Analytics and Dynamic Customer Strategy: Big Profits from Big Data

Chapter 7Turning Models into Customers

Living in the Past, as Richard Roeper says, “is a Jethro Tull album, not a good poker strategy.” You may not be familiar with either Jethro Tull, a rock band from the 1970s and 1980s, or Richard Roeper, an apparent poker player, but living in the past is poor strategy indeed. Since all models are built using data that represents the past, we create predictive models, those that foretell the future; otherwise, we're just living in the past.

In this chapter, we explore how to move from models into activities to capture customers or to upsell, cross-sell, and full-line sell. Our goal, or at least my goal, is to figure out how to earn these additional transactions without giving up margin.

Mac's Avoids Mindless Discounting

I was listening in on an analyst call with a major player in the marketing automation space. I'm not going to say who, because I've heard similar utterances from all vendors, so it wouldn't be fair to single these guys out. They were talking about a transit system that was using a mobile marketing application to know your likely stop. You log in when you get on (I guess to get loyalty program points—that part wasn't clear), and the system can push an “offer to the Starbucks at your usual stop to come in and get a dollar off a latte.” Look, that's no better than a big “$1 off” sign in the window. I realize the guy was just throwing out an example, except that this mindless discounting is actually what they were doing.

Let's ...