Monthly Archives: December 2012

Personalization: The Store Clerk vs. The Machine

Try this offline experiment this holiday season:
Img-tiffanysWalk into a Tiffany’s with a bag from JC Penney’s and see if anyone will talk
to you.  Next, go to JC Penney’s with a bag from Tiffany’s and watch the
staff fawn over you.

Online personalization is an evolving and very dynamic space. The algorithms
behind personalization sift through reams of data and supply us with tailored
recommendations, advertisements and the most personally relevant and appealing
results.

Because online personalization is on the cutting edge, we sometimes forget that
we have been targeted for decades while shopping in the brick and mortar
stores. Old-school targeting faces a similar set of problems.  Old-school
retail targeting is about visually sizing up customers:


Img-juliarobertsVivian, played by Julia Roberts in the movie, “Pretty Woman,” enters the
posh shop where a day earlier, dressed in her “working girl” clothes, she was
snubbed by the shop assistant. Now, wearing a beige dress, black hat and white
gloves–the very image of elegance–she is loaded with shopping bags. The shop
assistant smiles and asks if she needs help.

Vivian: I was in here yesterday, you wouldn't wait on me.
Shop assistant: Oh.
Vivian: You people work on commission, right?

Shop assistant: Yeah.
Vivian: Big mistake. Big. Huge. I have to go shopping now.  

The shopkeeper’s targeting mistake was fictional. But every day, millions of
dollars hang on sellers properly sizing up their prospects. 

Img-hoodieNever in my life have I been referred to the women’s department when entering a
clothing store. The employees quickly surmise that I’m not looking for a dress.
They might be wrong. I could like wearing dresses, or, I may be buying a gift
for my wife, mother, or daughter. But they play the odds and refer me to the
men’s section. Additionally, because I’ll never be confused with a fashionista,
they are likely to recommend a new pair of khakis rather than the luxury
cashmere hoodie made from the soft wool of Mongolian goats.

Online personalization is similar.  When you visit that same clothing
retailer’s online site, the algorithms attempt to determine something about you
and customize the content. It’s all about probabilities – the better the data
and the better the algorithm, the better the chance they will hit the mark and
show you something you like.

Of course, just as I can cloak my identity online using a cookie blocker, I
could also cloak my identity offline.  If I do not want a store clerk to
know I am a man, I could wear a large parka and mask (though they might call
security to escort me out). If I cloak my identity online, I’ll get a less
interesting experience or just be ignored.  

Old school targeting happens everywhere. I know a single woman who wears a
wedding ring when she travels because she gets better service from the airline
and the hotel. Sadly, society still discriminates based on appearance. In
old-school targeting, we sometimes receive wonderfully customized service, but
are also vulnerable to unpleasant experiences due to our looks, what we wear,
our gender, or the color of our skin.

Img-jcpenneyHumans naturally react to others based on many factors – some legitimate and
some not. Store clerks need a filter to triage purchase intent because they
can’t spend equal time with everyone who walks into the store.  They need
to allocate time to people they believe are going to buy, so they develop
heuristics, based on their own biases, to help them interact with customers. If
you walk into Tiffany’s with a JC Penney’s bag, you might be a billionaire, but
my guess is that the store clerk isn’t going to take the time to find out (unless
it’s a great sales clerk who notices your brand of shoes or the wristwatch you
are wearing).

Old-school personalization is supposition based on our five senses.  When
practiced well, it can be accurate.  Online personalization lacks many of
the cues one gets in the offline world, and, like store clerks, there are good
and bad online systems.  Good systems unify online and offline data and
work on enhancing the experience of the customer.

Computers, like humans, have the same potential to do great good or cause harm.
But unlike humans, computers can quickly digest millions of different
interactions to make decisions.  For instance, BestBuy.com can query its
database to check if you are an existing customer and what you purchased in
your last visit. It would be impossible for a store clerk to remember the faces
and purchases of millions of customers.

Img-johnhenryStores, both brick-and-mortar and online, want our business and try to seduce
us for it. Except now, in the age of “Big Data,” it’s easier for the ones
online to be masters of seduction.  One hundred years ago, John Henry
beat the machine at a severely high cost.  Today, he wouldn’t even stand a
chance.

Vivian tells Edward: “The stores are not nice to people — I don't like it.”
This is after she was snubbed.
Edward responds: “Stores are never nice to people. They're nice to credit
cards.”

 

Special thanks to Ken Treske, John Battelle, Caitlin MacDonald, Brad Justus, and others for their inspiration and advice on this piece.

tale of two haircuts: does price correlate with looks?

Haircuts are interesting.

Before last week, I'd never spent more than $22 for a haircut.  When I got married, I went to my go-to local barber (then it was $12) and got a good cut because I didn't want to trust my hair to a newcomer.

When I'm in San Francisco (where I live) I now go to a place that is one block from my house and open on Sundays.  I got there primarily for the convenience and that the cut takes approx 10 minutes.  Also, the price is $5 … and even with a 60% tip, the final price only sets you back $8.  I get more joy bragging about the bargain than from the haircut itself.  

This week I was in New York, had an hour, and needed to get a haircut.  I chose a place for convience (it was directly across the street from where I was staying) but it wasn't a place I typically would go to.  They gave me a robe when I walked in.  And they had a different person give a shampoo both before and after the cut.  The total time was 45 minutes (was expecting it to be a lot longer) — much longer than my normal 10 minutes in-and-out.  And the price was $106 ($86 with a $20 tip) which is almost 5 times the price I have ever paid for a haircut.

Now objectively, the more expensive haircut is probably better.  But because I paid so much for the hair cut (they call it a "salon"), I actually feel better.  Which leads me to a theory:

The more you pay for your haircut, the better you think you look.

After doing an informal poll, there seems to be a direct correlation with how much you pay and how good you think you look (now how good you actually look).  This seems to be the reason people pay so much for things.   And it seems to be a good investment if it makes you more confident and happier.

For me, I enjoyed the experience of going to a higher-end "salon" but next time, I'm going back to my $5 regular.