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80 posts categorized "Big Data"

November 04, 2013

Is There a Difference Between Segmentation and Personalization?

Judy Bayer, Director of Strategic Analytics for Teradata International, and Marie Taillard, a professor of marketing and Director of the Creativity Marketing Centre at the ESCP Europe Business School in London, wrote a very interesting article in which they stated that they no longer believe in segmentation. ["A New Framework for Customer Segmentation," HBR Blog Network, 12 June 2013] Obviously, the headline for their article (which they may not have personally selected) undercuts that statement; nevertheless, their arguments are both interesting and persuasive. They believe that segmentation (like dividing consumers by gender, ethnicity, geography, religion, etc.) promotes a "rigid methodology that carves out the market" in unnatural ways. They accept the notion that you "can't be all things to all people," and they believe that rigid segmentation defies that concept. They continue:

Drill and board clear"To resolve these contradictions, we had begun pleading with students and clients to look for 'jobs to be done.' The approach echoes Ted Levitt’s famous comment about selling ¼ inch holes rather than ¼ inch electric drills, and advocates a mindset shift away from selling products to 'doing jobs' that solve customers’ problems. In Clay Christensen’s words, customers 'hire' products or other solutions because they have a specific job to fulfil, not because they belong to a certain segment."

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November 01, 2013

SAP Discusses the Future of Business, Part 2

In Part 1 of this two-part series, I indicated that I divided the facts presented in an interesting SAP slideshow entitled "99 Facts on the Future of Business" into thirteen separate categories. In that post, I discussed the first five categories: Big Data; Business Leadership; Customer Service/Experience; and Education. In this post, I'll discuss the remaining eight categories, namely: Emerging Markets; Innovate or Perish; the Internet of Things; Risk Management; the Supply Chain; Targeted Marketing; Urban Growth; and a Miscellaneous category. SAP introduced the presentation by explaining:

"Business Innovation is the key ingredient for growth in the future of business. Changes in technology, new customer expectations, a re-defined contract between employees and employers, strained resources, and business and social networks are requiring businesses to become insight-driven businesses. In this presentation, we have gathered 99 facts that represent the changes taking place in the world today. Each fact represents a key insight and suggests where we need to focus and change to become viable, sustainable and growing future businesses."

As noted in Part 1, I placed these facts into thirteen categories to help paint a more coherent picture of the future as seen by the analysts at SAP. In the first post, I included the first five categories: Big Data; Business Leadership; Customer Service/Experience; and Education. In this post, I'll discuss the remaining eight categories, namely: Emerging Markets; Innovate or Perish; the Internet of Things; Risk Management; the Supply Chain; Targeted Marketing; Urban Growth; and a Miscellaneous category.

99 Facts

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October 31, 2013

SAP Discusses the Future of Business, Part 1

In an interesting slideshow entitled "99 Facts on the Future of Business," the folks at SAP paint a picture of the future to which businesses should pay attention. The company introduces the presentation by explaining: "Business Innovation is the key ingredient for growth in the future of business. Changes in technology, new customer expectations, a re-defined contract between employees and employers, strained resources, and business and social networks are requiring businesses to become insight-driven businesses. In this presentation, we have gathered 99 facts that represent the changes taking place in the world today. Each fact represents a key insight and suggests where we need to focus and change to become viable, sustainable and growing future businesses." I've placed these facts into thirteen categories to help paint a more coherent picture of the future as seen by the analysts at SAP. In this post, I'll include the first five categories in this post. They are: Big Data; Business Leadership; Customer Service/Experience; and Education. The remaining eight categories will be provided in the next post.

99 Facts

To continue reading this post, click on this link to the new Enterra Insights site.

October 24, 2013

Avoid Competitive Obsolescence Using Technology

Michael Fitzgerald, Nina Kruschwitz, Didier Bonnet, and Michael Welch, report, "A study by MIT Sloan Management Review and Capgemini Consulting finds that companies now face a digital imperative: adopt new technologies effectively or face competitive obsolescence." ["Embracing Digital Technology," MIT Sloan Management Review, October 2013] The term "digital technology" is pretty broad and, by itself, is probably not very useful. The authors define it as "social media, mobile, analytics or embedded devices" that "enable major business improvements (such as enhancing customer experience, streamlining operations or creating new business models)." The authors obviously believe that companies that fail to adopt these technologies and transform their operations will fail or, like old soldiers, just fade away. They report that the key findings from the survey are:

  • According to 78% of respondents, achieving digital transformation will become critical to their organizations within the next two years.

  • However, 63% said the pace of technology change in their organization is too slow.

  • The most frequently cited obstacle to digital transformation was “lack of urgency.”

  • Only 38% of respondents said that digital transformation was a permanent fixture on their CEO’s agenda.

  • Where CEOs have shared their vision for digital transformation, 93% of employees feel that it is the right thing for the organization. But, a mere 36% of CEOs have shared such a vision.

According to previous research, "digital transformation will require companies to draw from a core set of four digital capabilities: a unified digital platform; solution delivery; analytics capabilities; and business and IT integration." ["The Digital Capabilities Your Company Needs," by George Westerman, Didier Bonnet, and Andrew McAfee, MIT Sloan Management Review, 29 October 2012] Despite the fact that so many executives believe that achieving digital transformation for their companies is critical, the authors report that "many companies struggle to gain transformational effects from new digital technologies." This is problematic since the authors conclude: "Almost no organization is sheltered from the competitive disruption wrought by the widespread adoption of digital technologies."

Transformation
The challenge, of course, is that every business is unique in some way. That means that no single path to digital transformation is going to work for everyone. The path to digital transformation begins with understanding your business. The first case study that the authors present involves Starbucks. Although some coffee drinkers simply want to buy a cup of java on their way to work, many others want to sit and enjoy that cup of Joe. For consumers who want to enjoy their purchases on site, Starbucks offers "free Wi-Fi in Starbucks stores, along with a digital landing page with a variety of digital media choices, including free content from publications like The Economist." For those consumers who want to rush off to work (or elsewhere), Starbucks has managed to "cut 10 seconds from every card or mobile phone transaction, reducing time-in-line by 900,000 hours. Starbucks is adding mobile payment processing to its stores, and is processing 3 million mobile payments per week. Soon, customers will order directly from their mobile phones." Fitzgerald, Kruschwitz, Bonnet, and Welch continue:

"The world is going through a kind of digital transformation as everything — customers and equipment alike — becomes connected. The connected world creates a digital imperative for companies. They must succeed in creating transformation through technology, or they'll face destruction at the hands of their competitors that do."

