The consumer of today has to go look for the best deals that are offered by the sellers, but Teradata CTO, Stephen Brobst, imagines a future where analytics change this arrangement into a “reverse type auction” model.
Brobst spoke about this concept at the Discover, Integrate, Act Summit in Sydney, highlighting how data about a customer can be used to predict more targeted deals.
To illustrate his point, Brobst used an example of a traveller arriving at the airport and looking to rent a car.
“I want it to be a compact car, refill the tank myself, don’t want the ‘added value’ insurance, and I am platinum customer with Hertz,” he said.
“If you want my loyalty I am a high value person to invest in, so who will now give me the best deal?”
At that juncture, the seller would need to decide what price and value they deliver in order to get the consumer to purchase the rental agreement on the vehicle.
“From an analytic point of view, the seller, in this case the rental car agency, will want to do analytics on the customer to see how profitable they are when the vehicle is rented and my lifetime value,” Brobst said.
Back to the future
With analytics, Brobst said past history is used to predict the future, such as changes in customer habits based on environmental factors.
“A compact car may have been the initial request, but when the customers arrive in the warm and sunny destination, some may consider upgrading to a convertible, which gives extra money to the rental car agency,” he said.
With analytics, Brobst said the probability of offering the upgrade to the customer can also be measured.
So even if a customer has the full intention of bringing back the car with a full tank, there is the possibility they may run out of time and return it with half a tank, resulting in added profit for the rental agency.
The possibility of that happening to one customer compared to another is made possible with analytics.
“There are a bunch of analytics that can be used to understand how much is really the profitability that can be made from the customer, as well as what offer can be made,” Brobst said.
“What offer you make to me to rent that same car for the same time frame may be for a different price you give to someone else because of the value of the customer and their habits.”
Patrick Budmar covers consumer and enterprise technology breaking news for IDG Communications. Follow Patrick on Twitter at @patrick_budmar.