The Blog

  • February 14, 2007
  • The sound and fury of retail

    The not-so-pretty underside of CRM became apparent again recently with the revelation that TJX Companies, parent of more than 2500 outlets including TJ Maxx, Marshalls, and other retailers, had a break-in that may have compromised customer data.  Increasingly, retailers are becoming the targets of thieves because they capture and store huge amounts of sensitive customer information like drivers license numbers, credit card numbers, and more.  To put it charitably, many retailers have become better at capturing data than at securing and preserving it.

    Experts in the retail and IT industries have been quick to round up the usual suspects meaning that all kinds of security and encryption solutions have been recommended to staunch the flow of customer data to the bad guys.  But there are at least two low or lower tech ideas that ought to be at least as prominent as we all grapple with the downside of digital consumerism.

    The absolutely lowest tech solution involves my favorite word at a checkout and I honestly don’t know why more of us don’t try it.  When they ask for your zip code give them letters instead of numbers—two letters to be precise—NO.  There’s no reason why a customer with money to spend has to run a gantlet of retailer demands in order to make a purchase.  Either your money or your plastic is good or it isn’t and if it isn’t the retailer better have a waterproof reason for turning you down.  Refusal to provide a zip code will not suffice.

    If you are using cash, there are laws that stipulate that you can’t be turned away from a public accommodation (which covers a lot of ground) and if you are using plastic there is nothing in the merchant agreement that says the merchant has a right to collect your other private information.  Just say no and make a stink of it if you have to.

    The lower tech solution, and frankly one that is over due, is asking some basic questions about why we collect the data we collect.  The usual answer is a variant on the theme of knowing customer behavior so that the retailer can better focus promotional efforts but I don’t buy that.  How is knowing that a woman bought a man’s sweater going to be useful in the future?  There just isn’t enough data there.  You need to know if the woman is married to the man or has some other relationship, if it’s a present, or if she just liked the style and it fit. 

    At the end of the day the logic of this kind of data gathering doesn’t make sense.  A logician would call it a priori reasoning which basically means that if something happened before it will happen again.  It’s like saying that if you flip a coin and it comes up heads that the next flip will also come up heads too, but that’s not true.  The two events are independent and subject to the same laws of probability. Similarly every visit to a store is a unique event and needs to be treated that way. Still retailers love to collect historical data hoping it will turn out to be some sorcerer’s stone.

    There are lots of variations on that theme but here’s my point—we spend too much time and effort capturing data about behavior and hardly any collecting information about customer attitude yet it is customer attitude that will ultimately bring the customer back.  I suspect the reason is that it’s easier to collect numbers at the checkout and associate them with specific behaviors than it is to capture attitudes.  When you capture attitudes you might discover things you don’t want to know and that can be scary.

    Capturing attitude provides the very important ‘why’ of a transaction as in why the customer likes to shop at a particular store, at a particular time, for a particular reason.  Attitude can also tell a lot about selection and placement preferences and a lot more if you let it. 

    In the bad old days capturing that kind of information was tediously slow and ruinously expensive; it involved focus groups, surveys, and other field research and retailers went looking for it only infrequently as their budgets allowed.  Today, though, capturing attitude can be swift and accurate leading to numerous insights, some of which have not even been contemplated.

    What’s keeping retailers and other vendors from capturing more useful customer attitude data is a complex subject; it involves the established ways of operating a business and a general reluctance to be the first at implementing new technologies.  Retailers might be able to create a moat around their sensitive data and government might at some point require them to do so but all that is a long way from the original intention of better understanding customers. 

    Even the best security systems won’t change the fact that many retailers are simply not collecting the right information to achieve their goals.  If Shakespeare were alive today he might call the current regime of retail data capture the “sound and fury” of retail but as Shakespeare also wrote, it is a tale told by an idiot and it signifies nothing.

    Published: 17 years ago


    • February 14th, 2007 at 2:08 pm    

      Of course, the other option besides saying “No” is to give bogus information, which I do from time to time, depending on my mood and the quality of service I’ve received. Having lived in various locations across the country I can quickly dredge up phone numbers and ZipCodes from Eugene, OR; Champaign, IL; and Danvers, MA — all places I no longer live. My CVS ExtraCare account calls me “Mr. Santa Claus” and thinks I live in ZipCode 00000. I’m sure the segmentation specialists at CVS are puzzling over that one.

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