To Push Nook Past Kindle, Barnes & Noble Bets on BI

CIO — Amazon's Kindle vs. Barnes and Noble's Nook is the new Coke vs. Pepsi, and neither retailer wants to fizzle out. Both companies are marketing their latest e-readers as tablets, good not just for reading but for all entertainment, including browsing the Web, watching movies and playing games.

Bigger, richer Amazon sells the less expensive device, but Barnes and Noble hopes it can still outmaneuver its rival by stepping up its analytics game and luring would-be buyers off the sidelines. Less than two years ago, Barnes and Noble kept more than a dozen separate databases of sales, operations and customer data. When managers wanted to analyze it, they asked the business intelligence group to run reports, says Marc Parrish, vice president of retention and loyalty marketing at Barnes and Noble. The company now runs a roughly 100-terabyte database built on Teradata servers, in part to more quickly and accurately figure out which consumers are likely to buy a Nook.

Using business intelligence is the right move, says Rob Enderle, principal analyst at the Enderle Group, but it might not be enough.

"You want to make sure you're not spending money on people who would not consider buying your product," he says. "If you can't spend more than your competitor, you have to spend smarter."

Stayin' Alive

The e-reader battle emerges as the $7 billion Barnes and Noble, like many media companies, faces an uncertain future. Borders, its biggest rival in physical retailing, went under last year. In May, Liberty Media, an $11 billion media conglomerate, offered to buy Barnes and Noble for $1 billion, only to withdraw the offer and instead make a less risky $204 million investment in the company. Then just before Halloween, the bookseller's CFO left.

Sales at Barnes and Noble's retail stores continue to decline while online sales rise. The Nook and its content contribute significantly to online sales: Digital books outsell physical ones three to one at bn.com.

The company's new database allows managers to run their own reports using statistical analysis tools. But more important, they can now look at companywide data on more than 60 million customers for new insights on consumers.

Parrish says the tipping point that inspires a Nook purchase is unique to each customer base. For example, women known to buy romance novels are prime candidates for the Nook, which lets users read material without flashing book and magazine covers. And a tween girl who has let her Nook go dormant may be coaxed to return when Barnes and Noble sends her reviews or recommendations of young adult fiction. What doesn't work is bombarding people with coupons. "We want to have a positive experience with them so they stay with us in the future," he says.

Indeed. "The Nook may very well be what allows Barnes and Noble to continue as a business," Enderle says. "If Barnes and Noble can't make it a hit, they're pretty much done."