Big Data For Mom-And-Pop Shops

Startup Tranzlogic brings big data-style analytics like those used by giant retailers to small and midsize merchants.
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The owners of the local pizza parlor down the street probably don't pore over sales data to learn nitty-gritty details about their customers, but a Southern California startup is hoping to change that. Tranzlogic, based in the Los Angeles suburb of Westlake Village, tracks a merchant's credit card transaction data, identifies key traits of the retailer's best customers and delivers that data back to the merchant via a Web portal.

What kind of information does it track? Demographic, economic, geographic and psychographic details, Tranzlogic VP Anthony Aker told InformationWeek in a phone interview. "The cardholder is under 35, he's married, has no kids … and he's making approximately this income," said Aker, describing the type of information that Tranzlogic provides merchants.

What exactly is this ominous-sounding "psychographic" data? It's information about customers' personal preferences based on their shopping habits, such as whether they prefer sporting events to museums, or would rather stay home than go on vacations.

[ Are retailers ready to manage the data deluge created by a mobile customer base? Read Big Data Helps Retailers Target Mobile Customers. ]

A potential privacy violation? Not so, Aker said. "We're not returning back to the merchant personally identifiable information," he explained. "We're not saying to [a] restaurant, for example, that Anthony Aker came in here and spent $25 on April 15. But what we can say is that [the restaurant] had a $25 transaction on April 15, and here's some valuable customer information about that transaction."

Tranzlogic starts by taking a merchant's credit card processing data. "We bump it up against various data repositories and in the process identify -- and de-identify -- the cardholder," said Aker.

By partnering with credit bureaus and accessing public data repositories, Tranzlogic can build customer profiles, which it provides to businesses. "Census data, survey data -- this stuff is out there," said Aker. "We aggregate it and build customer profiles, and then match those profiles to credit card numbers."

Tranzlogic licenses its technology to credit card-processing companies, which in turn offer it as a value-added service to their small and midsize business customers. "[These credit card processors] are essentially service providers," said Aker. "They are hungry to differentiate themselves through technologies such as ours." He estimated that approximately 10,000 merchants currently use the Tranzlogic system.

Aker and his Tranzlogic co-founders, CEO Charles Hogan and CTO Dave Watkins, launched the company at the end of 2012 after extensive beta testing with a small number of clients. The company thus far has partnered with "smaller, more entrepreneurial" credit card-processing firms such as Signature Card Services, but it is in talks with bigger industry players as well, Aker said.

Although Tranzlogic's technology might not fit the classic high volume-velocity-variety definition of big data, it does show what information retailers can glean by analyzing data sets already at their disposal.

In essence, Tranzlogic is offering smaller merchants the type of data analysis that giant retailers have been doing for some time. "Target and Walmart have the resources to spend hundreds of thousands, if not millions, of dollars on this type of research," said Aker. "They have departments for these things."

It's a different story with smaller retailers. "Some are not doing it because they can't afford it," Aker noted. "Some are not doing it because it's not even on their radar."

Merchants access the Tranzlogic service via a Web browser. "They don't have to download any software to their point-of-sale system, or to their credit card processing terminal," Aker said. The Web portal provides access to reporting and business intelligence tools, as well as to raw data and other features, including a localized "heat map." "I want to know where my customers are coming from, [so] I can pull up a map and it's going to be shaded according to sales or transaction counts," he explained.

As for its competition, Aker said that Tranzlogic has only a "couple of indirect competitors" at this time. "There are some big companies that are doing things that are similar, but not the same. Their approach is more industry-comparison as opposed to specific information about that business."

Companies want more than they're getting today from big data analytics. But small and big vendors are working to solve the key problems. Also in the new, all-digital Analytics Wish List issue of InformationWeek: Jay Parikh, the Facebook's infrastructure VP, discusses the company's big data plans. (Free registration required.)