What to Avoid in Customer Analytics

Tuesday November 17th, 2015

Working recently on enabling customer analytics for a large Australian bank, I was once again reminded of the potential of Big Data and the risks involved.

This bank proudly analyses customer transactions to glean important information about its customers. They plan to use the data, for example, to offer you travel insurance when they see that you bought a flight ticket. But they also plan to offer you access to their lounge in Singapore if the flight tickets were bought from Singapore Airlines.

The big question is: as a customer, would you be happy to receive such an offer? Where does the (very subtle) creepiness line pass? How do we decide what’s acceptable and what’s not? Some examples might help.

Let’s start from the creepiest. I know of a US-based company that offers software that analyses web-clicks and can predict with high precision, for female surfers, whether they are having their period. Creepiest, you must agree. Not surprisingly, the company doesn’t get a lot of clients (no female clients, I assume).

A more famous example is the Target story, where their analytics predicted a young girl’s pregnancy before her family knew. What did Target do when the story came to light? “We found out that as long as a pregnant woman thinks she hasn’t been spied on, she’ll use the coupons. She just assumes that everyone else on her block got the same mailer for diapers and cribs. As long as we don’t spook her, it works,” —said Target to Forbes.

On the other side of the continuum there are companies who “spy” on me and make it worth my while. Two examples are Google and Amazon. When I type a search item, Google attempts to complete it for me. It uses what I searched for in the past and what you are searching right now. It spies on all of us and we love it. Why? Because the benefits outweigh the loss of privacy.

We rarely feel that our privacy has been compromised by this and we enjoy the benefits.

Similarly, when I buy a book from Amazon, they tell me that “people who bought this book also bought those books…”. Again, they are spying on me and you, creating a detailed profile of my buying habits and comparing it to your profile. Do I feel that my privacy is breached ? Not at all. The recommendations are actually quite good, usually. Does this benefit Amazon? You bet it does. Fortune magazine claims that Amazon get up to 60% conversion rate on their recommendations.

A middle-way example is Orbitz. As a result of customer-spending analytics, Orbitz decided to present Mac users with more expensive options than PC users. All users had access to the same offers, but Mac users would have to work harder to see the cheaper options. As an Orbitz user, would you be happy with this? Would you complain? Or would you switch to a PC?

Your company is likely to find itself somewhere between these extremes. Yes, you want to know as much as possible about your customers. But you must ensure that you don’t alienate them by compromising their sense of privacy.

My advice: do your customer analytics, but use the results wisely.

Ben Bor is a Senior Solutions Architect at Teradata ANZ, specialist in maximising the value of enterprise data. He gained international experience on projects in Europe, America, Asia and Australia. Ben has over 30 years’ experience in the IT industry. Prior to joining Teradata, Ben worked for international consultancies for about 15 years and for international banks before that. Connect with Ben Bor via Linkedin.

 

 

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Ben Bor

Senior Solutions Architect at Teradata
Ben Bor is a Senior Solutions Architect at Teradata ANZ, specialist in maximising the value of enterprise data. He gained international experience on projects in Europe, America, Asia and Australia. Ben can count some of the largest international conglomerates amongst his clients, including the UK tax office, Shell, Exxon, Credit Suisse, QBE, Woolworths, Westpac and others. Ben is an international presenter on Information Management (IM) topics, having presented in Europe, Asia, USA, Canada, NZ and Australia on IM topics ranging from performance through data warehousing and data quality to Social Media analysis and Big Data. Ben has over 30 years’ experience in the IT industry (he wrote his first program in 1969, using punched cards). Prior to joining Teradata, Ben worked for international consultancies for about 15 years (including CapGemini, HP and Logica) and for international banks before that
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About Ben Bor

Ben Bor is a Senior Solutions Architect at Teradata ANZ, specialist in maximising the value of enterprise data. He gained international experience on projects in Europe, America, Asia and Australia. Ben can count some of the largest international conglomerates amongst his clients, including the UK tax office, Shell, Exxon, Credit Suisse, QBE, Woolworths, Westpac and others. Ben is an international presenter on Information Management (IM) topics, having presented in Europe, Asia, USA, Canada, NZ and Australia on IM topics ranging from performance through data warehousing and data quality to Social Media analysis and Big Data. Ben has over 30 years’ experience in the IT industry (he wrote his first program in 1969, using punched cards). Prior to joining Teradata, Ben worked for international consultancies for about 15 years (including CapGemini, HP and Logica) and for international banks before that

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