Business Intelligence – Always intelligent decisions?

In order to survive business need to know there customers. This goes all the way back to the local shopkeeper who not only the knew the regular shopping basket of their customers, but the status of their marriage and how many drinks they treated themselves to on the weekend.

The same is was true today as it was then only know businesses are faceless corporations who focus on building up a workforce of faceless replaceable employees, who interact as briefly as possible with customers to move more of them through the shop faster. Now instead of building up individual relationships with customers and suppliers businesses can understand their customers through the accusation of data.

In an age where more and more transactions are carried out digitally we are not only exchanging money for goods and services but data along with it. We are divulging shopping habits, location data, gender race and sexuality data every day and allowing businesses to build up profiles that give them a far greater insight into the behaviour of customers than the humble busy body shopkeep could ever have imagined.

In essence in order to make use of this data businesses must examine it and turn it from figures and words into useable information. From this information they gain knowledge that can be used to allow them to gain a competitive edge in the business world.

One example of the clever implementation of business data is in the work of the Cincinnati Zoo. Now famous for shooting a Gorilla that has become the face of a movement, the Cincinnati Zoo was once famous for successfully applying a program of clever data aggregation and management about it’s customers and using it to design programs, work practices, opening hours and specific membership packages to boost it’s business.

The Zoo’s new ability to make better decisions about how to optimize operations has led to dramatic improvements in sales. Comparing the six-month period immediately follow- ing the deployment of the IBM solution with the same period of the previous year, the Zoo achieved a 30.7 percent increase in food sales, and a 5.9 percent increase in retail sales. (Lauren 2013)

Here we see an exceptional use of smart data analysis to identify the trends of customers. By monitoring the behaviour of their customers they could predict actions that they would take and alter their behaviour to fit these customers. What more businesses seek however is to change completely the shopping habits of their customers. One such company is Target.

This tale of the shocking accuracy of Target’s business intelligence unit is chronicled in Charle’s Duhigg’s New York Times article “How Companies Learn Your Secrets”. The Target Corporation is the second-largest discount retailer in the United States, behind Walmart, and is a component of the S&P 500 Index. It generated $73.78 billion in revenue last year alone. But while Target sells nearly every type of consumer product imaginable they found that for many female customers they were just a place to come and buy cleaning products. Target wanted to break this association with shoppers and so hired analytics whizkid Andrew Pole.

Shopping is a habit. There are times when it’s a treat to get a new pair of whit sneakers or a fun new video game but for the most part it is  a regimented habit carried out for survival. That’s how the brain views it and that’s why we become ingrained in the process of buying the same goods in the same place. This habit can be hard to break once formed. One time however when we are vulnerable to such a shift is when we have a baby.

At this point in life people are so flustered and vulnerable that they are open to suggestion and manipulation in where they shop by simple convenience. If you can get new parents into Target to buy a stroller, then they might as well pick ip the diapers there and the baby formula and the beer etc.

With this goal in mind Pole developed a formula using customer purchasing habits measured against mothers who registered with their maternity department to analyse the shopping habits of expectant mothers. Their products of choice? Cotton balls, unscented soap and multi vitamins.

From examine these purchasing habits Cole could predict which customers were entering their second trimester and send them out a discount booklet with baby products mixed in with regular products. Subtle enough  not to arouse suspicion but forward enough to entice the shopper.

The plan however back fired when a target branch got a call from an irate father demanding to know why his teenage daughter had received vouchers for a baby carrier, stroller and formula. “Were they encouraging her to get pregnant?” The manager made a follow up call several days later to apologise yet again only to be met with an apology and something along the lines on “I need to learn more about what’s going on in my own house”

Business intelligence can create smart business opportunities but can also make you look pretty dumb.

Appendices:

Duhigg (2012) http://www.nytimes.com/2012/02/19/magazine/shopping-habits.html?_r=0 Accessed 12/09/2016

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