There are likely going to be two networks at play: one that connects customers and the other that connects everything else. This second network is often referred to as the Internet of Things (IoT) or the Industrial Internet. To learn more about the IoT, read my posts entitled The Internet of Things Looks Like Big Business and Fellow Travelers: Big Data and the Internet of Things. Although the authors insist that undergoing a digital transformation is an imperative for companies, they don't pretend that such an effort will be easy. "Even in a connected world," they write, "it takes time, effort and willpower to get major transformative effects from new technology." The authors write with a sense of urgency on this subject. George Westerman, a research scientist at MIT's Center for Digital Business, told them, "The big thing is, technology change is happening so rapidly that every industry is being affected by this." The rapid pace of change is probably the main reason that companies are struggling to transform.

During the dot.com era, many companies were quick to purchase and employ IT systems that later proved unsustainable. Having been burnt in the past, they are hesitant to jump in again during a time of rapid change. Hesitancy, however, is not a winning strategy. The authors report that "previous research by Capgemini Consulting and MIT's Center for Digital Business found that companies that invest in important new technologies and manage them well are more profitable than their industry peers." The obvious answer to this conundrum is investing in technologies that are adaptable and easily updatable. This is much easier to do than in the past thanks to cloud computing and software-as-a-service offerings. The authors promise, "Business leaders who embrace the digital imperative will see boosts in their operations, customer relations and business models."

With the digital path to purchase becoming an increasingly important channel for commerce, it comes as no surprise that the study found that "customer experiences reflect the clearest impact of digital transformation. The survey found that improving customer relationships was the area where companies were having the most success with digital technology. Most prominent was improving the overall customer experience, followed closely by enhancing products and services in customer-friendly ways." To learn more about why enhancing customer experience is important read my post entitled Analytics 2.0: Big Data, Big Testing, and Big Experiences -- Part 2.

The authors admit that "there is no one factor that impedes digital transformation," but they do acknowledge that some companies "lack both the management temperament and relevant experience to know how to effectively drive transformation through technology." They conclude their article by offering "nine specific hurdles in the broad areas of leadership, institutional obstacles and execution that companies need to overcome to achieve digital transformation." They are:

  1. Lack of Urgency — "Complacency affects more companies than any other organizational barrier cited in our survey."

  2. The Vision Thing — "Digital transformation starts with a vision from top leadership."

  3. Picking a Direction — "Creating a road map towards digital transformation is challenging."

  4. Attitudes of Older Workers — "Responses to the survey suggest a deep-rooted perception that older people will have trouble reframing."

  5. Legacy Technology — "Problems arising from older systems are a legitimate issue."

  6. Innovation Fatigue — "For people of any age, there is also the possibility of technology fatigue."

  7. Corporate Politics — "Internal power centers, controlled by departments or individuals, can inhibit changes that dictate less power or different ways of working."

  8. Making a Case for Digital Transformation — "Only half of the companies surveyed said they create business cases for their digital initiatives."

  9. Incentives — "The companies that do best at digital transformation also do the best job of aligning incentives with digital transformation efforts."

If I were asked to prioritize those obstacles to transformation, lack of vision and legacy technologies would be high on my list followed closely by corporate politics. If you had any doubt about whether the industrial age is over and the information age has arrived, this survey should put your doubts to rest. If your company has yet to join the digital age in a meaningful way (i.e., aligned itself utilizing a unified digital platform), then it might just be a candidate for history's dustbin.

October 23, 2013

Globalization and the Supply Chain

Although globalization isn't quite the hot topic it used to be, the subject is still a vital one. Historically, discussions about globalization involved the movement of three things: capital, people, and resources. Nowadays, some pundits like to add a fourth item to that list: ideas. Recently, an article in The Economist stated, "'Globalisation' has become the buzzword of the last two decades. The sudden increase in the exchange of knowledge, trade and capital around the world, driven by technological innovation, from the internet to shipping containers, thrust the term into the limelight." I suspect that the article left out the movement of people either because so many countries have become xenophobic or because jobs now move to people rather than people moving to jobs (i.e., outsourcing) – or maybe the article omitted the movement of people for both reasons. ["When did globalisation start?" 23 September 2013] Globalization has both supporters and critics. The article explains:

Globalization"Some see globalisation as a good thing. According to Amartya Sen, a Nobel-Prize winning economist, globalisation 'has enriched the world scientifically and culturally, and benefited many people economically as well'. The United Nations has even predicted that the forces of globalisation may have the power to eradicate poverty in the 21st century. Others disagree. Globalisation has been attacked by critics of free market economics, like the economists Joseph Stiglitz and Ha-Joon Chang, for perpetuating inequality in the world rather than reducing it. Some agree that they may have a point. The International Monetary Fund admitted in 2007 that inequality levels may have been increased by the introduction of new technology and the investment of foreign capital in developing countries."

As with most debates, there is truth on both sides; but, there is no denying that the billions of new middle class consumers are better off thanks to globalization. The article, however, insists, "It is impossible to say how much of a 'good thing' a process is in history without first defining for how long it has been going on." So the staff at The Economist asks, "When did globalisation start?" Taking the long view, the article argues, globalization began when labor became divided between hunters and shepherds, which led to further labor specialization (e.g., merchants, armorers, etc.). Of course, the "world" in which these specialized laborers lived and interacted was fairly limited in size. It was traders and merchants who really spawned what we now think of globalization. The article concludes:

"It is clear that globalisation is not simply a process that started in the last two decades or even the last two centuries. It has a history that stretches thousands of years, starting with ... primitive hunter-gatherers trading with the next village, and eventually developing into the globally interconnected societies of today. Whether you think globalisation is a 'good thing' or not, it appears to be an essential element of the economic history of mankind."

Throughout most of history, the primary movements of goods, people, and capital have been fairly regionalized. I have argued in previous posts, that regionalization within the broader framework of globalization, is going to characterize much of the trading and other supply chain activities in the future. There is growing evidence of this. For example, Jonathan Webb reports, "The preliminary data from [Procurement Leaders'] CPO planning survey currently finds relatively little evidence for globalisation. In this study, we asked procurement leaders from where the goods and services for each region were sourced. As it turns out, most of the goods for each region were sourced internally." ["The world isn’t globalising – it’s regionalising," Procurement Leaders, 9 July 2013] There's nothing sinister about regionalization. It simply makes economic sense to reduce the length of supply chains.

