Remember my friend Sue, the self-proclaimed big data "Stuper User"? Well, as you may recall, Sue's company was interested in customer data analytics and the ability to extract insights for their marketing campaigns. The problem is, there is a shortage of people with the necessary skills to provide those insights.
This is not surprising given that data science is only now coming into its own. Harvard Business Review called the Data Scientist the "sexiest job of the 21st century" but not just anyone can be a Data Scientist: as Joel greenhouse writes in the Huffington Post, statistical know-how is the foundation of the profession.
This is what differentiates an analyst from the scientist: the analyst will run the queries and statistical tests, but the scientist will design experiments and tease out those oh-so-valuable insights that everyone is talking about. And this, folks, is why it is so difficult to find an individual who:
- Understands your business and industry;
- Has the necessary statistical background;
- Is technically savvy enough to understand how databases work;
- Can write the programs used to test hypotheses (such as SAS programming language, R, Erlang, etc.);
- Is able to craft simple and coherent reports that are actionable.
Educational institutions are falling over themselves to create/capitalize on master's level certificate and graduate degree programs in data science, business intelligence, or business analytics, etc. And they're apparently not cheap! They range from $10,000 to $60,000 and anywhere from 10 months to a couple of years in duration. Time will tell if these programs are graduating data scientists or analysts.
In the meantime, Sue's company will continue to search for someone who can fill its need for customer insight in a market that has a shortage of available candidates.
Many businesses have some form of loyalty program, be it a member card or maybe just a punch card for the 10th coffee free. That's great: customers love free stuff, you love repeat business. But, you're leaving value on the table.
The basic premise of a loyalty program is that customers are rewarded for their continued, well, loyalty. That is, the more that customers buy from you, the more perks they get, even if it's only a coffee after the n-th coffee purchased. This relationship between customer and business is pervasive; from where I'm sitting, this is probably one of the more interesting use cases for data analytics and one of the tools that businesses can use to maximise their revenue per patron.
Every loyalty program has to have some tracking mechanism. Corner coffee shops typically use cards on which customers accumulate stamps towards that proverbial free coffee. More advanced retail loyalty programs use member cards with mag stripes.
The coffee card doesn't give the business much information other than that the customer bought a specified number of coffees (not even what kind of coffee!). Not very valuable information, but it's low-tech and cheap. What would have been more interesting to the business is to have known that that customer had also occasionally bought a scone with their coffee. This would allow the cashier to upsell that scone whereas the customer might not have otherwise ordered it. There's that value left on the table.
Big box retailers may also be leaving value on the table. Let's take a real-life example: the TJX group has loyalty programs that are honored in Winners, Marshall's, and Homesense stores in Canada and, according to the TJXStyle+ web site, this loyalty program offers its users:
- Early shopping access to stores
- Advance tips on fresh arrivals
- Special offers
- 30 day returns
- The chance to enter exclusive member only contests
Interesting. At least that one line about special offers is interesting insofar that it implies that customers receive some incentive and/or that there is some sort of tracking. But, since there is no e-commerce implemented on the Winners, Marshall's, or Homesense web sites (nor is it implemented on its US cousins' sites such as TJMaxx), we are led to believe that customer purchase tracking happens at the cash register. Customers who sign up for the TJXStyle+ card or email updates on each of these sites only have to provide very basic demographic information limiting the segmentation that the vendor can perform. This forces the vendors to market to a larger segment instead of engaging customers in one-to-one marketing interactions. (Caveat: TJMaxx offers a TJX Rewards Credit Card in the US but it is not clear how they use the transaction data to promote to customers. Given how the TJXStyle+ program is implemented, the assumption is that the credit card is being used in a similar manner reducing the vendors' ability to reach individual customers.)
The point here is that, regardless of your loyalty program, if you don't capture transaction data about individual customers, and if you can't analyse it through the lens of demographic segmentation using analytic tools, you're losing opportunities to upsell, cross sell, promote, incent, and generally provide a better shopping experience while maximizing the revenue per patron. So, your opportunity cost is the unrealised sales.
As Big Data eases itself into the mainstream, more and more companies will be using user information to uncover and access hidden value in an effort to increase revenues.
All the while, we are asking ourselves (or should be, if we're not) more and more questions such as:
- At what point does big data become intrusive to individuals?
- What does the law say about the use and sharing of personal information?
- To whom does metainformation derived from this personal information belong? Does it belong to the individual or the business that created/collected it?
- What are the ethics of using personal information of minors and subsequent marketing to them?
- What are the applicable laws?
- Why is it that everyone wants in on big data?
What's of concern are statements such as those made by Equifax's CIO David Webb: "We know more about you than you would care for us to know." That's pretty scary. How does that impact minors? And, what are the ethics of monitoring kids for suitability as credit consumers, for example?
Disney has reportedly spent $1 billion on their MagicBand (or MyMagic+, it's not clear what it's actually called because of conflicting reports) RFID bracelet program making the happiest place on earth one heck of a data generating machine. The bracelets are tied into many of the company's systems (POS, ticketing, resorts, character interactions, etc.) allowing Disney to personalise the experience that much more once its fully implemented. Of course, as a customer you can opt out of providing information to Disney and identify yourself as a number linked to an account. Regarding children, "Disney is aware of potential privacy concerns, especially regarding children," but no action plan has been detailed to my knowledge.
The value and promise of big data is tangible. Will efforts to use our personal information and data to help us part company with our money succeed? Or will there be a backlash from a "No-Loyalty" activist group to fight against this money grab? Time will tell.
