When Digital Becomes Human: The Transformation of Customer Relationships by Steven Van Belleghem

Author:Steven Van Belleghem [Belleghem, Steven Van]
Language: eng
Format: epub, mobi
Publisher: Kogan Page
Published: 2015-04-02T21:00:00+00:00

From big data to big wisdom: the predictable consumer

In his excellent big data book The Signal and the Noise8 Nate Silver discusses how it is possible on the basis of scenarios to make very accurate predictions. Silver became well known when he predicted the results of the 2008 presidential election in the United States with startling accuracy. His predictions came true in 49 of the 50 states. During the 2012 election he went one better, this time predicting the results with 100 per cent accuracy. The power of prediction is getting bigger all the time. Even so, it has not yet become an exact science. During the 2014 World Cup, Silver predicted that Brazil would win. According to his analysis, the host nation would easily triumph over Germany in the semi-finals. Unfortunately, the Germans won 7–1. Microsoft is working on a similar big data analysis system and this proved to be more successful, accurately predicting every result from the last 16 to the final.9 But perhaps it is just as well that these systems don’t always work, at least as far as the average football fan is concerned. It would be pretty boring if we always knew the result of every match in advance. The public needs the occasional shock result to keep them entertained.

Even so, it has to be acknowledged that the predictive ability of big data technology with regard to consumer behaviour is improving every day. This can sometimes lead to strange situations. One day a 16-year-old girl received a discount voucher for baby clothes from the US retailer Target. The father of the girl saw the voucher and was outraged. How dare they imply his daughter was pregnant! He stormed off to his local Target store to complain. The manager apologized profusely for the mistake, said he would look into the matter, and promised to call the father with an explanation within the next few days. But when he phoned back, it was the father’s turn to apologize. He had talked to his daughter again and she had now confessed that she was expecting a baby in six months’ time. Target’s analysis tools allows them to predict with great accuracy when one of their female customers is pregnant, based on the combination of products they buy. In this case, Target knew the girl was pregnant before her own father.10

More and more companies are using accumulated data to make predictions about the behaviour of their customers. For example, based on age, family composition and hour of appointment, doctors can now predict with reasonable accuracy whether or not the patient is likely to show up.

In future, universities will also use big data analyses instead of entrance examinations to choose the best candidates. The less well-known Wichita State University (WSU) in the United States already employs this method and has so far achieved a 96 per cent level of accuracy in its ability to pick out good students. Using data points such as a student’s paper grades, the amount of

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