Regionalization, however, isn't sounding the death knell for globalization. Most multi-national corporations understand that their best opportunities for growth are going to be found in emerging markets among new global middle class consumers. Robert J. Bowman, Managing Editor of SupplyChainBrain, cites an Ernst & Young study that concludes "the biggest opportunity for merchandisers in years to come is the emerging consumer in China, India, Brazil, Eastern Europe and other places far from U.S. shores." ["Forging the 21st-Century Supply Chain," 23 January 2013] Bowman also quotes Josh Green, Co-Founder and Chief Executive Officer of Panjiva, who stated: "To me, the defining economic event of the 20th Century was the rise of the American middle class. For the 21st Century, it's the rise of the global middle class." In other words, what regionalization means is that global corporations are going to have to learn to think globally but find a way to act locally (or regionally). Bowman states, "Manufacturers will still need to be in China – but to serve the Chinese market. The same goes for growing demand in those other emerging economies."

Let me state the obvious: Globalization and regionalization both depend on good supply chains. Getting products to new members of the global middle class or do those still struggling to get out of poverty (the so-called "bottom billion"), is a challenge with which all manufacturers and retailers are struggling. An organization called D-Prize, which "is dedicated toward expanding access to poverty-alleviation solutions in the developing world," also believes that "distribution equals development." Its website explains: "Many solutions to poverty already exist; the challenge is distributing these solutions to the people who need [them] most. We tackle this by challenging social entrepreneurs to develop better ways to distribute proven life-enhancing technologies, and funding early-stage startups that deliver the best results." The distribution challenges faced in getting poverty-reducing solutions to the bottom billion are the same challenges that manufacturers face in getting their products to the same group. Nicolas Fusso writes:

"A massive global toolbox, filled with highly effective tools for solving poverty, continues to expand. Inside you'll find relatively recent additions, such as portable solar lanterns. Other tools, like childhood immunizations, have been dependable for generations. Unfortunately, this toolbox is not open to everyone; it seems someone forgot to unlock it for those most in need of access. In fact there are many proven paths toward development. The past decades have observed a wide range of advancements – including new health and medical interventions, development-focused technologies, and proven financial services. Yet millions in the developing world still lack access to basic poverty solutions. Why is that? Today's greatest need is not for scientists and engineers to create new tools. The real need is for better distribution of solutions that already work." ["Distribution, the Key to Unlocking the Development Toolbox," Next Billion, 25 April 2013]

Fusso notes that D-Prize is offering a prize of up to $20,000 for good ideas about how best to distribute poverty-reducing solutions to those who need them. To large multi-national corporations, that sum is a pittance, but the solutions that could emerge from offering that sum could help everyone. Solving the distribution of goods and services challenge to poverty-stricken areas should be a win-win for both humanitarian and commercial ventures. One would assume that humanitarian efforts could piggy-back on commercial distribution systems serving the bottom billion. Certainly multi-national corporations could use the good public relations that would be created by such a venture. As I wrote in a previous post, "For years, people made the bad assumption that impoverished populations wanted nothing more than the very basics -- food, housing, and water. Yet business people clever enough to package goods in sizes that the poor could afford (like single-wash packages of detergent or a minute of cellphone time) found that the poor could be consumers and profits could be made. We shouldn't be surprised; 'Apple Marys' in the U.S. survived the great depression using this economic model."

The future of globalization and supply chains may very well be characterized by how well companies learn to overcome the "last mile" challenges associated with the bottom billion consumers. Solve that problem and other distribution problems will naturally be solved as well. For more about how globalization and supply chains can help solve poverty, see my post entitled Can Supply Chains Save the World?

October 22, 2013

Get Personal with Your Customers

"In a climate where companies send mass, generic emails to entire mailing lists on a regular basis," writes Malcolm Duckett, "consumers have become deadened by indiscriminate email campaigns." Duckett believes that "a targeted approach is the only real way to avoid damaging your company's relationship with customers and to build brand loyalty." ["Intelligent email marketing should be personalised and targeted," Fourth Source, 7 May 2013] Janet Kyle Altman, of Kaufman, Rossin & Co., basically says the same thing, but in a different way. She writes, "Your target is not 'everyone'." ["To Market Successfully, Your Customer Can't Be 'Everyone'," Business News Daily, 27 September 2013] It's obvious that you can't personalize your marketing efforts if you know little to nothing about the consumer you wish to reach. Richard Ting asserts that "brands are missing out by not fully understanding who their customers are. Let's face it: the signal-to-noise ratio is still fairly low among brands." ["The Customer Profile: Your Brand's Secret Weapon," HBR Blog Network, 11 March 2013]

Orangedudes-target-customer-600pxAngela Wells calls the "getting to know your customer" approach Business-to-People (B2P) marketing. "B2P Marketing," she writes, "is the recognition that businesses aren't actually buying what you're trying to sell. Individual decision makers — people — are making the decisions for their companies, not impersonal disengaged companies as a whole." ["Forget About B2B And B2C - Technology Enables B2P (Business To People) Marketing," Marketing Tools: CRM, 28 June 2013] Whether your desired customer is sitting behind a desk at a business or on the couch in their home, doesn't really matter. Wells is correct that individual decisions are what you are trying to influence. Duckett insists that "saying the right thing at the right time to the right person" is getting easier thanks to technology. He writes, "The new generation of cloud-based marketing automation tools out there can help make this quick, simple and effective." He recommends a four-step approach for getting to know customers better.

"Step 1 – Create a profile: Clearly identify and classify visitors by monitoring and remembering their behaviour. There are tools that let marketers automatically record visitors’ individual behaviours as part of a 'customer history' record.

"Step 2 – Target: The marketer can set up simple targeting 'rules' (one by one as needed) so, for example, a rule might say 'target people who have looked at brand A more than 15 times', 'target visitors who have been visiting for 2 months but have not purchased' or 'target visitors who have purchased but not for 3 months'. Then the marketer will communicate to the system what content they want to try on each segment (this might include a set of email variants or even content to show in the visitor’s web page or triggers to your telesales team).

'Step 3 – See what works: Gathering this data on which content delivers the best results from this target segment (and the control group) is useful to marketers that then need to look at conversion rates, number of sale and, basket size to make their decision.

"Step 4 – Repeat and love the engagement: Keep the process going, each time building into the targeting the additional behavioural information harvested from the visitors. Your system should also include functions to ensure customers aren't repeatedly contacted with the same message or offer. This is important; otherwise customers will get wise and exploit the brand. For example, they will come to understand that if they abandon a basket one day, they will receive a discount the next – or will get frustrated when continually offered a deal they are not interested in, for example, a product they already purchased elsewhere."

