Jun 23, 2010

Beer and diapers - the myth of purchase data analysis

Doing some research on how Foursquare and other social media companies are trying to get into the loyalty business, I stumbled on this piece that basically says that the key is data analysis:

"Loyalty programs enable businesses to conduct what we market researchers call market basket analyses of purchase data – by determining what items frequently get purchased together or at least by the same types of consumer, companies can optimize promotions."

I could almost see it coming ... the beer and diapers story. And bang, right on cue, there it was:

"There is a reason why Godiva chocolates are sold near the jewelry counters, and why (to use my example above) beer and diapers are often near each other in convenience stores."

Twenty years of purchase data analysis and the only story that sticks is beer and diapers. The secret is that there has always been much more talk about this type of analysis, and very little real work.

If not, we would be talking about something other than beer and diapers.

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