us as we sit down with Volker Selle, CEO of Cheil, the visionary leader behind the pioneering provider of connected commerce solutions. In this exclusive interview, Selle delves into how Cheil’s predictive analytics and forecasting are revolutionizing the future of retail and consumer engagement. He also shares insights into the challenges faced in this rapidly evolving industry and how Cheil is navigating and shaping the landscape of modern commerce.”
European Business Magzine (EBM)-As the CEO of Cheil a leading provider of connected commerce solutions, how do you see predictive analytics and forecasting shaping the future of retail and consumer engagement?
Volker Selle (VS)-So, starting with consumer engagement? I think it’s a very broad topic anyhow, because I think it’s a combination of a lot of stuff. Most of the companies still very much deal with the front end, even in the digital world, as well as in the physical world. And having said this, I think the engagement is driven by experience now, and I think the most important topic is what kind of experience do you want to deliver in retail?
When I’m dealing with clients, it’s not very obvious what they really want to achieve because their needs are different now. Having for instance, a flagship store, or having a store that really should sell, is a completely different experience.
From my perspective, the ultimate experience you can have is to buy a product and take it out of the package. Behind this, there is a lot of logistic processes, and – communicating to customers, and then we dive into the topic of predictive analytics which helps predict behaviour. And by predicting behaviour, you can predict sales and by predicting sales, it is predicting the logistic how much stock is needed.
Where are the clients or the customers and shoppers buying now, and how do you deal with the processes to create outstanding customer experience and therefore, outstanding customer engagement? To create outstanding engagement and using predictive analytics — there are hundreds of fields nowadays, where it can be applied. We are using it also to plan with field performance and operations and are using it for predicting sales. We are starting to predict shopper journeys and the experience which is needed. We are predicting how many journeys and what are the right offers if we make promotions, and predicting the price sensitivity and dynamic pricing topics.
EBM-Can you discuss in a bit more detail on how dynamic pricing strategies are evolving in today’s competitive mass market landscape and how you know, how Cheil is leveraging this approach to drive sales and customer loyalty?
VS-One major topic is having pricing strategies and also dynamic pricing, especially when we are talking about promotions. Often there is not a deep rationale behind how you set the pricing. And most of the time, it’s very much dependent on whether you want to drive, for instance, market share by driving sales, or whether you want to drive profit.
Sometimes if you don’t use dynamic pricing in the right way maybe you drive the wrong KPI. And could lead to less profit, even though you could earn much more by having the right price point in the market. At the same time, I think it’s crucial to manage the pricing in a dynamic way regarding your competitors. If you have different competitors running a promotion in your digital world or in the retail market, then the challenge is the performance of your promotion is going down because a competitor has set a different price point.
And that could start interfering with the sales strategy because in reality, you need to know the right pricing levels of everyone and then you have to adapt to these prices in a dynamic way. You can choose to make them cheaper, but you will need the right arguments to have a different price point, which is maybe a bit higher. Maybe loyalty members can also affect different price points.
I also think there is a wide range of opportunities on how to drive dynamic pricing into all your marketing activities now, certainly in the digital world, as well as in the physical world. We are driving us, and we have tools in place to manage this along with the predictive analytics.
EBM-How does Cheil harness data and analytics to gain deeper insights into customer behaviour and preferences?
VS- First of all, the biggest challenge is to create holistic data, infrastructure, and data knowledge. The learning is that companies, either in their unstructured data or their data in silos, and our approach is that we have built a data infrastructure for us and for our clients, that is able to have one data lake. And within this data lake, we can correlate all data from different touchpoints. Because I think data, pure data, has no value in way.
If data is just transforming into information, then why is it bad. But what is the implication? What is the insight behind it? Why is it like this? So, it’s a strong combination of having a holistic data approach, in combination with the right analytics, plus knowing your market and being able to interpret the data in the right way.
We also learned we should have a comprehensive set up around data, which means big data and smart data. For instance, we have a lot of big data for our clients. And we are managing all the salespeople, plus we have technical platforms in place to be able to get all the smart data from the field. Sometimes that is much more valuable than pure, big data being taken from the origin or GIF car because it helps us to interpret the data very well. I think the data framework is holistic and data framework is important. Having the right analytics, it’s still human intelligence. Everybody’s talking about AI.
Having the right combination of big data and smart data to drive the right insights. The insights are the biggest challenge. And then if you have this, you can drive the right experience and the right engagement. Now, you can drive the right loyalty of your office shopper. Everything is more or less connected with each other. But I think you have to manage your expectations in the right way. Getting the right data set up in place, then coming to information and then pushing it. That’s a way a company has to go. But I think we have succeeded quite well with this.
EBM-How does Cheil enable brands to connect with consumers on a different level through seamless integration and what are the key benefits for brands and consumers alike?
VS- I think this is the biggest challenge. Have you been asleep? Because in reality, we call it Omniverse or it’s like you have the physical world, then you have the digital world and then you have a virtual world connecting all these worlds. A holistic and seamless customer shopper journey of human beings is the biggest challenge.