Duckett concludes, "By engaging the visitor at every stage, marketers can ensure that customers are not disappointed by their experience of the brand, either by confusing content or unnecessary adverts. The end goal is that the visitor's experience will be easy, engaging and ultimately provide the visitor and the brand with exactly what they want." As I've noted in previous posts, it's easy for online customers to jump on or off the path to purchase. That's why I agree with Duckett that consumers must encounter a good experience at every stage or touchpoint along their journey.

Ting believes that many companies don't get to know their customers better because the data they collect about them is siloed. "Combined," he writes, "this information would be enough to create the ultimate 360-degree customer profile, which would allow enhanced targeting and personalization." The different types of siloes into which data is gathered include:

  • "What they're saying — social CRM. What are your consumers saying about your products and services in social media? Are your consumers' brand sentiments shifting from positive to negative or vice versa?

  • "What they're buying — purchase history. What is the last product a consumer purchased from you? How often does he buy from you? What are her favorite products? Are people making more or fewer purchases?

  • "What they're doing — brand interaction history. Are they using your mobile apps? How often are they using them? Are they visiting your website? Are they spending more or less time with your brand?

  • "What they're liking — social interest graph. What interests do they share on social media channels, and who is in the network of people who share similar interests?"

He cautions, "It may seem simple to combine these discrete data sets into one holistic customer profile, but there are major technology obstacles brands need to get past." Integrating data is never as straight forward as people think it will be. Ting insists that a customer's lifetime value will increase "by better engaging them over the long term and with purpose. ... To surgically cut through the noise, advertisers need to develop richer customer profiles. It's not the sexiest of topics in advertising, but it's one that will ultimately allow brands to target and personalize the experiences and messages that consumers deserve." Altman concludes, "No matter what product you sell or service you deliver, more targeted marketing gives you a better return. Targeting a specific audience gets you in front of them more often, with messages that touch them emotionally. If you try to be everything to everyone, your message becomes vague and less impactful."

Wells agrees. "With the rise of social media and engagement," she writes, "it has become increasingly obvious that we are all targeting people – those people who make the decisions whether or not to purchase what you are trying to sell. These people we are targeting are consuming media like never before, across a range of social platforms such as Facebook, Twitter, LinkedIn, and so much more." It should be pretty obvious by now that none of the recommendations offered by these pundits can be achieved without the right kind of technology. The secret is to get personal with your customers without creeping them out. It's a fine line that companies must walk when making personalized offers. The right technology and a good marketing department or firm will help you walk that line.

October 15, 2013

Personal Data: Who Should Own It and How Much Should It be Worth? (Part 2)

In Part 1 of this two-part series, I discussed the general topic of data ownership and why it is becoming an important issue in the Big Data era. I concluded that post with a quote from Joseph W. Jerome, a Legal and Policy Fellow at the Future of Privacy Forum. He wrote, "'Monetizing privacy' has become something of a holy grail in today's data economy." ["Buying and Selling Privacy," Stanford Law Review, 3 September 2013] As I have reported in previous posts, the World Economic Forum has recognized the economic value of data and has declared it to be a new resource class comparable to gold or silver. That has raised the eyebrows of a lot private citizens who see companies getting rich on their personal data. As a result, many people are asking how can they gain ownership of their data and get their share of the pie?

"As any savvy consumer knows," writes, Meghan Neal, "there's big money to be made off our personal data. I'm talking gobs upon gobs of cash, potentially." ["Should We Be Making Bank Off Our Own Personal Data?" Motherboard, 9 July 2013] For the moment, she insists, "we're just digital cash cows" for data brokers. She continues:

Data ownership"But that data is our lives, our identities. So why the hell aren't we seeing a dime? The short answer is that consumers are using personal data as currency, rather than looking at is as a commodity. We 'pay' for 'free' services like Gmail and Twitter with our data, instead of viewing that personal information as private property they — the Googles and Twitters and the like — should be paying us for. ... That's why now is a good time to look at the longer answer. Which is to say that consumers taking back their own data, to say nothing of profiting from it, would be a radical upheaval of the global digital economy as we know it. It’s daunting to even think about."

In the previous post, I cited an article written by Robert Hillard, who insists that the "true owner" of personal data is the individual. ["You should own your own data," Mike 2.0, 25 April 2013] He believes that the individual should be in control of their data and, presumably, that means free to make a buck off of it. As a result, he writes, "This approach actually opens up a huge array of new possibilities and leaves the individual in control. The evidence is growing that when people feel confident that they can withdraw their information at any time and are not at risk of unintended consequences they are much more willing to submit their data for a wide array of purposes." The question is: Will selling access to our personal data be enough to replace our 401(k) as a pension plan? The short answer is: Don't count it. Jerome writes:

"Today, privacy has become a commodity that can be bought and sold. While many would view privacy as a constitutional right or even a fundamental human right, our age of big data has reduced privacy to a dollar figure. There have been efforts — both serious and silly — to quantify the value of privacy. Browser add-ons such as Privacyfix try to show users their value to companies, and a recent study suggested that free Internet services offer $2,600 in value to users in exchange for their data. Curiously, this number tracks closely with a claim by Chief Judge Alex Kozinski that he would be willing to pay up to $2,400 per year to protect his family's online privacy. In an interesting Kickstarter campaign, Federico Zannier decided to mine his own data to see how much he was worth. He recorded all of his online activity, including the position of his mouse pointer and a webcam image of where he was looking, along with his GPS location data for $2 a day and raised over $2,700."

Hayley Dixon reports, "Collecting personal data online has become a multibillion-dollar industry but there are fears that it is largely unregulated as companies obtain information through web searches, social networks, purchase histories and public records." ["Personal Details Are Being Sold For A Fraction Of A Penny," Business Insider, 13 June 2013] Dixon goes on to report how much your personal data is worth per each transaction:

"Basic age, gender and location information sells for $0.0005 per person, or $0.50 (32p) per 1,000 people, according to the figures seen by the [Financial Times]. The data on those who are considered to be 'influential' within their social networks has the higher value of $0.00075, or $0.75 (48p) per 1,000 people. Details of how much a person earns or their shopping history are slightly more valuable again - and each piece sells for $0.001. In total most people's data is now worth less than a 64p."

