Deloitte frequently publishes articles on the power of customer analytics for deriving insight into customer behaviour and motivations. Particularly interesting news in this field last week was that Tesco is enhancing its already market-leading analytics capability by using comments customers have made on social networking sites, as well as card and mobile data, to influence its eCommerce display sequencing (i.e. if you have an inclination for higher value goods, you will see more higher value goods up front on a page customised to you).
While the era of mass customisation is not new, the example of Orbitz – an online travel portal – displaying higher value rooms to Mac users on the (empirically accurate) assumption that they are willing to pay more begs the question: how long will it be before organisations begin simply charging higher prices for identical products to those with the ability and willingness to pay, by using information from external sources?
This is third degree price-discrimination and is not illegal – an erosion of ethical boundaries you could argue - but not illegal. Efficient market theorists would advocate that this is a good thing since market surplus is minimised by maximising revenue of customers on the upper end of the price elasticity of demand curve and capturing more customers on the lower end. Others would simply claim that it is unfair – an identical product should mean an identical price to everyone.
Regardless of your opinion on whether this usage of customer information is good or bad for society at large, the practice of customer analytics to drive margin will only intensify through more sophisticated customer segmentation. No doubt a middle-ground will eventually emerge on what customers will tolerate, but this will be determined in part by how subtle and sophisticated organisations are in exploiting the information.
Interested in reading more? The recently published Data Nation 2012 report from Deloitte Analytics reveals what people really think about how their data is mined and used.
Jayson has written a number of previous posts including: Live in the Cloud and Cloudforce '12 wrap-up.
Jayson is a Consultant within the Customer team in Consulting. He has a broad range of experience in designing target operating models for front-office functions across the private sector and financial services, and is also a certified Salesforce administrator.