Does Your Purchase History Tell Companies All They Need to Know About You?

I’m going to give you superpowers so that you become rich by predicting what people are going to do next. I’ll give you two choices and you can only pick one

First choice: I’m going to give you the superpower that whatever the person sees on the website or store you can see everything. In other words, it’s like walking into the store in a mall and you’re going to install the camera on their shoulders and you could see everything what they see.

The second choice would be I’m going to just give you her past purchase history. Which one would one you pick?

The answer is number #2.

Find out why in Episode 23 of the Inevitable Success Podcast.

Below is a lightly edited transcript of Episode 23 of the Inevitable Success Podcast.

Transcript:

Damian: We’re going to have a discussion with about what does what you buy say about who you are from the marketing perspective. So how much can we learn about somebody based off literally the products that they purchased?

Stephen: Well the first thing that you have to do is to convert such product description into the descriptors of buyers and you may say that “Oh that’s crazy it’s the same thing”. No it’s not.

Damian: Give me some examples.

Stephen: A very simple example, and by the way, this is stemming from…let set up a little bit of why we value this. It’s not the product data that they we’re interested in.

What we’re looking for is a product purchase data because if nobody bought it, who cares? We only look at the things that people bought. So premise number 1: we’re not doing this for better taxonomy, for inventory management system. The premise of this discussion is that we’re doing this to sell more things to people by finding the right propensity and affinity of products by the people.

Example: We have a product, let’s make it a supermarket item as an example. You have food labels on every food item right? So for inventory management you only look at it as okay that’s sugar whereas this cookie is gluten free or peanut oil free or fat free. Or it could be organic. Well that’s another way to throw it in there. So we look at that as a description as a product but if you flip it to “Oh she’s only buying organic food” that tells you something. Right? She’s only buying sugar free or what they call “diet items”. Maybe she’s into weight loss. I don’t know. I don’t want to offend her by saying it explicitly but I can gently nudge some products like that if I make an offer of something. Just by looking at the same thing in a different angle okay? So instead of just looking at the food label you start describing buyers of such products. I’ll pick another example: baking soda & baking powder.

Well how many use of those can you think of?

Damian: First I was confused and then I started thinking about it.

Stephen: Well you could use it to bake things right? That means that person who bought it is a baker right? But then a housewife could be using it because their refrigerator stinks. I would put an open box of baking soda in there and then what is she? She’s not a baker yet. Or you could be using it to brush your teeth for personal hygiene.

Damian: You can use that to clean too.

Stephen: So the same item can be used in multiple ways. And if you understand the purpose of it or the context of it then you can describe the person’s attitude better. So I’ll give you another example. Awhile back we were helping out all kinds of different merchants by putt...