Over the past two days, I've written about probably the most well known urban legend in the world of data, and explained how Simpson's Paradox can be used to understand the mixed messages that data can sometimes present. In the final part of this series, I explain the responsibility of gathering great data.
With great data comes great responsibility
Big data allows retailers a better understanding of their customers than ever before. However with great data comes great responsibility. Due to the relative low cost of email it can be tempting to target as many people as possible with as many offers and promotions as possible. However there is a hidden and often overlooked cost to this approach that bears considering.
Every time you send a consumer an email that they don't want you damage the relationship with that customer. This can lead to them becoming less engaged by unsubscribing, flagging emails as spam or often simply deleting them before opening . A high open rate might look good until it turns out people are only opening to click the unsubscribe button.
It is also important for retailers to be careful in how they utilise the data they collect about their customers. Most retailers will have statistical models to predict purchase behaviour and consumer characteristics. However sometimes these models can be a bit too good.
Target for example spent a lot of time developing a system that allows them to model expectant mothers from very early on in their pregnancies. This was done primarily by analysing changes in shopping habits specifically looking for certain key products e.g. vitamin supplements, larger handbags, car seats, etc. This misfired in spectacular fashion however when the recipient of some highly targeted mailing was a teenage girl still living at home with her parents and hadn't in fact told them about the incoming child.
So how do you avoid this in the future? Pay attention to customer response rates. If they seem to respond well to email or express a preference for it then continue to contact them. If however they always delete the email or rarely open them it's probably safe to assume that they are not going to suddenly change their habits and another approach might be better. It's also a good idea to embed targeted mailings within more general advertising if contacting about potentially sensitive or personal subjects.
By Peter Smith, Analyst at Webalytix.
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