'Worlds are being disrupted' by our data-driven approach: Splunk CEO

  • "Mad Money" host Jim Cramer sits down with Splunk President and CEO Doug Merritt for the latest on his analytics company's disruptive story.
  • Merritt emphasizes the need for all companies to become data-driven.

Sticking to tradition in retail — specifically, choosing what to sell without having the data to back up the decision — could be what's killing struggling chains.

That's at least if you ask Doug Merritt, the president and CEO of software analytics play Splunk, who told CNBC on Monday that picking items to sell without consulting customer data could land retailers in jeopardy.

"If you're doing it that way, it's going to be harder and harder to be successful," Merritt told "Mad Money" host Jim Cramer. "That is not the way that Amazon's doing it. That's not the way that Mercadolibre's doing it. That's not the way Alibaba's doing it."

"Worlds are being disrupted because people are taking a data-driven approach right now to understanding product velocity [and] customer needs," Merritt continued.

Splunk is partnered with Amazon's cloud arm, Amazon Web Services, and boasts clients such as Coca-Cola, Nordstrom, Groupon and the state of Alaska.

The San Francisco-based company helps clients gather real-time data related to their businesses to smooth operations, heighten security and gain eye-opening insights into their customers.

For retailers in particular, Merritt's company hones in on ultra-specific data points that paint a picture of broader customer patterns, wants and needs.

"There are signals — WiFi hotspots, mobile devices, sensors on the stores — that, if you know how to trap, you can do a much better job of understanding what your customers need and listening to that customer so you can be successful," the CEO said.

These days, Splunk is moving towards a more "prescriptive" model, telling customers not only that they need to harness their data to survive, but also explaining which data points are most useful and how to use them, Merritt told Cramer.

The move is part of Splunk's push to create faster "time to value" for their customers, which comes in handy for multinational companies that need to comply with foreign regulations, the CEO said.

But most of all, Merritt said that Splunk's core mission and its partnership with Amazon highlights what companies increasingly need: visibility into customer sentiment and behavior.

"Every company has got to become a data-driven company or they just won't compete going forward," Merritt told Cramer, speaking from CNBC's 1Market in San Francisco. "And Splunk is the best solution out there to help companies understand this multitude of data that is coming in every single day and turn it into a business outcome, a true competitive advantage."

Watch Doug Merritt's full interview here:

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