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Thursday, July 31, 2014

OKCupid, Facebook not alone in studying consumers

NEW YORK – Think you’re in control? Think again.

This week, OKCupid became the latest company to admit that it has manipulated customer data to see how users of its dating service would react to one another. The New York-based Internet company’s revelation follows news earlier this month that Facebook let researchers change news feeds to see how it would affect users’ moods. The fact is, big companies use customers as unwitting guinea pigs all the time – online and in the real world. ...

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NEW YORK – Think you’re in control? Think again.

This week, OKCupid became the latest company to admit that it has manipulated customer data to see how users of its dating service would react to one another. The New York-based Internet company’s revelation follows news earlier this month that Facebook let researchers change news feeds to see how it would affect users’ moods. The fact is, big companies use customers as unwitting guinea pigs all the time – online and in the real world.

OKCupid’s claim, that its research was aimed at improving its services, is common. But some find that manipulating situations in order to study consumer behavior without consent raises troubling privacy concerns.

“Every company is trying to influence consumers to purchase their product or feel a particular way about their company,” said Kit Yarrow, consumer psychologist at Golden Gate University in San Francisco. “The question is, when is it manipulation, when consumers are in some ways tricked, and when is it just influence?”

In a blog post on Monday OKCupid founder Christian Rudder detailed the experimentation: The company removed text or photos from profiles and in some cases told people they were a 90 percent match with another date-seeker instead of a 30 percent match. Rudder was unapologetic and said the results are being used to improve the sites’ algorithms.

“If you use the Internet, you’re the subject of hundreds of experiments at any given time, on every site,” Rudder wrote. “That’s how websites work.”

Facebook’s recent disclosure set off a firestorm on social media services and in the press. During one week in January 2012, the company let researchers manipulate 689,000 users’ news feeds to be either more positive or negative to study how the changes affected their moods.

But Internet companies aren’t the only ones studying unsuspecting customers. Retailers have been at it for decades.

Brick-and-mortar stores and restaurants have long used data drawn from customer loyalty programs, satisfaction surveys and exit interviews, to figure out how to best target consumers.

For example, Darden, which operates the Olive Garden, analyzes customers’ checks to see what types of dishes people tend to combine.

The restaurant chain also analyses how long customers wait for a table. Darden said the research, along with customer surveys, helps the company improve the customer experience.

“We collect all sorts of information about any interaction we have with guests to understand who our customers are, and who is visiting the restaurant,” said Chris Chang, senior vice president of technology strategy at Darden.

While Darden’s methods are considered traditional, retailers are beginning to use more high tech ways to study consumer behavior too.

Alex and Ani, a New York-based jewelry and accessories maker that runs its own stores and also sells goods at department stores nationwide, works with technology company Prism Skylabs to use data taken from video footage create so-called “heat maps.” Using video they can track how customers flow through the store, and rearrange displays and move them to places where customers linger.

That’s just one piece of data the jewelry company uses, said Ryan Bonifacino, vice president of digital strategy. Once the company has the traffic patterns, they also evaluate timestamps on receipts and other point-of-sale information in an effort to create a profile of what types of people are shopping in the store and customize products to them.

“It’s not about one individual coming into a store, it’s about understanding the journey” of customers as a group, Bonifacino said.

Another example is Forest City, a Cleveland-based real estate developer, which operates malls around the country. The company works with U.K. firm Path Intelligence to identify shopper patterns through mobile phone movements. The system uses cellular data, Wi-Fi and Bluetooth. Forest City emphasizes that it does not collect personal data or any data that could be used to identify an individual shopper. The company has used the data to determine whether it should move an escalator in one mall to make the flow of traffic more efficient. Another time they were able to tell a retailer whether they should change locations or not.

“In the past, we would have used a gut feeling or anecdotal evidence, more low-tech ways to determine whether or not we should move the escalator,” said Stephanie Shriver-Engdahl, vice president digital strategy.

The use of “big data” and other ways to study consumers are likely to get more pervasive. The key to conducting studies without sparking outrage – online and offline – is transparency, said marketing expert Allen Adamson, managing director of branding firm Landor Associates.

“Big data is everywhere, and people know that and are willing to deal with it,” he said. “If you tell consumers this is what you’re doing to make sure you’re meeting their needs and be able to offer the right merchandise, they’re usually accepting and understand.”

That’s true for Lucas Miller, 24, of Phoenix, who wasn’t fazed when OKCupid disclosed its experiments.

“In terms of tracking behavior, I’m far less worried about for-profit companies doing it than I am about the government,” he said.