You have to remember that those figures are what the data brokers are charging. If they had to buy that information from you, your share would be considerably less. As Dave Morgan told Dixon, "You're not worth much." The Financial Times published an interesting calculator to help you determine what your data is worth. It can be accessed by clicking this link (subscription may be required). At the moment, however, individuals are not getting any remuneration for their personal data because companies assert that they are providing it voluntarily. For the most part that's true. Most consumers ask: What choice do I have? If you don't provide the information you don't get the service you need. Mark Veverka finds it interesting that "it appears that we are much more willing to share personal information with banks than our doctors. About 87% of Americans are willing to share personal financial details with their financial institutions, but only 58% are willing to share personal medical details with their doctors, according to an extensive global survey exclusively obtained by USA TODAY." ["Unplugged: Who's got your personal data," USA Today, 24 June 2013] He continues:

"The assertion that we might trust Wells Fargo more than our family doctor isn't that surprising at first blush, says Steve Pratt, the San Francisco-based head of Infosys' consulting and systems integration group. We expect banks to monitor every transaction we make, regardless of how big or how small, to assure that our money is safe. We also tend to trust them more because they've earned that trust, for the most part, since making the transition to digital banking more than a decade ago, Pratt says. How an institution treats our information, and how it uses that data, tends to determine how much we as consumers are willing to share with them."

Veverka, like Neal earlier, argues that in many cases consumers aren't giving up this information for free. In return for providing information, they receive "exclusive service, timely discounts or other tangible benefits to reinforce their willingness to continue to share information." Jerome appears to agree with the premise that consumers should only provide data when there is a benefit to be gained. He writes:

"A recent piece in the Harvard Business Review posits that individuals should only 'sell [their] privacy when the value is clear,' explaining that '[t]his is where the homework needs to be done. You need to understand the motives of the party you're trading with and what [he] ha[s] to gain. These need to align with your expectations and the degree to which you feel comfortable giving up your privacy.' It could be possible to better align the interests of data holders and their customers, processing and monetizing data both for business and individual ends. However, the big challenge presented by big data is that the value may not be clear, the motives let alone the identity of the data collector may be hidden, and individual expectations may be confused. Moreover, even basic reputation-management and data-privacy tools require either users' time or money, which may price out average consumers and the poor."

I certainly don't have a definitive answer about who should own various kinds of data or whether it's a good idea to pay consumers for certain data. There are smart (and opinionated) people who are considering the matter and it will be interested to see what they propose in the years ahead. The only thing I know for certain is that Big Data is worth big money. It remains to see who will cash in. I just wouldn't expect to get rich selling your personal data.

October 14, 2013

Personal Data: Who Should Own It and How Much Should It be Worth? (Part 1)

"Data is the issue du jour," writes Jack Marshall, "CEOs are now frequently asked what their 'big data strategies' are, and CMOs are being pressured to turn the volumes of information their companies collect into business insights and cunning marketing strategies. That's prompting many clients to panic and to question where their data lives, who has access to it, and what exactly it's being used for." ["Brands Get Nervous About Data Ownership," Digiday, 22 April 2013] Interestingly, Marshall is talking about data provided by business clients to ad agencies. He continues:

Sales-versus-Marketing"According to agencies, clients do 'own' their data in the vast majority of instances. But agencies are well aware of its value and have no incentive to give up control of it to the client. It's less an issue of ownership than it is of control and access. Relationships and contracts vary, of course, but typically it's understood that agencies have rights to it on their behalf. But the reality of the situation is that most data-management platforms, DSPs, trading desks and other data platforms sit on the agency side, not with clients. Therefore, even if brands wanted to take control or 'ownership' of their own data, they're simply not in a position to do so at present."

Peeling the data ownership debate back one more layer, we find that within large organizations there are debates about who should "own the data." Tom Casey, Kumar Krishnamurthy, and Boris Abezgauz write, "Unlocking the potential inherent in all this data, structured and unstructured, internal and external, demands that companies set clear goals for how the data will be used — whether for optimizing the supply chain, developing closer relationships with customers and partners, predicting and reacting quickly to market shifts, or identifying areas for operational improvements and better accuracy of reporting. And they must decide on how it is to be collected, analyzed, and acted on." ["Who Should Own Big Data?" Strategy + Business, 12 August 2013] They continue:

"Given the cross-functional challenges, rich potential, and inherent dependency on complex technology, the question of who should own the data has become a hotly contested topic. In an online survey of more than 500 business intelligence professionals, respondents were evenly divided among three possible scenarios — that IT should take the lead, that the business should, or that a matrix organization should be created, bringing together the expertise of both."

If large companies can't get a grasp on how big data is to be used and who owns it, it's no wonder that individuals feel even more helpless. A number of privacy advocates believe that individuals (not companies) should have ownership of their personal data so that they have more say in how their data is used. "Citizens and consumers are becoming increasingly aware of the value of their personal information," writes Robert Hillard, "and hence are looking for more privacy options." ["You should own your own data," Mike 2.0, 25 April 2013] He continues:

"The default position of governments has been to revisit their privacy regulations. This approach, though, is doomed from the start as no regulation can possibly keep up with this rapidly developing information economy. In fact, it is likely to be economic forces that will provide the solution to the privacy risks of Big Data. Both government and businesses are beginning to realise that they can make individuals much more comfortable to share their data if rather than providing an almost infinite (and incomprehensible) set of privacy settings they simply renounce any attempt at taking over ownership of the data and simply borrow or lease it with the permission of the true owner – you. Rather than reducing the value to business and government, this approach actually opens up a huge array of new possibilities and leaves the individual in control. The evidence is growing that when people feel confident that they can withdraw their information at any time and are not at risk of unintended consequences they are much more willing to submit their data for a wide array of purposes. The protection of the individual in a world of Big Data is not through better privacy, but rather through clarifying who actually owns the data and ensuring that their rights are maintained."

I agree with Hillard that technology will always outrace any attempt to regulate it. When it comes to permission-based data usage, however, the devil is in the details. With so much data already available, getting the privacy genie back in the bottle could prove problematic. Mark Veverka rhetorically asks, "Do you know where your personal data is?" His short answer is: "Everywhere." ["Unplugged: Who's got your personal data," USA Today, 24 June 2013] "We need not only be concerned with how the government is gathering and using our data," he writes. "We should be equally cognizant of what businesses such as retailers, banks and medical providers are doing with our personal information and how it affects our relationships with them."

Duncan Jefferies reports that trust, privacy, and data ownership weren't really front-burner issues until recently. "During the early years of Web 2.0," he reports, "everyone seemed only too happy to share a huge amount of information about themselves through tweets, Facebook updates, geo-location data and other sources. But it seems people are beginning to realise that it might not always be a good idea to turn off their internal privacy settings." ["Can we trust organisations with our data?" Green Futures, 24 June 2013] Even though the privacy genie may never be able to be put back in the bottle, Abhishek Mehta, founder of Tresata, believes that "the discussion around the positive applications of Big Data is hollow if user privacy is not being addressed." ["Abhishek Mehta Discusses the Concept of Data Ownership," by Maria Deutscher, Silicon Angle, 18 June 2013] Mehta believes, "Individuals and organizations need to know who owns their data, who has access to it, and what can be done with it." The article continues:

"The way Mehta sees it, big tech firms possess 'pools' of user data. Amazon is the 'purchasing cloud of information,' Facebook is the 'social cloud of information,' and so on. Consumers entrust these companies with their data, but they don't necessarily know who owns it, and more importantly, they can't access all of it from one place because the technology required to do so is not yet available. Much of this also applies to private organizations, which generate large amounts of sensitive information that can easily fall into the hands of third parties. Mehta believes that in time, these isolated pools of user information will collapse into one another. He views this trend positively, but stresses that Big Data can be a source of both good and evil."

