Monday, November 06, 2006

Limits of Transaction Data

What can transaction data tell you?

On the one hand historic data can tell you a lot about a customer's behavior and with a bit of pixie dust can probably hint at the future.

However, it fails on two important fronts:

First, it is exactly what it is -- a firm's own transactions. Not category activity, not context, not reasons, and not intent.

Second, it is based on a given set of business rules and assumptions about how the world works. It does not support answering 'what if we changed the ...' type questions.

Without a doubt, marketing databases should include transaction history. Analyses built on transaction data confirm whether marketing activities impact behavior, at least at the macro level. But like many puzzles, it is only a starting point so don't stop there.

Like John Mayer, I'm Waiting on the world to change.

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