Customer Data & Decisions – “Reflections of Me”

In this post, I explore what firms really do know about me as a customer.

What do they know, and how did they get that?

Wow! Where do I start?   Many companies today are doing everything in their power to amass as much data on me as possible so presumably they “know me” and make more relevant marketing offers…or as they say, “to provide me with an exceptional experience through an ongoing conversation.”

As empowered consumers, we are the judge of whether they are doing this well. Are they really capturing the right information and in a way that is respectful, well-timed, and used appropriately? This subject quickly stretches into ethical and political implications, but to avoid that, I will just lay out some facts about what companies are doing:

• First and foremost, they save everything I do with them. All interactions, all transactions, all orders, all clicks on their website – basically any activity on their physical and digital properties they capture and keep – in some cases for 4 years or more.
• They can often freely share this information with subsidiaries and affiliates (which means a lot of other companies) unless I explicitly ask them not to.
• They append 3^rd party data – lots of it. The sharing of data about me is ubiquitous. Appending means other companies are capturing data and sell it and it’s often indicative of my affinity to like, want or to buy something. This can pretty easily be matched to me with a presumption, for example, I also like to golf because I subscribe to a golf magazine.
• They are looking at my patterns of activity.
• They progressively profile through very short but repeated data collecting. For instance, I sign up on a website and provide basic information, then I agree to a news letter, and they capture some preferences, I download their mobile app, and so forth. Eventually, they may know whether I own or rent, have children, or are planning a kitchen remodeling.
• And they try to predict their next best move. In other words, they are trying to figure out what I really need and want. Called “Next Best Action” technology, and usually found in larger companies, there are very large teams tasked with calculating lifetime value, building rules, testing propensity models – and ultimately a hub that makes promotional, product and service recommendations.

Really very little of this is new my friends, it’s just massively accelerating.   In 1992, one of my favorite non-fiction authors, Erik Larson, wrote a book called “The Naked Consumer: How Our Private Lives Become Public Commodities.”[i] Back then, his impetus for writing the book was based on a pretty simple event driven mailing he received for his child’s first birthday. Intrigued, he chronicled a world he saw as already borderline out of control with consumer data sharing. Imagine his sentiments now with the growth of the internet, digital channels, social, mobile, and big data.   I think he might change the title to “The MRI of the Consumer.”  This month, Scott Brinker posted a blog entry estimating that nearly $22 billion USD of venture capital funding has been poured into the marketing technology companies he pastes onto his marketing technology landscape and admits it’s probably underestimated.

As a long time marketer, I’m not that paranoid or really that appalled at what is going on. I still believe we live in a world that has checks, balances, methods and free choices.   Often, as consumers, we decide how much information to give up in return for something.  In most cases it’s a conscious choice. And there are ways to combat and prevent abuse. My biggest concern is security, as information is repeatedly hacked and then used for purposes it was never intended for. Better security and education are needed, but in general I don’t think it’s as surprising today to the average person as it was for Larson 20 years ago.

But rest assured, this picture of you is getting clearer – and there is a substantial amount of corporate energy being poured into filling in the blanks. The popular term is “The customer journey”, and now also being called “The customer movie”, with the intent to define every frame.

Yet motives and reality are two very different things.   I might want to be rich, but simply wanting doesn’t make it so.   And really, who I am versus what specific habits or preferences I have in relation to a certain product or service is generally where the line is drawn. For instance, a home improvement business would love to know what kinds of building skills I have, what tools I have, and what projects I’m considering, yet I don’t think they really care about what music I like.

What do they intend to do with my information?

I believe at the heart, companies just want to sell more of what they have and do it at the lowest possible cost to them.   It’s that simple.   But they know the world is competitive, there are choices, switching barriers have eroded, and if what they are offering (or failing to) isn’t a match, or at the right price – I will go somewhere else.

So they collect data, study events and patterns of activity, test timing, try to get preferences right, personalize content, and hope I’m impressed when they take actions.

Are they becoming specialists majoring in knowing one aspect of me, and knowing it well?   Perhaps, but make no mistake their not your best interests are in mind, and if information is useful to another party, and a business transaction makes sense, it will happen. Ironically, businesses are better at sharing customer information then the healthcare industry is at sharing patient information, although finally we are seeing some improvement there.

How did they do that?

It’s really not rocket science, yet amusingly marketers are applying technology that is also used to help launch and guide rockets.

When a rocket launches, there are sensors monitoring all its complex systems. As a consumer, your systems – what you say, what you do, where you go – are being monitored.   Hotels are now placing beacons at key locations such as the front door, to detect when you arrive.   Stores are using similar technology to gauge your potential interest in a product sitting on the shelf you are next to.

There is already software and technology, and the cost is dropping, to gather this data and allow the marketers to access it and build rules on it (e.g., if customer arrives, alert front-desk personnel and pop-up appropriate offers).

Rocket scientists make heavy use of statistics and probability theory to understand the amount of redundancy necessary in systems, the likelihood of something failing, or predictions of weather to gauge best launch and landing windows. Marketers use all these techniques to tune their systems for response time versus cost, whether a new promotion will succeed, or timing a communication.

Also, the cost of storing, aggregating, distilling, modeling, and using this information is dropping rapidly.   The internal discussion has shifted from how much data should be saved, to how more data can be synthesized and insights gleaned from it.

A confluence of freely shared institutionalized best practices, application speed and simplicity, cloud computing, automation, and scientific testing procedures has led to more companies with access to better marketing technology – and a better, albeit still incomplete picture of you the customer.

Comments and alternative views are always welcomed.

Note:  These views are my own, and not that of my employer

[i] Larson, Erik. The Naked Consumer: How Our Private Lives Become Public Commodities. New York: Penguin Books, 1992.