When Mehta talks about collapsing data pools into one another, one potential course for that collapse is to place data into what has been called Personal Data Vaults. But even if such vaults are created, individuals may not know what to do with them. Howard Gross asserts that consumers already know that massive amounts of data are being collected about them as they shop, surf the web, and make mobile calls. But, he notes, "Knowing is not always the same as understanding." ["Big Data and the Myth of Consumer Control," SmartData Collective, 25 June 2013] He continues:

"Joseph Turow, a professor at the University of Pennsylvania’s Annenberg School of Communication, has found that most Americans are unfamiliar with concepts like data mining and behavioral targeting. They are also limited in their ability to use technologies that protect their privacy. Moreover, few grasp the fact that by simply 'liking' something on Facebook, they may inadvertently reveal their ethnicity, economic status, political views, religious beliefs, mental health or sexual preferences."

Clearly, the issue of data ownership is only going to heat up in the years ahead rather die down. If privacy doesn't become the driving issue, money will. "'Monetizing privacy' has become something of a holy grail in today's data economy," writes Joseph W. Jerome, a Legal and Policy Fellow at the Future of Privacy Forum. ["Buying and Selling Privacy," Stanford Law Review, 3 September 2013] In the final post of this two-part series, I'll explore whether or not you and I are going to get rich selling our private data to the world.

October 10, 2013

Surviving in the Omni-channel World

Erik Brynjolfsson, Yu Jeffrey Hu, and Mohammad S. Rahman believe that mobile technology is forever changing the face of retailing. They write, "Recent technology advances in mobile computing and augmented reality are blurring the boundaries between traditional and Internet retailing." ["Competing in the Age of Omnichannel Retailing," MIT Sloan Management Review, 21 May 2013] As a result, they assert that "retailers [can] interact with consumers through multiple touch points and expose them to a rich blend of offline sensory information and online content." The editorial staff at SupplyChainBrain agrees that mobile technology has changed the retail landscape, and the staff insists that interactions with consumers are just as critical after the sale as before the sale if they are to remain happy and loyal. "With more customers shopping online and on their mobile devices," it writes, "it seems imperative that retailers offer different channels for fulfillment to not only keep prices low, but to remain competitive and foster customer loyalty." ["Multichannel Fulfillment Is The New Normal," 11 March 2013]

Brynjolfsson, Hu, and Rahman believe that technology has finally reached the tipping point in the retail arena. They describe the new business landscape this way:

Omnichannel marketing"In the United States today, more than 50% of cell phone owners have smartphones, and more than 70% of these have used their devices for comparison shopping, a habit that is becoming increasingly common worldwide. In the past, brick-and-mortar retail stores were unique in allowing consumers to touch and feel merchandise and provide instant gratification; Internet retailers, meanwhile, tried to woo shoppers with wide product selection, low prices and content such as product reviews and ratings. As the retailing industry evolves toward a seamless 'omnichannel retailing' experience, the distinctions between physical and online will vanish, turning the world into a showroom without walls. The retail industry is shifting toward a concierge model geared toward helping consumers, rather than focusing only on transactions and deliveries."

It doesn't take much imagination to envision the challenges and complications created by this new retail landscape. Although analysts seem to be in agreement that retailers must adapt to this omnichannel world or risk extinction, "some of the largest U.S. and U.K. retailers [have been] slow to adapt their store operations to changing consumer buying habits, according to a study by SD Retail Consulting, a retail advisory firm and unit of Hilco Trading, LLC." ["Largest Retailers Slow to Adapt to Needs of Omni-Channel Shopping Environment, Study Finds," by SD Retail Consulting, SupplyChainBrain, 7 June 2013] Antony Karabus, president of SD Retail Consulting, stated, "The largest retailers must examine every customer touch point and how they play their part in creating that seamless customer experience. For the minority of retailers who are successfully transforming their store environments, the rewards will be substantial."

Charles Hunt, owner of Duvet and Pillow Warehouse, a fast-growing online retailer, told reporters from The Economist, "'Multichannel' (or even better, 'omnichannel') is something almost every self-respecting retailer wants to be. It means letting customers shop with smartphones, tablets, laptops and even in stores as if waited upon by a single salesman with an unfailing memory and uncanny intuition about their preferences. Pure-play internet vendors are good at this. But most resist the idea that actual stores, with their rents, payrolls and security cameras, ought to be one of those channels. The thought of having the same costs as bricks-and-mortar competitors 'scares the living daylights out of me'." ["Mixing bricks with clicks," 23 March 2013] Hunt clearly spots the sorest point in omnichannel operations — the differential costs between online and brick-and-mortar operations.

Another sore spot, however, is omnichannel alignment. McKinsey & Company analysts Duarte Braga, Paul-Louis Caylar, and Pascal Griede, note, "At many companies, ... channel conflict or poor coordination gets in the way of true multichannel harmony. Successful multichannel leaders understand the importance of flexibility – helping customers shift between channels at the different steps of their decision journey to achieve the experience they want." ["A symphony of separate instruments: Cross-channel and online sales," Telecom, Media, and High Tech Extranet, 24 October 2012] Braga and colleagues note companies that began as brick-and-mortar stores are sometimes as reluctant to enter the online market as Hunt indicates he is to enter the brick-and-mortar arena. This kind of reluctance can result in the disharmonies noted by the McKinsey analysts. They conclude:

"No company today would neglect digital sales altogether. Yet many still view these efforts as sideshows to their 'real' business in stores. By taking smart advantage of the range of digital platforms currently available, retailers can delight customers both inside and outside their stores, while harvesting valuable consumer insights. Going a step further to integrate these digital channels within a truly multichannel strategy can boost performance across all channels – whether online or offline."

