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Executive Times |
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2008 Book Reviews |
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Super
Crunchers: Why Thinking-by-Numbers Is the New Way to Be Smart by Ian
Ayers |
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Rating: |
*** |
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(Recommended) |
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Click
on title or picture to buy from amazon.com |
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Statistics If,
like me, you last took a course in statistics decades ago, you’re likely to
be refreshed after reading Ian Ayers’ book, Super
Crunchers: Why Thinking-by-Numbers Is the New Way to Be Smart. In a
conversation style packed with anecdotes and examples, Ayers explores the
ways in which analysts, policy makers and others are mining vast amounts of
data to use a fact-based approach to making decisions. Here’s an excerpt, pp.
172-174: Beware of Super Crunchers Bearing Gifts Everybody loves a freebie you
know, those little gifts that sellers send their best clients. Still, we
should be worried if we see a seller treating us better than its other
customers. In a world of Super Crunching, sellers' promotions are far from
random. When Amazon sends you a nice desk ornament out of the blue, your
first reaction should now be "Yikes, I've been paying too much for my
books." When firms Super Crunch on
quality, they tend to help consumers. However, when firms Super Crunch on
price, hold on to your wallet. The dark side of customer relations management
is firms trying to figure out just how much money they can squeeze
out of you and still keep your business. In the old days, the firm's lack of
pricing sophistication protected us from a lot of these shenanigans. Nowadays more and more firms
are going to be predicting their customers' "pain points." They are
becoming more adept at figuring out how much pricing pain individual
consumers are willing to endure and still come back for more. More and more
grocery stores are calculating their customers' pain points. It would be a
scandal if we learned that your local Piggly Wiggly was charging customers
different prices for the same jar of peanut butter. However, there is
nothing to stop them from setting individualized coupon amounts that they
think are the minimum discount to get you to buy. At the checkout aisle,
after they have just scanned in all that information about you (including
swiping your loyalty card), they can print out tailored coupons with prices
just for you. This new predictive art is a weird twist on the Clinton line
"I feel your pain." They feel your pain all right; but they
experience it as pleasure because the high net price to you is pure profit to
them. In a world of Super Crunching,
it's going to be a lot harder to rely on other consumers to keep your price
in line. The fact that price-conscious buyers patronize a store is no longer
an indication that it will be a good place for you, too. The nimble number
cruncher will be able to size you up in a few nanoseconds and say, "For
you, the price is . . ." This is a new kind of caveat emptor, where
consumers are going to have to search more to make sure that the offered
price is fair. Consumers are going to have to engage in a kind of number
crunching of their own, creating and comparing datasets of (quality-adjusted)
competitive prices. This is a daunting prospect for people like me who are
commercially lethargic by nature. Yet the same digitalization revolution that
has catalyzed seller crunching has also been a boon to buy-side analysis.
Firms like Farecast.com, E-loan, Priceline, and Realrate.com allow customers to comparison
shop more easily. In effect, they do the heavy lifting for you and help
level the playing field with the price-crunching sellers. For consumers
worried about the impact of Super Crunching on price, it is both the best of
times and the worst of times. Ayers
presents many of the pros and cons of the ways in which the use of knowledge
gleaned from vast amounts of data can help and hurt oneself and others. Super
Crunchers may not break any new ground, and will be old hat to those who
work with databases, but for the general reader, there’s likely to be new
insights here about what the use of data can mean. Steve
Hopkins, December 20, 2007 |
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The recommendation rating for
this book appeared in the January 2008 issue of Executive Times URL for this review: http://www.hopkinsandcompany.com/Books/Super Crunchers.htm For Reprint Permission,
Contact: Hopkins & Company, LLC • E-mail: books@hopkinsandcompany.com |
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