I remember years ago watching Steven Seagal come back from a coma to kick Senate butt in Hard To Kill, and the particular scene where he scribbles an old proverb on the toilet seat that the anticipation of death is worse than death itself. Of course, it was a self-fulfilling prophesy, the evil senator is now afraid knowing that at some point he’s going to die at the hands of our Aikido wielding hero and makes mistakes.
And more recently I watched Looper, a time traveling scifi with Willis and Gordon-Levitt caught in a bit of an infinite loop and the only way to break it is to do something different. And it got me thinking about Big Data and Predictive Analytics (God knows why).
Looping
Big data promises companies unparalleled insight into the consumer world; purchasing behaviour, social and personal habits, information in near-to-real-time. Combine this with predictive analytics and businesses start to build a current and future picture of what their customer base will likely react to, what choices they’re likely to make, where, when, both on a mass consumption/ demographic level and surgically targeted individual level. And here is where the new paradigm breaks down and becomes just another endless cat-and-mouse cycle.
Customers aren’t stupid. While you will perceive to gain the edge over consumer and competitor for a while the customer at large will begin to twig that you hold all this information and are using it for advantage as well as providing them with a more personalized and efficient service. And they’ll demand more. They’ll expect you to anticipate what they want because you’ve promised to, and you’ll turn to your data scientists to eke more out of the predictive engines and bucket of data. You’ll want to buy in more data to fuel it. And for a while there’s an uneasy stalemate and the public are satiated with the level of service again.
The itch
But then there’s that itch again…heightened expectation and anticipation for you to meet their growing demands. And so the cycle begins again. No longer is the status quo enough. You’ll need to maintain the 2 Second Advantage or the customer starts to leave you in droves, taking their data with them. You have to up your game.
Customers aren’t stupid. But betting your business decisions solely on predictive analytics might be a self-fulfilling infinite loop of cat-and-mouse. At some point you’re going to have to break the loop to win the game.
And we think we’re so clever….
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Excellent point, Theo. At some stage along the line, it is no longer insight, and you are no longer predicting anything. And soon the average Joe goes back to become no one in particular again.
Theo, doesn’t this loop infer an unlimited desire for the same thing on the part of the customer? I’ll give it to you that there was no shortage of senators for Seagal to kill.
But, let’s say I make cookies. If I use predictive analytics just to figure out ways to sell the same customer more of the same type of cookies, at some point the customer will get tired of those cookies.
Unless I figure out how to use predictive analytics to sell you the cookies you love, plus another type of cookies, or, conversely to sell you the same type and volume of cookies you love at a lower cost to produce, I’m dead in the water. If I do figure that out, I control the loop or create subsequent loops.
I’m not sure the customer will change their expectation based on knowing you know things about the as much as they’ll change their behavior because organizations will use analytics to hammer them with something beyond their desire to want it.
Thoughts?
Hi Ron,
Good points and now I’m hungry for chocolate chip with hazelnut.
I believe the Heisenbergs Uncertainty Principle may work here, in that customers who know they are being scrutinized at personal levels may start to act differently and manipulate to their own advantage, therefore create a false expectation that a company would react to.
Every system has a flaw that can be exploited, analytics is no different.
You have to think like a customer to sell to a customer. Data at the end of the day does not preclude the ability to ‘think’ so there is always a human element needed.
Great Point Theo…Totally agree .Mostly tried and tested techniques is applied and Less hand in hand working between statistician and Marketers.
This brought to mind a brief essay written by Norman Cousins in 1966. If this article interested you, then you might be interested to read it. http://www.digitalathena.com/poet-and-the-computer.html