What Do They Do With All That Data, Anyway?

“Facebook is absolutely, indisputably creepy, a fungal colony of privacy violations fused helplessly to our human infrastructure.” You know…I was going to write something else entirely, but this jumped out at me today. And so of course I had to follow it, because who can resist a hook like that?

It’s a piece entitled ”The New Intimacy Economy” by Leigh Alexander (@leighalexander), in which she argues against the inherent creepiness of technology that pretends to be a person with an actual relationship with you. “We often imagine the inevitable future tech dystopia will be cold, populations marching under the eye of sterile robot overlords, our speech monitored and scrubbed of sentiment and intonation. Increasingly, though, it seems like we’re hurtling toward the opposite: A singularity of smarm, where performative — maybe even excessive — intimacy is the order of the day,” she writes.

Look for this to get worse, not better. This is the new business model, and it looms ahead of us like a tidal wave. Do you wonder where we’re going with all this Big Data, why Target (among so, so many others) wants to track your every move, your every purchase? (Want to know just how in-depth this goes? Please, I implore you, grab a beverage of your choice and set aside some time to read this fantastic Charles Duhigg article, “How Companies Learn Your Secrets,” published in the New York Times. For my marketing peeps who know all this, skip ahead in the article and read about how P&G’s Febreeze was damn near an epic fail, and how they turned it around.)

Customer Intimacy is “it”…although marketing is going to probably call it a “customer centricity” model. We’re all used to the product central model…where you’re Apple or Gucci or Ferrari, and your aim is to be The Best. Let the masses come to you for your superior product. Big data allows for something different. Manufacturers didn’t know much about you, the buyer. They didn’t have to. But data allows them to know something about you. A LOT about you, in fact.

Data analytics tells you a ton about past consumer behavior, sure. But it’s the predictive power that they’re really after. It’s not what you bought last month, or all of last year. It’s what you’re liable or likely to buy in the future…and leveraging that into a number that just might represent your lifetime value to the company. Your current AND future value. And data has the capacity to predict what you’ll do. We’re very frighteningly creatures of habit, after all.

Look, we’ve brought this on ourselves. We all have smartphones. Hell, even my mother has a smartphone, and she’s a woman who still literally spends all summer chopping firewood so as to keep up with her main heat source during the winter months. (In Colorado, no less.) So not exactly a woman on the cutting edge. And we all use those smartphones to outfox every retailer in existence, right? You’ve never stood in the retail outlet and scanned a barcode to see if you could get the item you’re thinking about buying cheaper off Amazon? You’ve never researched a product, looked up reviews, educated yourself to make the best buying decision possible before you went out to pick something up? We’re smarter consumers than we were twenty years ago, with way more technology at our fingertips. Technology that allows us to communicate instantly with one another (“Hey, your spouse bought a Prius last year, right? How do you guys like it?”), that allows for some pretty neat and disruptive distribution channels to come into being. (Anyone else looking forward to drone deliveries? My kids can’t wait, frankly.) Globalization means that a multitude of places are making the same or close to the same stuff, commoditizing the very same items that would have given a company a serious edge on their competitors just a short while ago. Did you notice how fast the touch-screen interface on cell phones was picked up by every single manufacturer after the iPhone came out in 2007? Commoditization. And we’re demanding consumers, too, as if that weren’t enough…not only do we want the best, for the lowest price, and oh yeah, deliver it to me yesterday, but we want it bundled with other useful crap. Place X sells speakers, sure, but wait…WHAT? They’re not going to sell me the hardware to mount them on the wall? Well, that’s BS! I’ll go somewhere that DOES provide that…and that will respond to me when I send a pleading Tweet for help, too.

Given all that, what’s a business to do? Well, depending on the business, they’re going to try to lure you in by being consumer centric. Don’t confuse that with customer service. That’s more basic. (And without it, you’re kinda S.O.L. anyway.) Consumer centric is where they’re going to pick through the data to find out which consumers are the real money generators…and laser in on them. If you’re not as profitable, don’t worry, you’re not going to get left out, the company won’t ignore you, or bar you from their store. But you’re not part of the core group that the company is going to try to cater to. This is seriously long-term thinking on the company’s part. They’re going to need to not only cater to you, but potentially change their entire business model. R&D isn’t charged with finding the next big blockbuster. They’re handed the core group and told, “Develop something for THEM.” Your entire org chart would probably have to change. Instead of having product silos, you’d have divisions based on the different kinds of consumers you have, and they ways you’d be most likely to get them to spend.

A good analogy I heard recently was MBA students. You have a group of people who probably travel at least some for business, and then they enroll somewhere for an MBA. And what happens to their travel? Well, it’s very likely that for the next couple of years, their travel frequency goes way down from what it was. And what happens to those people who were enrolled in travel rewards programs? Their standing falls, since they’re not traveling as much. And once they graduate, they have to start all over again from the beginning to boost those travel rewards. The ironic part of that is that an MBA graduate is even more likely to travel. If the airlines had a list of those enrolling in MBA programs, they might be able to maximize future value by freezing those travel rewards for those students, or diverting them into a different program, recognizing their value as more frequent travelers in the future.

Of course companies are trying to be more intimate. They are, in fact, attempting to become a “trusted advisor,” a lot like your financial advisor, or your lawyer. They know a lot about you, and want to be the place you turn to for answers…and oh yeah, for products that you need or want, too.

It used to be mostly about “How many different uses can you think of for this product that we’re making?” The question is quickly changing to “What combination of products is best for this customer?” It’s rough right now…and of course the stabs at customer intimacy are going to look performative. As the data gets better and better, the more transparent that intimacy is going to become.

As a consumer, you can expect a lot of starts, stops and fits from your retail experiences. Some of them will be amazing and great, some will fall completely flat, some will feel sort of creepy. (I’m willing to bet that the older you are, the creepier it will feel to you.) Some people will attempt to go “off the grid” and avoid the data gathering. Others will embrace it. Until that part evens out, companies will get a bit of a skewed vision of their actual consumer base. It’s a time of change; try to be patient, if you can. Of course you’ll vote with your wallet. We all do.

As a company or marketer, you’ll have to do your best not to look like a Peeping Tom. That’s going to be a tall order for some of your customer base…and there will be a faction who will never get on board, no matter how good for them it might be. Letting them go gracefully and with your respect may actually win you more loyalty from them in the future. (You just won’t be able to track it!) It’s okay…this is a long-term game you’re playing here, and the upcoming generation already expects personalization on a grand scale. Lose the battle in order to win the war.

May we continue to live in interesting times.

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