Brynjolfsson, Hu, and Rahman report how "the availability of product price and availability information, the ability of consumers to shop online and pick up products in local stores, and the aggregation of offline information and online content have combined to make the retailing landscape increasingly competitive." They note that "retailers used to rely on barriers such as geography and customer ignorance to advance their positions in traditional markets. However, technology removes these barriers." For brick-and-mortar stores location still matters in two ways. The most obvious way that location matters is, of course, ensuring that a store is located in an area easily accessible and desirable to shoppers. In the mobile age, Brynjolfsson, Hu, and Rahman point out that location also provides an advantage when shoppers are nearby. They explain:

"The growing prevalence of location-based applications on mobile devices is a critical enabler of these changes. According to the Pew Research Center, 74% of U.S. smartphone users used their phones to obtain location-based information in 2012. Retailers are taking advantage of opportunities created by location-based applications. Walgreens, for example, has teamed up with Foursquare, a location-based social networking website, to offer customers electronic coupons on their phones the moment they enter a Walgreens store. Saks Fifth Avenue has also worked with Foursquare to steer consumers toward physical locations by offering goodies (such as high-end brand Nars lipstick). Macy's offers free Wi-Fi in its stores; consumers can scan QR codes on products to see online product reviews, prices and exclusive video content on fashion trends, advice and tips. In some cases, the location-based applications aren't managed by the retailers but by third parties. For instance, RedLaser, an eBay company, allows consumers to scan UPC codes to determine whether specific products are available nearby and at what price. Mobile applications themselves are becoming increasingly advanced. For example, Loopt, of Mountain View, California, provides real-time location-based services aimed at specific users and popular locations. Retailers can use Loopt as a virtual loyalty card, allowing them to connect directly with consumers based on their location. Loopt users can find friends nearby and receive coupons and rewards for checking into specific locations. Another app called Doot enables users to leave public or private messages for friends or family members at restaurants or stores; the messages are activated when the designated people reach the sites."

Brynjolfsson, Hu, and Rahman offer seven strategies for achieving successful omnichannel retail operations. They are:

1. Provide attractive pricing and curated content.

2. Harness the power of data and analytics.

3. Avoid direct price comparisons.

4. Learn to sell niche products.

5. Emphasize product knowledge.

6. Establish switching costs.

7. Embrace competition.

They conclude:

"Technology is making omnichannel retailing inevitable and is reducing the ability of geography and ignorance to shield retailers from competition. It is breaking down the barriers between different retail channels as well as the divisions that separate retailers and their suppliers. At the same time, omnichannel retailing expands the overall pie by extending market reach and introducing consumers to products they may not have known about. Supply chains that generate increased consumer value are likely to win in the long run. More transparency is likely to speed up this process, leading to more of a 'winner-take-all' effect. As a result, retailers and manufacturers will need to find an area where they are truly the world’s best, as opposed to just working harder to hide from competition. With omnichannel retailing, competition will increase on many fronts, but so will the opportunities for savvy retailers and supply-chain partners to gain competitive advantage."

Omnichannel operations for many companies will result in smaller retail stores and larger distribution centers. I will discuss the backend impacts of omnichannel operations on the supply chain in a future post.

October 09, 2013

Millennials: Getting to Know You

Back in 1951, when Oscar Hammerstein II and Richard Rogers wrote their now-famous tune "Getting to Know You," they weren't thinking about marketers' love affair with consumers. Nor did they ever dream about how intimately marketers could actually get to know consumers. Nevertheless, marketers embrace the sentiments contained in Rodgers and Hammerstein lyrics:

MillenialsGetting to know you
Getting to know all about you
Getting to like you
Getting to hope you like me

As marketers get to know consumers, differences in generation product preferences quickly become clear. For example, back in 2012, Jefferies, a global investment bank, and AlixPartners, a global business advisory firm, released a study entitled Trouble in Aisle 5 that concludes there is a dividing line between baby boomers and millennials (sometimes referred to as Generation Y). ["Millennials' Grocery Consumption Patterns to Vastly Affect Food, Beverage Industry, Study Finds," SupplyChainBrain, 3 July 2012] Presumably Generation X individuals lean either towards their parents preferences or towards their children's preferences, because you don't read a lot about Gen Xers as a huge marketing target. In fact, the generation getting most of the attention nowadays is Generation Y — the so-called millennials. As the staff at ZOG Digital tells retailers and manufacturers, "Millennials are likely within your target audience." ["Marketing to Millennials: Just be Real, Dude," 3 July 2013] Here's how the ZOG Digital staff defines who is included in the term "millennials":

"The exact definition of 'millennials' varies, but it generally encompasses anyone between the ages of 18 and 30. Described as 'digital natives' by eMarketer, these consumers grew up with advancing technological opportunities. They may remember their parent's old brick car phone or beginning computer classes in grade school, but largely, they emerged from their teen years with a solid grasp on the Internet and all surrounding devices. Now, millennials are not only the creators of many social media networks, but they are – as a whole – early adopters who exemplify it. Just take a look at the average age of users on six of the most popular social networks – the typical user on Facebook, Twitter, Pinterest, YouTube, Google+ and Instagram falls within the late teen to early thirties age range. Millennials are the influencers you are looking to identify and engage with in order to increase visibility."

To learn more about "influencers," read my post entitled Do You Know Who Your "Influentials" Are? Lucia Moses notes, "Millennials are different from their parents, at least when it comes to spending. The Shullman Research Center surveyed adults with a household income of $75,000 plus on their spending plans and habits, and found that those age 18-33 were more optimistic about their financial situation and planned to spend more than their older counterparts." ["Wealthy Millennials Approach Shopping Differently Than Their Parents," AdWeek, 3 September 2013] The latest quarterly MarketPulse report from Information Resources Inc. confirmed the optimistic outlook of millennials: "The report found that 28% of millennials feel their financial situation has improved in the past year, vs. 20% of those aged 25-54 and 16% of those age 55 and older. In addition, 42% of millennials expect their financial position to improve in the coming year, vs. 26% of those aged 35-54 and 17% of those aged 55 and older." ["Shopper Sentiment Improves: Report," Supermarket News, 6 August 2013]

According to Moses, millennials are more likely to buy online but less likely to use credit than preceding generations. So what else has Big Data analysis taught us about millennials? AlixPartners analysts report:

"Based on the most recent projections by the U.S. Census Bureau, millennials over the age of 25 (the age at which income and household formation typically start to really accelerate) will make up roughly 19 percent of the U.S. population by 2020, up from just over 5 percent in 2010. These 64 million millennials will see a significant spending-power increase in the coming years as the median income for those households is expected to jump to more than $45,000 from just over $28,000. In fact, the study finds, food-at-home spending by Millennials is set to jump by $50bn annually through 2020. By contrast, the baby boomer generation, which has had an outsized influence on consumer trends for decades, will fall to below 20 percent of the population in the next eight years." ["Millennials' Grocery Consumption Patterns to Vastly Affect Food, Beverage Industry, Study Finds," SupplyChainBrain, 3 July 2012]

Brad Tuttle agrees with that analysis. "The millennial generation," he writes, "is easily the most studied demographic since ... the Baby Boomers." ["Millennial Shoppers: Big on Browsing, Not Splurging," Time, 11 September 2013] He continues:

"This is not only because Americans are always fascinated by youth culture, and that millennials are growing up during a period when technology and economic forces are changing rapidly, but also because — to put it bluntly — Gen Y represents big bucks. Roughly 80 million American millennials spend $600 billion annually, and by 2020, it's expected this generation's spending will hit $1.4 trillion per year, or about 30% of all retail sales. No wonder retailers, marketers, manufacturers, and all kinds of consultants have been trying so desperately over the years to get inside their heads and find out what it is that interests them — and what they'll pay for."

