Data Analytics Marketing
I read an interesting article on WSJ a few days ago about how data analytics will get us closer to rational decision making. And it got me thinking about this, since there used to be quite a bit of discussion around this theme in my MBA classes, and it made me question whether we can actually be unbiased and neutral when we combine the ever-evolving and accurate science of data and analytics with our own real-world experience, learning and behavior?
The article talks about the ways in which we will be able to leverage tens of millions of data points to reduce uncertainty and risk. While that is indeed important and welcome, I don’t expect we can be fully rational, even with mega-million dollar analytics and software, because we are driven by greed. And that is never determined by rational thought and behavior. Yes, the data analytics help gain and understand insights. But when we are motivated by incentives based on profit, often we may choose to ignore all of that for short-term gains.
Take the current recession, although, there were signs and warnings of the outcome, banks time and again deliberately risked and intentionally put their business partners at risk for more revenues. This article, also from WSJ states that too much information can impair judgement, clearly debts that should have never been assigned AAA ratings were rated as such, so more detailed analyses can sometimes make it worse.
But that said, there is tremendous potential to help streamline processes and find patterns that could have never been identified had it not been for data and analysis.
Wal-mart is betting on that as well. The company realizing the massive potential of harnessing the online chatter to learn consumer preferences and willingness-to-pay has invested in social media analytics. Based on the real-time conversations taking place Wal-mart is able to spot trends, optimize prices and selection on Walmart.com.
Mercent provides a software tool for the merchants to recalibrate prices based on information about consumer Web searches and competitors’ offers — it adjusts prices on roughly 2 million items per hour.
Amazon has been using this type of information and past purchases to personalize not only recommendations but also prices based on individual consumers (this last bit I am basing on a conversation with a colleague, I am not certain whether or not that is absolutely true). Even if it isn’t, the idea is interesting, why can we not personalize prices based on individuals?
As we become increasingly mobile, surfing on-the-go, shopping on-the-go, sharing on-the-go, marketers should be able to leverage all that data to make their offerings personalized. Question is will data analytics become too much of a good thing? Will it make us so reliant on data that we lose our intuition, and become more loss averse?
After all, creativity doesn’t rely on just facts and numbers. And creativity drives innovation.