By Chuck Densinger, chuck.densinger@us.ibm.com & Mason Thelen mason.thelen@us.ibm.com

Question: Which computer system can provide retailers with unprecedented insight into how to serve their customers better?

Answer: Watson.

It may sound like science fiction, but it is very real. Fresh off its victory on Jeopardy!, the IBM Watson system is quickly moving out of the world of games. The first application of the technology will be in healthcare, where Watson’s ability to analyze the meaning and context of human language and quickly process information to find precise answers will help physicians and nurses unlock important knowledge buried within huge volumes of information. It will offer answers they may not have considered to help validate their own ideas or hypotheses.

But merchants watching the “Jeopardy!” match have already started thinking about ways that Watson could address some of the most vexing problems in retailing today.

For example, the typical large retailer has many customers who regularly shop the store, website, mobile application or catalog. But still, the retailer doesn’t really know these customers or even have a basic understanding of their individual needs, tastes or what they might want to buy next. We’ve all had the experience of feeling like a stranger in a store where we spend a lot of money. This has consequences for everything from the store’s revenue to its brand.

Watson technology could be integrated into a retailer’s core systems, including databases, CRM, inventory and order management plus all customer interaction points. The system’s analytical capability could enable businesses to ask a virtually unlimited series of questions, instantaneously, about individual customers. Such as: “When should we next contact John Smith? What should this look and sound like? Through what mediums should he be contacted?” Watson could analyze all the data available in to the retailer on that customer — purchases (and returns), favorite brands, online habits (if he identifies himself), and the type of customer he is (for example, a loyal customer … or only shops sales … or prefers shopping the web rather than the store).

Chuck Densinger and Mason Thelen help lead the Advanced Customer Analytics practice in IBM’s Global Business Services unit. Densinger can be reached at chuck.densinger@us.ibm.com. Thelen can be reached at mason.thelen@us.ibm.com.