I’m writing this newsletter with a heavy heart. My father died. In Israel, my family and friends are at war. Darkness, dysfunction, and distrust are destabilizing the world.

Today,

I want to share the story of PEACE for Profit.

It is about the power of WHY.

The PEACE for Profit template illuminates the conversations over which actions you should take to achieve the desired outcomes.

If you have been reading my newsletter for a while, you have seen the framework evolve through the years. You already know how it solves problems for retail managers.

In the coming weeks, you will see more case studies.

But to understand why PEACE for Profit is so powerful, you need to go back to why it was created in the first place.

Why Frameworks? Solving the Paradox of Simplicity and Complexity.

In business, you often think about solutions.

But,

If you dig deeper into any complex problem, you often find that there is more than one solution. Your job is to decide which solution is best to address the problem.

Worse,

Often, the biggest challenge is to understand the problem.

Take market research.

You have probably heard that success comes from understanding customers. But the problem most companies face is figuring out what their target customers want. They have difficulty accessing the target audience for meaningful insight collection.

Many people believe the solution is better software.

Software products have been built on binary thinking. Yes or no. Black or white. Stop or move. If a piece doesn’t work, you fix the broken step.

And yet,

The advances in AI challenge the deterministic architectures.

You see it clearly in Generative AI such as ChatGPT. You enter a prompt twice and get different answers. You change a word, and responses may be on different topics.

Still, the linear cause and effect are common.

But in complex situations, there is not one component with a clear impact; instead, many parts influence an outcome.

And,

The retail store is a complex environment.

In 2019, many technology providers promoted their “Google Analytics for Physical Stores.” But that never made sense to me because there were no direct correlations of cause and effect. Physical stores don’t allow you to have binary thinking.

I struggled with designing an analytical framework to address the complexities of the 20-plus tracking technologies.

As technology improved, the data became more complex. Quickly, it became a choice between simplicity and the aspiration to understand the nuances better.

During the pandemic years of 2020/21, my interest in behavioral economics grew.

I searched for ways to introduce the psychology of behaviors into an analytical structure. And I wanted a sophisticated framework to embed all the complexities of the technology without removing the simplicity of usage by the business user.

Why “Alignment”? Because Everyone MUST Win.

From the Stanford University days in 2013 to 2018, my focus was to define behaviors in the context of the technology and what the business user could do.

Dual Usage is an important concept.

I was working primarily with video analytics, and the cameras were often purchased for loss prevention budgets for surveillance. Retail executives felt the data has benefits to other departments in the organization.

It became evident the same data impacted different jobs differently.

Context mattered.

The win-win-win alignment stood in stark contrast to the call to action and conversion that dominated the digital world, where users move through the website step by step.

Once we connected between what the tracking technology can do and what the user was trying to achieve, we solved the dual usage problem.

Why “Object Elements”? Because Retailers Need Technology-Agnostic Solutions.

You cannot divorce the definition of the metric from technology.

And metrics reflect behaviors.

For example,

Take a simple metric like Waiting Time. The definition is more complicated than number of seconds. You first define an object, recognize the object, and define the physical location that matters before determining the importance of the time-based metric.

This is where many people got stuck.

If you watched the original 101 course, you know about the five elements of people tracking technologies. In early 2023, the elements were cataloged with who, where, when, what, and why.

Why “PEACE”? Aspirations. Acronyms. Clarity.

In 2022, I needed an innovative analytical framework.

In analytics, you must understand the differences between inputs and outcomes.

If metrics represent behaviors, the next step is to identify the behaviors to influence and the behaviors that influence.

In the digital world, you only care about the user’s behavior.

But in the physical world, the behavior that generates the outcome and the behaviors that influence it are often different. In many operational situations, the “do something” is related to store employees.

I search for connections between the two types of behaviors.

The first piece was evident because the retailers wanted to deal with customer engagement. And if you deal with engagement, you want to think about conversion.

I had the E and C.

Because behavior was the core concept, I had the P from people.

Abandonment turned up because I was trying to determine how employees influence behaviors. In many cases, the involvement of employees occurred in friction points, hence the abandoned terminology.

I had the P, E, A, and C.

PEACE made sense to me. At first, the E stood for external because I looked at external factors outside the store. But, as I worked with the framework, experiments became increasingly important.

I had the steps.

First, you understand the behavior and quantify it. Second, you figure out what store employees need to do and quantify that. The last step was the clarity of the impact. To determine which actions influenced the outcome.

PEACE came together as a step-by-step system to define the inputs.

Why “Profit”? A Holistic View of Outcomes.

The definition of the primary outcome as Profit, not sales, and not conversion was one of the earlier steps in building the framework.

“PEACE for Profit” sounds counterintuitive because the wordings are opposites. Peace sends a positive message. To many people, profits stand for greed.

Many people think about profit as bad. It symbolizes greed and short-term thinking. But if you holistically think about profit, you realize that profit is awesome precisely because it considers the costs that generate the outcome.

Profit is also where the amplification comes in.

Costs and outcomes are not limited to your experiment, stores, and retail chain. There is a long-term impact. Scaling has a multiplier effect.

Why “Amplify Store Sales”? The Peak Before Payment.

Amplification becomes the objective because the cost factors already exist once a potential customer enters the store.

You already have a store, an inventory, and employees. These are sunken costs when the in-store selling process starts.

Amplification refers to what happens on the sales floor. E-commerce has many benefits, but physical stores still carry 80% of retail sales.

I don’t think that it will change soon. We are humans who live in the physical world. So, the stores themselves will have to change, and they are changing, but the existence of physical stores, I think, will stay.

The existence of stores or how stores will look and function are two different questions.

Why a 5x5 template?

The 5x5 template you see came to me during the workshop at 2 a.m.

It was evident from the questions that the technological elements with the metrics were understood. The relationship between behaviors, inputs, and outcomes was understood. But the question remained how it all works together.

I hope the template will help you think about how the data from the technology works together with the behaviors and what influences them.

I hope to help you manage the process before the purchase, from entering the store to exiting, where 80% of retail sales still occur.

I hope the template will empower the frontline employees and simultaneously reduce the stress of corporate managers.

You want to focus on change, not data.

Get started. Click to download.

As the world becomes darker, it’s easy to blame another person, the other side, or even yourself. It’s much harder to dig deep into “why.”

Be in peace, Dad.

Ronny Max

P.S. If you are interested in a PowerPoint slide of the template, hit reply.

GET TEMPLATE

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Behavior Analytics Academy trains people and teams to increase conversions, sales, and profits in physical environments. Build Profitable Ecosystems.

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