‘Big data’ has been a hot topic for a while now, with controversy consistently featuring in the press around loyalty schemes and retailers’ treatment of data. I’m reminded of a story over a year back involving the retailer Target in the US. A father complained to the retailer for targeting his teenage daughter with adverts and coupons for baby related items, only to realise it turned out the retailer knew his daughter was pregnant before he did.
How did they do it? Through ‘big data’. First, they assign every customer a unique ID, tied to their credit card and email address, so they can see their complete purchase history. Then they tie any demographic information they can infer based on the purchases or from other sources to the customer record. Building on this information, they then build a segment identifying customers who have previously signed up for their Target Baby Registry, and use this segment to identify shopping patterns in the run up to the birth of their child.
In this case, they identified common purchase trends which could be broken down by trimester - for example women in their first trimester start buying supplements like zinc, calcium and magnesium. And so, based on the data, Target could assign a shopper a ‘pregnancy prediction’ score, and in doing so, target them with specific offers and promotions relevant to their stage in pregnancy.
All a bit ‘Big Brother’? Maybe.
You can see how Target benefit from their data - they can drive loyalty by being relevant to their customers, and they drive footfall and sales by targeting them with appropriate offers. But what about the customer? Does it hit a bit too close to home, like in the case of the father? Is it going too far, crossing the line into the private and personal?
It’s a difficult question, particularly because this type of predictive data analysis occupies a grey area. Technically, using data in this way isn’t doing anything wrong. The individual pieces of personal data collected comply with data protection. The difficulty comes when combining this data in clever ways, which allows companies to find out information about their customers that is deeply personal.
So while it’s obvious what’s in it for companies like Target (new mothers are particularly lucrative), it’s far less obvious what the upside is for consumers whose privacy is on the line. As loyalty cards become more and more prevalent, with Starbucks replacing their old paper loyalty card, (where 8 stamps got you a free coffee), with a new plastic loyalty card that can capture and centralise your purchase history, it’s important that we keep asking “what’s in it for the consumer?” Loyalty needs to be a two way exchange, where we reward the customer in return for their data. As long as we’re still getting free coffee, maybe we shouldn’t be surprised when Starbucks start congratulating women on their pregnancy as they notice a shift in their consumers’ behaviour from ordering double espressos to decaf.
The arts sector is coming a little late to the game - partly due to legacy systems that didn’t facilitate reliable data capture let alone support data mining - so it hasn’t yet had to navigate these complex issues.
However, as the system landscape changes, and data capture and mining becomes more accessible, I think the arts are in a fantastic position. Why? Well, first of all, it has the opportunity to learn from the mistakes of companies like Target, and so can avoid these privacy pitfalls that damage customer relationships. Instead, the arts will be able to lead the field in pioneering big data analytics that benefit the audience as much as the organisation.
These advances are already taking shape: the recent announcement of Clive Humby and Edwina Dunn, the couple behind Tesco Clubcard, branching out into the cultural sector by investing in Purple Seven recognises the fact that there is commercial potential for the arts in bringing a ‘big data’ approach to the sector. Moving beyond just reporting on audience purchase history, and instead identifying insights behind purchase behaviour and customer data, will allow venues to reach their full potential.
And here at Spektrix, we’re working with organisations to improve the results of their marketing based on the insights gained from data analysis. The organisations we work with have had great success re-targeting customers based on segmentations that identify users who have opened email marketing campaigns but not purchased. This approach allows them to be more precise with their marketing, using the wealth of data at their fingertips to segment their audience based on their purchase history, their preferences, their interactions and other demographic factors. The organisations we work with can spend less on marketing while still converting more customers, so overall marketing spend can be reduced and ROI rockets.
But ‘big data’ isn’t just for the marketing and sales team, it can support the wider decisions in an organisation. Through allowing venues to more clearly segment their audience, they can understand exactly what works and what doesn’t. It can inform programming decisions, pricing plans, development projects. By providing an insight into your audience, you can think more strategically about exactly what kind of performance to program and when, and really put the audience at the heart of your decision. It can go even further, and like Google, the arts sector workplace could be revolutionised by ‘people analytics’ and propel the arts sector into prosperity.
With all things considered, resorting to an extreme ‘Big Brother’ interpretation of big data analytics doesn't take into account the huge potential waiting to be unlocked. What’s more, we in the arts have an opportunity to lead the field with responsible data analytics that will build trust between arts organisations and its audiences. Target may have gone a step too far, but if my local theatre gave me a gentle nudge to book a play they’d targeted me with before and seen I’d clicked on, knowing that it was exactly the kind of show I book for, and giving me an offer to incentivise me to book, at the time it knew I was most likely to decide to purchase? Well, that would be just great! Ultimately, ‘big data’ can make your venue more relevant to your audience and as long as it's used wisely, there’s nothing bad to be said about that.