There were many great parts to the book and movie Moneyball. If you have not either read it or seen it – you should. In addition to the great storytelling by Michael Lewis, the main theme resonates in our business and just about everywhere: we now have the capability to track everything. This may not seem like a big jump from the prior method of measurement by sampling, but it is a big big deal. Sampling is the Nielsen ratings: where a small population of representative viewers track their TV habits and the results are applied to the total population. The tracking everything equivalent is having every single set top box send in data for every single viewer. The story in Moneyball helps to demonstrate the difference. To know from sampling that a pitcher behind in the count is 25% more likely to throw a fast ball than anything else – could help you. If you know from measuring everything that this particular pitcher is more likely to throw a fastball on the next pitch because you have a complete database of every pitch he has thrown in the past 5 seasons – well, that is different.
For the past decade, businesses have been making this same transition. From sampling data about their customers to tracking everything. The leaders in this revolution will win. The businesses that understand this will jump very far ahead of their competitors. The businesses that do not understand this will say that a statistically significant sample is the same as a complete database and will not go to the effort to track everything. They will lose. Some businesses, like the grocery stores, are tracking our every purchase, but I just don’t think they know what they have in the data. Here is my post from last year on that topic.
Governments will be in a unique position to capitalize on the data they collect. A dramatic example of that is happening right here in the Seattle area with the tolls starting on the 520 bridge. I can go online and see a record of every time my car has gone across the bridge. Imagine the possibilities here! Not only could parents or insurance companies learn about driving patterns, but some super smart PHD is going to figure out how to match up drivers for ride sharing – by evaluating the driving patters in the data. Or I could sign up for a service that sends my family a text when my car passes the tolling camera – that calculates what time I will be home based on the other traffic data.
In our marketing services business, we started tracking every single interaction about five years ago. Before that, the proprietary closed databases in many of our systems aggregated data – because storage space in the database was more valuable than individual activity records. Sounds hard to believe given the current environment, but these old databases actually wrote over themselves every night – just to save hard disk space. As a result we have pretty good predictive data on what will happen if we email an email address, or call a phone number, based on our past experience. Using that experience data, we direct resources to the highest value activities first. It is a game changing practice.
Privacy experts say that this kind of customer data collection is an invasion and should be made illegal. There definitely are steps that should be taken to protect the consumer and protect the data. Increasingly however, customers are demanding that the businesses that serve them know their stuff. Today there are many simple requests that I want in this area. I want Amazon to tell me if I am buying a book for the second time. I want the credit card department at my bank to realize that I already have a credit card and to stop calling me with new credit card offers. I want Starbucks to know my order before I order it. I want Delta airlines to know what seats l have sat in. This is just the beginning.