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The Big Data Behind Recognizing The Customer

How big data enhances the customer experience

23May

E-commerce companies and other customer-facing organizations are faced with a dilemma when they must balance the cloud age need to gather big data on customers in order to spot trends, and a perceived need to afford privacy and an environment of non-intrusiveness.

Somewhere, in a grocery store’s data warehouse, I am quite sure there is a data point which says that I like Vernor’s ginger ale. Does that invade my privacy? Probably not. Especially if they send me a coupon for it now and then.

While there is certainly a contingent of shoppers who value privacy and anonymity above all, the data gathering tools and analytics used by virtually every retailer today has become more commonly accepted. That data accomplishes two things that are beneficial to both consumer and retailer: The ability to better understand what the consumer wants, and the ability to create a more personalized experience. Do consumers like Vernor’s better in one part of the country and Canada Dry in another? Who knows? Big data knows. And as a result, distributors know where to focus their efforts.

Because consumers are getting something out of the bargain, such as coupons or rewards that are matched to their personal habits, most don’t have a problem with the data collection, and despite what the tinfoil hat contingent may claim, the fact that you purchased eight rolls of toilet paper does not go into a massive database at the NSA. As it turns out, consumers do like being recognized.

According to research commissioned by hotel price comparison platform HotelsCombined, 22% of American business travelers like to be recognized when they stay in the same hotel on a regular basis. 'Our research shows that recognition is a key enabler of a positive customer experience,' said Chris Rivett, travel expert at HotelsCombined. 'Certainly, a skilled concierge will personally recognize the property’s best customers and know what they like, but more hotels and resorts are taking better advantage of technology, big data, and analytics that allow them to offer more personalized services to all guests, regardless of status.'

While small businesses may deliver that sort of recognition informally – such as the waitress at your favorite restaurant who calls you 'hun' and knows your order by heart – depending on individual customer-facing employees to recognize customers and know their preferences is not scalable.

Today’s customer experience is powered by information and lots of it. The first wave of big data was fairly basic and collected broad demographic data, which enabled companies to spot trends that were previously invisible, but today it has gone a step further to incorporate dynamic personalization. While still protecting consumer privacy – no company really wants to be 'Big Brother' – what the consumer says, does, buys, and doesn’t buy all goes into the mix, and often transactions from multiple inputs (in-store, online, and other downstream channels) all come together to provide millions of data points, which provide key information that helps companies create a more personalized profile that for example, lets you go to an online store and be instantly recognized, and presented with a menu of items that the algorithm believes you would enjoy.

Even the healthcare industry is taking full advantage of the recognition trend to provide benefit, better care, and a new type of customer experience for healthcare consumers. The availability of electronic health care records is ushering in a new continuum of care which blends together point-of-care, pharmacy, and clinic to provide a more unified view of each patient’s health care.

Grocery stores are early adopters in the big data world, first with loyalty cards that gather information about purchases, and now with innovations such as smart shelves, recently put in place at some Kroger stores. When a shopper has their mobile app open, the smart shelf can offer personalized pricing and product suggestions on the fly, based on each customer’s preference.

This sort of big data has applications in retail beyond improving the customer experience though, and some stores are beginning to use facial recognition security cameras in an attempt to reduce shoplifting, an approach that has long been used by larger casinos to spot known fraudsters, card-counters and other undesirables. While the approaches described earlier are used to create a positive experience and privacy concerns are minimal when used in this way the negative reaction has been stronger. In this case, the technology isn’t being used to give the consumer any meaningful benefit, such as a coupon on a product the algorithm has figured out they like, and so acceptance for such purposes faces a bigger hurdle.

Recognizing the customer, engaging them based on gathered information, and initiating a scalable program of recognition, dynamic personalization, and customized offerings and rewards are ushering in retailers, hospitality providers and others into a new era of heightened customer experience. The technology is here, and utilizing it is going to be an essential part of remaining competitive in the years to come.

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