The data mining behind loyalty cards shows just how devious they can be
This interesting article about data mining shows just how devious they can be. For example, a casino:
The system collects data each time a gambler uses their casino loyalty card – be it for gambling, purchasing food in the restaurant or paying for snacks from their room minibar – to create a pattern of their behaviour.
The system can see, for example, that the last few times Gambler X visited the casino, they stayed for two days and lost between $200 and $300, then promptly left the gaming floor, spent no more money and went home the next day.
”As a casino operator you don’t want that, you want to make people happy and spend more money,” Quinn says.
Enter Tibco’s event processing software. When the system detects the customer is falling into a particular pattern, such as the consistent losing streak that caused them to leave during their last visit, it sends an automatic note to a gaming floor attendant to offer the person a free meal, or ticket to a show.
The idea is to distract the gambler long enough that they’ll come back later and continue to play and lose money, albeit in more palatable amounts.
Ingenious. For the cost of a meal (and installing the computer tracking in the first place) the Casino gets heaps more money. No wonder gamblers get sucked into losing lots of money.
They apparently want this so much that last week they sent me two cards “to the householder” even though I’ve never been a member — and I hear I’m not the only one.
I do have a Woolworths loyalty card, because I more often shop there. It earns me Frequent Flyer points which sometime in the next couple of decades might add up to enough to take a flight somewhere (or more likely will earn me a small discount using Points+Pay… or a thing such as the barbecue I got via the Qantas FF shop a few years ago).
But I happen to know that you don’t earn any points for transactions less than $30, so I deliberately don’t present the card for those, ‘cos really, they don’t need to know too much about my spending patterns.
You can call me paranoid if you wish, but note the comments in this article the other day:
But analysts said that the programs took from customers as much as they “gave back”, in terms of valuable information on their shopping habits. “This is essentially just a new form of marketing,” Citigroup equities analyst Craig Woolford said. “There are two globally perceived benefits – one is retaining your customer, and the other is developing insights into your customers’ shopping behaviours.”
Oh, I also love this quote from someone at Coles:
“Australian customers tell us they want discounts on the products they buy the most,” Coles finance director Tony Buffin told BusinessDay.