The grocery store loyalty cards that started to appear in the late 1980s were a first glimpse at a new phenomenon in retail and service industries: the subtle trading of personal privacy for price discounts and convenience. With a grocery loyalty or convenience card, you get access to special discounts at the register, and the ability to write or cash personal checks. But you also hand over a list of everything you buy, when you buy it, and how often, to the store and its consultants.
Grocery stores aggregate this data, connect it to the information you supplied when you signed up for the card (street address and ZIP code are really all they need to unlock the data mining opportunities), and then manage their inventory, their sales strategies, and their product placement based on what they learn. According to this consulting firm’s web site, that massive data flow can have practical benefits even with the most basic analysis:
Consider the classic justification for association-based algorithms: The operator of a super market chain would like to know what is the common basket of goods that describes the typical Joe Doe shopper. In other words, he would like to classify the thousands of customers that patronize the super markets into realistic segments that he can serve uniquely.
Millions and millions of transactions that describe the buying behavior of these customers are collected, scrubbed and processed in order to establish a basket of goods similar to the ones shown below.
{eggs, orange juice, butter, diapers, tissue papers..}
{leafy vegetables, orange juice, butter, soft drinks, soya sauce}
{eggs, pepper, orange juice, bread, diapers, cereals, seafood}
{potatoes, leafy vegetables, Milo, soya sauce, fruits}
Fairly freaky, but just the beginning. There’s a new technology in town that’s likely to take this kind of activity and purchase tracking to a whole new universe. Radio frequency identification tags (RFID) are the hot topic among all sorts of retailers and service providers, and even among cultural types like libraries and museums.
An RFID tag is a tiny little computer chip that carries some basic identification code (like a bar code). This information can be scanned by radio frequency to give up its secrets, and integrate with a bunch of other databases for analysis.
You can imagine the benefits of RFID for inventory management in a warehouse, or book cataloging in a library. If every item has a tag, all you have to do is scan the stacks wirelessly to find out what’s there, and even where it is. Take two steps forward in the concept, and you could also see RFID chips placed on or near museum displays, triggering specific audio or text on a visitor’s handheld computer (at least one museum is doing this already).
But imagine the power and glory of attaching these little wonders to human beings. Gas stations have done this for a while, with their little keychain fobs that allow you to pay for gas with a waive of your keys. Toll roads are using a similar technology to allow for ‘EZ Pass’ drive-through toll booths. Now entertainment and service industries are coming out to play, such as theme parks.
According to this article from back in May, several theme parks are now testing RFID systems for use on their patrons. You would grab one of these wristbands or buttons as you enter, load it up with money so you don’t need to open your wallet once you’re there, and waive it as you buy drinks, enter rides, sit down for lunch, or watch a show. Better yet, get separate wristbands for your whole family, so your kids can buy stuff when you’re not looking.
Behind the lure of safety and convenience is a massive data mining effort, looking for what you do, where you do it, how long it takes you to get from place to place, and where there might be long voids of time when you aren’t buying things. Says the article
Often, says Manning [a consultant on such things], visitors enter a theme park, get overwhelmed by rides and other attractions, and wander aimlessly or not at all‹and sometimes don’t buy anything. ”Kids are random variables,” says Manning. ”The ultimate benefit will be to monitor the randomness and eliminate downtime.”Ultimately, parks could provide personal itineraries and use the same yield management techniques as the airlines to populate rides and target demographic groups such as boys 10 to 16 years old, says Manning. The best park managers will use this data to document customer behavior such as how customers enter a park and what they do once inside.
It’s not clear whether the patrons using these systems really understand the terms of the transaction, or that their personal privacy is really what’s for sale. But the RFID train is coming on fast for many elements of the entertainment industry, including, no doubt, some aggressive organizations in the arts. The cost? If you have a high volume of visitors, it will likely pay for itself:
If a visitor buys one more $3 Coca-Cola at the park because of the RFID wristbands, it will go a long way toward paying for the project.
[NOTE: If you want to see some of the many things retailers can do with this aggregated data, be sure to read this glossary of terms. Yikes.]
