Knowing Your Customer Well, or Overdoing It?

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Towards the end of 2013, the online retail giant Amazon, created a storm with their apparent trial of drones that will transform the online industry by having newly ordered goods in the hands of their customers within thirty minutes.  We even covered the field service and data auditing aspects of this story in one of our blogs! This is a feat that, if proven to be truly possible and successful, is unmatched today by any other service. It’s revolutionary stuff.

It has since been suggested by Alex Jones (and others) however that this is a hoax and nothing more than a giant publicity stunt but who knows exactly what’s going on in Seattle.  Only time will tell but considering that both Fedex and UPS have since denied to speculate about their intentions in the area of drones then maybe this is far more than just an elaborate rumor.  But if this is the pinnacle of innovation (let’s not even discuss the new Google contact lens right now) then this is nothing compared to this weekend’s article in The Wall Street Journal: “Amazon says it can ship items before customers order.”

How is this even possible? Well let’s start at the beginning: every time we surf the web or make a purchase online, we are providing the retailers with invaluable information about our habits, interests, and buying behavior and most of this is happening before we even check-out our carts. This type of information is exactly the type of data that the likes of Google and Facebook need to hit us with targeted ads that seemingly match our interests (although, let’s be honest, sometimes the quality of these ads are still dubious but they’re improving in quality and relevance over time). So we are already arming the retailers with vital information about our behaviors, even unknowingly.

And now, with the advent of Big Data, the arsenal of personal data that’s collected will continue to grow and grow but, in essence, Big Data is a waste of everybody’s time if you do nothing with the data that you have collected. But with so much data at hand, businesses either need to employ an army of Business Analysts to pick their way through the data to understand what it all means so they can make pragmatic decisions or recommendations, or you enter the world of intelligent analytic (and we even blogged about this back in April 2013). In this new world, expert computer systems use algorithms to interpret the data for you and make recommendations or take direct actions, although in Amazon’s case they seem to be taking the process to the extreme by anticipating what a customer is going to do in the future before it ever happens!

For many years, successful businesses have been saying that you need to understand your customer. Get into the mind of the buyer and position something they need or that you want them to think they need (this is the tried-and-tested marketing skill of positioning; “positioning is not what your company physically does to a product—it is what your company does to a customer’s mind”).  Clearly therefore, Amazon is in a different league if they feel that it’s safe to identify and dispatch a product to a customer before the order is placed.  Is this risky?  You bet.  If Amazon gets this wrong, then they could waste a lot of money by gifting the product to the customer to prevent copious amounts of product returns.  This in itself is another risk because Amazon is assuming that all customers will be honest and not just state they did not want the product just so they can keep it without paying.

So who wins? Well unless this is a pinpoint accurate process them surely not the customer who will be taking receipt of goods that they did not order (obviously) and probably don’t want!  Does Amazon win? Maybe, if they get this right as it will be a huge competitive advantage.  One potential winner is the reverse logistics industry which will be thriving as a result of having to recover products from the field and returning them to Amazon’s warehouses.  Maybe there’s a future role here for their drones?

But the clear winner is Big Data.  With so much at stake, Amazon’s direction here just shows one of the possibilities of collecting so much data and acting intelligently.  Will it work and takeoff, who knows, but what do you think?  Is Amazon taking the notion of “understand your customer” too far?

Don’t worry, we know just how to understand our customers without overdoing it.  Find out more abour our company and our customer mission below.

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