We have created a process for us, which is based on service design and business thinking. We also look at all these journeys in a very holistic approach. So that means we are not just looking at the front end, we are looking at each of the touch points. What is the state of the shopper or consumer there? What is his emotional status? Which data do we need at this point, and which data we can grab for the next touchpoint now, to create an overall defined experience we want to achieve as a brand.
EBM- Cheil aims to be a total solution provider in the omniverse. What does this vision entail? And how does AI play a central role in achieving this objective?
VS- It’s crucial we use AI to create a better experience on touchpoints and automate. That is the key and essential thing for us to manage the overall journey. Sometimes we can use AI to create a stronger experience, for instance, AI chatbots. This is what we’re doing for a real estate company by producing AI based content. So, it’s everything we can automate with the human touch. IN the shopper’s journey and customer journey we are using AI.
So, that means we are very much involved in the operational processes of our clients. And also, some clients are outsourcing operational work to us, which normally would never be outsourced. Now, our advantage in this case is that we really know all the problems that can occur.
EBM- Could you share examples of how Cheil has successfully implemented AI powered solutions to enhance customer engagement and drive business growth for clients?
VS- One example is the real estate company, which is our client. Normally, they have a brick and mortar, but they also wanted to think about how to step into the digital world. So, for them, we created an AI driven platform where you can analyse millions of data points of real estate in Germany, that’s completely API driven. On the platform as well, you can compare your own real estate with its current market value. Sometimes I go there for fun, because it’s like your bank account, right?
You look and see the market price, the value, and you see how much you could rent it for. It’s based on millions of data points. At the same time, we developed a content strategy where we analyse based on AI. Including the analytics on the city market situation in the biggest cities in Germany, how the developments look in the future and what the price levels are in specific regions. Normally, in the old world of advertising, a copywriter would have to spend a year writing this data and make the presentation of it nice. Whereas now, the profiles are completely generated by AI, optimising the process.
EBM- What are the challenges that brands face in adopting AI driven technologies for consumer engagement? And how does Cheil help overcome those challenges?
VS- I think the power of AI is that it can disrupt existing markets, for example in training this should be disrupted. We develop in smart ways, for example a tour planning and task management tools using only AI. Those tools enable us and our clients to manage salespeople and merchandisers more efficiently — we increased visits by 145% and reduced the office time so they are out in the field. So, multitasking and all this stuff can be prioritised by AI, enabling us to develop new solutions and new tools, which can disrupt markets and make them more efficient.
First of all, it starts with knowledge, everybody is talking about AI. But the state of maturity in a lot of companies concerning AI is average. So therefore, one challenge is to help educate and consult with other companies. This depends on how innovative an organisation is and to also help them understand AI in the right way, and not be too reluctant against new innovation, which can be difficult.
I think the Germans are famous in being very reluctant against new technology. We have the country of engineers, but we are maybe not the country of tech. There are concerns in companies now between the IT departments against AI. And there are challenges around the reliability of AI generated content. Is it right or wrong now?
We help companies first of all by helping them find the right understanding of an AI tool that can help. What is the security and context of these tools, and where are the risks and opportunities, then we help them define their guidelines on using AI. That’s very important for employees using AI tools, having guidelines and educating them on which environments they can use AI tools.
Also, it helps to start a process where you identify the topics where you can increase efficiency and effectiveness with AI. It’s interesting to have this service design approach and with this, you can then identify the processes and steps where you can use AI to make things more efficient. So, I think these are the main topic, but I think your ad should not be the sole purpose by itself, it should have a reason and a clear KPI, with what you want to achieve.
EBM-Or what do you see as the next frontier in connected commerce? And how is Cheil preparing to stay ahead of the curve in delivering innovative solutions to their clients?
VS- So, for me, I’m German so I’m pragmatic. I study the makeup of what one topic really is. There are many topics always discussed: what happens in the future, nerds? Look at the Metaverse, what a big discussion that was now and look at it.
My perspective is that we have to make the right foundation now. If we use the right level of technology now, the right tools — like predictive modelling pricing —then there is a clear data approach combined with AI. Most companies are far away from implementing this.
It’s shaping the future. We should really embed all these topics into connected commerce because then we really are achieving a frictionless and seamless journey of our shoppers and consumers. And that is our approach. You need agile organisation on the agency side as well as on the client side.
As you are talking about different touchpoints and silos in organisations, if you don’t have an agile platform, then you will never achieve it. And this is a huge barrier out there.
One topic that we are very much working on right now is the sustainability topic. Because there is clear data. AI is more or less clear. How to create the experience strategies is clear. Now, I think it’s about helping the clients do this work in a very sustainable way.
Where can we drive sustainability in this process? What is the level of sustainability you want to have in the physical world as well as the digital world? Because the service has an impact on sustainability — most people are forgetting this.
We really want to accelerate the transition to a resource conserving and regenerative commerce. By shaping growth through creativity, innovation and technology. That is our purpose and what we are going for. And this is what we will embed in everything we are doing in the area of connected commerce.
That is very much how I see things being done in the future. Maybe it sounds quite pragmatic. I think that it’s crucial for the future because it doesn’t make any sense to always look for the next hype. And having done the homework, it doesn’t make any sense.
