Whenever shoppers make a store purchase, order something online, or even return an item, their spending habits are tracked, and very often without their knowledge. Before you freak out, it's not Big Brother monitoring you, and it's not necessarily a bad thing -- just retailers taking advantage of technology to meet the challenge of keeping consumers happy by anticipating their needs. Some of it, in fact, can be a good thing.
First-party data is information that businesses get from visitors to their own website. Let's say you're a manufacturer and you sell widgets. If someone visits your website, you can use first-party data to keep advertising to that person even after they click away. That's called retargeting. Hilton, the hotelier with a variety of brands in its stable, launched its own data center for "advanced analytics and actionable insights" in 2017, and so did Marriott and its Starwood loyalty program.
This is when a retailer gains access to a person visiting a partner website, not their own. It allows marketers to understand how their customers interact with other brands. A benign example might be airline companies partnering with hotel chains to offer deals to travelers, boosting sales by targeting customers with deals geared to them. On the other hand, the men's social network Grindr was in trouble in April for sharing users' very personal details with companies looking to sell stuff.
With third-party data, a retailer buys data, or "audience segments" to advertise to a particular group of shoppers -- people who are not already loyal customers. This type of data typically has specific terms on whether it is bought or shared privately. Facebook and the company Cambridge Analytica brought a flood of bad PR to the practice over the 2016 elections.
Data brokers such as Acxiom, which has a database of more than 3,000 bits of information for every U.S. consumer, and Datalogix (owned by Oracle) share information with other brokers to create consumer profiles. They "enable leading brands to personalize and measure every customer interaction and maximize the value of their digital marketing," Datalogix says. They also sell "audience segments" to retailers or advertisers.
This social media monster has been gathering data since you joined. You essentially gave permission for Facebook to use your "name, profile picture, content, and information in connection with commercial, sponsored, or related content." This data is used by advertisers to connect with consumers that best fit their shopping profiles. Every time you like a post, you give an opinion, and that's valuable to retailers.
Thanks to a Facebook data breach, people who never heard Acxiom's name are now all too familiar with the company and the data it holds on more than 250 million U.S. consumers. Branding itself as the "data foundation for the best marketers," this company uses first-, second- and third-party data to execute efficient campaigns.
Taking digital data from emails, the cloud, and services such as Apple Pay and combining it with credit card spending and the places consumers spend time (such as a favorite coffee shop), Acxiom creates what it calls a "single source of truth" for client marketing needs -- a targeted consumer profile that helps advertisers or retailers win and retain customers.
One of America's best-known fashion retailers is also a data innovator. Its marketing teams track Pinterest pins to identify trends and products, then use that data to promote products in their bricks-and-mortar stores, connect with and engage customers, and respond to queries.
Viber, which allows its users to make free texts, has done a lot to redeem itself recently, such as promising extra security and assuring that data belongs only to users. But in the past the company has been blasted for storing unencrypted data on its servers instead of deleting it immediately, and it merges with address books and retains that info even after users disable access. While Viber promise not to sell information to third parties, it won't promise not to share it. Hmmm.
Adidas worked with Intel to create the "adiVerse Retail Experience," a wall of virtual footwear that is interactive and intuitive. It detects movement to display eye-catching graphics and uses analytics to determine a customer's gender to suggest an ideal product from more than 8,000 styles. The wall is connected to social media platforms, and data is collected from customers when a sale is made.
Ever ahead of the trends, Costco tracks every purchased item. Back in 2010 the possibility of a listeria outbreak prompted Costco to reach out directly to customers who bought tainted food to get it back. The data it collected enabled the Centers for Disease Control to act swiftly and prevent panic. In this instance, data mining was helpful.
Whenever you browse the internet you create a bit of code called a "cookie," which is delivered to an ad network. Whenever you visit an ad network member site, it thinks, "I know what you were just looking at. Let me find it for you." This is why you see ads on Facebook for that pair of shoes or barbecue grill you searched for hours earlier on Zappos or Bed, Bath & Beyond.
Before data technology, retailers marked down items based on the buying season. Now they can evaluate consumers' buying patterns and mark down items only as needed, which increases revenue. Walmart uses a private, cloud-based data system dubbed the "Data Café" to track millions of transactions in real time. Its cloud grabs information from more than 200 sources including meteorological data, economic data, Nielsen data, telecom data, social media data, gas prices, and local events databases.
Target data analysts figured out what products expectant mothers buy -- certain lotions, vitamins, and scent-free products -- and was able to narrow down a customer's delivery date. Then it started sending coupons for baby items to would-be moms. The result? An irate father demanded the store stop sending his daughter, then in high school, what he thought was material encouraging her to get pregnant. She was pregnant; she just hadn't told anyone. Target knew before the family.
Retailers have predictive data available to understand what should be promoted and what shouldn't. For example: If weather data predicts snow and online analytics show a spike in searches for winter coats, a savvy store will put its best-looking winter coats in the windows and start emailing some ads.
A phone's GPS is a tracking device. Walk into a store, let a phone pick up the Wi-Fi, and retailers can watch shopping behavior, literally following a person around to see how they react to merchandise. Some stores, such as Macy's, will even send "welcome" notifications to shoppers entering their store. The good news: It will also send discount coupons.
Sign up for a loyalty card and you're allowing that store to keep and analyze your shopping data. That's how the apps show you products geared to your consumption. Pavilions' "Just For U" program for example, aggregates items you buy over and over and pulls from that data to suggest purchases, as well as offer savings to members.
Google has announced it wants to collect data about merchandise searched online and show consumers quickly what nearby locations stock it. This is a bit out of reach as of yet, but providing consumers with a tailored, seamless experience has always been a retailer's dream. If using your personal data gives them the ability to do so, then perhaps it's worth it.