Analysts obviously don't agree on everything about millennials. As noted above, some analysts predict that millennials will spend more than older consumers; but, others claim they will spend less. Tuttle notes that recent studies about millennials have been published by "the NPD Group, Accenture, and the Shullman Research Center." He reports, "In a press release accompany the NPD report, Marshal Cohen, the group's chief industry analyst, called millennials 'the most elusive generation and the most challenging to keep engaged.' While some of the findings in the studies from NPD and others may be surprising, and demonstrate important cultural differences between how millennials and other age groups spend, simple economic circumstances can be credited for much of what sets young consumers apart. For instance, why is it that millennials go shopping quite frequently, but purchase at a significantly lower rate than older consumers? 'Because they are the most selective as well as the most economically challenged,' Cohen put it simply." Tuttle provides a few more insights about millennials drawn from these studies:

  • "Millennials really love to shop. Indeed, in the Shullman study, 58% of consumers ages 18 to 33 put themselves in the 'love to shop' category, compared to 40% of adults overall. And while the data indicates that millennials are more likely to make online purchases than older consumers, young shoppers still do enjoy going to stores. According to the NPD report, 53% of millennials shop in-store at least once a week, and 81% of their dollars are spent in brick-and-mortar stores. 'Interviews conducted recently at one of America's largest shopping malls confirmed our survey findings that many members of the digital generation actually prefer visiting stores to shopping online,' the Accenture report states."

Lorraine Mirabella provides additional evidence that millennials may save brick-and-stores from the onslaught of online retailers. "Buying almost anything online may be as much second nature as texting for many in the first generation to have grown up with e-commerce," Mirabella writes, "but the millennials still do most of their shopping in stores, especially those that keep their offerings fresh and make the experience social, according to research from the Urban Land Institute." ["Gen Y shoppers, raised on e-commerce, still prefer in-store experience," The Baltimore Sun, 7 September 2013] Tuttle's next descriptive trait involves shopping frequency.

  • "Millennials purchase less frequently. Young consumers may be out at stores in large numbers, but they're not necessarily buying anything. According to the NPD study, the conversion rate — percentage of consumers who actually make a purchase — is lowest among millennials. Whereas seniors make purchases 72% of the time, millennials pull the trigger only on 57% of their shopping (more like browsing) ventures. Gen X and Baby Boomers fall in the middle, with conversion rates of 66% and 69%, respectively."

Maureen McAvey, senior resident fellow for retail for Urban Land Institute, told Mirabella, "Retailers are keeping a close eye on the millennials' buying habits because it's becoming clear that they are not just a younger version of their elders, but a different shopper altogether." That's why it's so important that retailers get to know them better. Tuttle's list continues:

  • "Even well-off millennials aren't big splurgers. The Shellman study, which focused on young consumers with household incomes of at least $75,000 annually, found that for 53% of higher-income millennials, their last 'luxury' purchase cost under $250. What's more, these consumers were fairly likely to wait and save up before buying anything in the luxury category: 30% reported saving up specifically for the purchase (compared to 16% of adults overall), and only 10% of millennials put the purchase on a credit card (compared to 19% of adults overall)."

Suley Muratoglu, Vice President for Marketing and Product Management at Tetra Pak, reports, "Millennials represent the fastest-growing segment of luxury goods and services purchasers, according to a recent study by American Express. Yet they are also giving rise to a new lifestyle that can be characterized in two words: frugal and green." ["Millennials’ Frugal And Green Lifestyles Raise The Bar For Brands," Manufacturing.net, 29 May 2013] Muratoglu continues:

"To splurge on the high-quality items they covet, especially just-off-the-line electronics, Millennials scrimp in other areas. But even as they look for coupons, sales and promotions and stray from well-known brands to keep their cash-strapped budgets in check, they choose 'makers and products that are socially responsible. … fair-trade and offer lower carbon footprints,' notes Ana Nennig, EVP of global consulting firm Havas PR. What's more, packaging, which has long been part of the green discussion due to concerns about food waste, sustainability and recyclability, is center stage again. But this time consumers are considering it in a more holistic way to embrace and fulfill this young group's unique views on frugality and social responsibility."

The last item on Tuttle's list addresses the frugality of millennials:

  • "They’re big fans of convenience and cheap prices. It's easy to see economic forces at work yet again in light of the NPD study's findings that 'value oriented retailers within the dollar store, second hand, drug store, and off-price channels' are especially appealing to millennial shoppers. Another study, 'Millennial Shoppers: Tapping into the Next Growth Segment,' released last summer by SymphonyIRI, indicated that millennials tend to be driven more by cheap prices than loyalty to any particular brands, and that they like shopping in drugstore chains like CVS and Walgreens more than other consumer demographics."

The millennials' reputation for frugality led McAvey to tell Mirabella, "'Many people speculate this is going to be the sharing generation,' more apt to rent a zip car or ride a bicycle than buy a car or use a tie-sharing service rather than having a closet full of the accessory. ... 'It's not clear that they wish to acquire as much stuff as their parents did, and retailers are very interested in what they're going to do.'" Tuttle further reports, "The SymphonyIRI survey also showed that millennials have been resorting to classic DIY strategies in order to spend less money, sometimes — in the case of health care — to disturbing degrees:

'This group is 46 percent more likely to use at-home beauty treatments to save money, and 31 percent more likely to cook from scratch or with limited convenience foods to save money. They are also 18 percent more likely to 'self-treat' where possible to avoid spending money on doctor's visits.'

The bottom line appears to be that millennials are becoming an economic force to be reckoned with but extracting money from their clenched fists may prove more difficult for retailers than it has been to get money from previous generations.