Despite all the data science strides direct marketers have made over recent years, customers still appear in pretty coarse grain fidelity to most companies.
I, as just one example, “look” exactly the same to my insurance company as my neighbor does. Admittedly we do “look” the same. We’re both white middle-aged, middle-class guys who make roughly the same sort of money. We’re both married and we both have two kids. But if you knew us you’d know that our profiles were wildly dissimilar.
My neighbor keeps going for a couple more glasses of wine after I’ve admitted defeat; he sleeps in while I hit the gym. His sweats the small stuff and it isn’t—in my humble opinion—going to end well. He, from my perspective, is a much worse insurance risk than I am. And yet, when we compared notes recently, I found out that we’re paying roughly the same premium. Fair? Probably not. Understandable? I guess so. That’s just the way it is—currently.
This has been the way of the world since time immemorial. A world in which information was scare, hard to come by, and, frequently, wrong. A world in which guessing was standard operating procedure. A world in which customers were segmented into broad crude demos, which aimed to say something about an individual, but frankly didn’t actually say very much. A world in which I existed within—as far as my insurer was concerned—the market of middle-aged white guys.
But I’m me, not “him” or “them.” My insurance profile is totally different from my neighbor’s. If our insurer “knew” us, it would realize that and make adjustments to our premiums that would make at least one of us very happy.
To know me—impossible, right? Wrong. Increasingly, lots of companies do know me. Amazon, Netflix and Apple know me. Pandora knows me. LinkedIn knows me. How? How can YouTube know that I’d like to hear Wreckless Eric’s Whole Wide World after I just played Phoenix’s Rome? The two, at first glance, are seemingly unrelated songs.
The answer? Because YouTube can see what I refer to as my “code halo.” It can see the so-called halo of information that swirls all around me (think of a mediaeval religious painting to get the analogy) created by every digital interaction I have.
Each one of us is creating a code halo with every click of our mouse or swipe of our phone, tablet, laptop, Glass, Nest, FuelBand, dashboard, or other smart device. Every transaction we make, every like we record, every preference we note, creates a trail of information—or a digital fingerprint—that reveals who we are and what makes us tick. Code halos allow switched on companies to “know” us (their customers and prospects), to “read our minds,” to turn the sales process from something that leaves us needing to take a cold shower, to something that is painless and seductive. Moreover, code halos enable businesses to see beyond a particular socioeconomic or demographic to reveal the “market of me.”
Code halos are shaking up what and how things are sold. Companies like Amazon and Netflix have leveraged code halo thinking to become the new titans of our digital age. They’re largely responsible for the demise of companies like Blockbuster and Kodak—companies that didn’t understand how digitization and “mass personalization” was playing out under their very noses. And now code Halo thinking is spreading fast into a broader and broader range of industries and markets where smart leaders are seeing that a new game is being played.
Google’s $3.2 billion acquisition of the smart thermostat maker Nest; Disney’s $1 billion development of smart wristbands that visitors can wear at its theme parks; and Monsanto’s $930 million purchase of Climate Corp., a weather-data-mining company that helps farmers increase yields by 30%—these are just a few recent examples of how code halo thinking is impacting everything from design, to production, to selling, to talent management.
Even insurers are getting in on the act. Flo’s Snapshot is a great example. It’s an on-board telematics device that allows Progressive to “see” its customer’s driving patterns in an unprecedented way to create a market of me.
The code halo concept is catching on like wild-fire—if you could see the frequent flyer field in my code halo it would be proof enough—and yet most companies have only really scratched the surface.
Marketers are clearly in the vanguard of many of these developments. Gartner has famously pointed out that CMOs will be in charge of more IT spending than CIOs by 2017. I trust that’s true in your organization. If it’s not, it’s time to start throwing your weight around—make the leap and understand how big the potential opportunity in front of you really is. George Orwell’s lovely quote comes to mind: “To see what is in front of one’s nose needs a constant struggle.”
Code halos allow us to see people, things, and organizations in greater detail than ever before. However, seeing alone will not be enough to guarantee commercial victory. Making meaning in a world of data abundance—more importantly making smart business decisions—will continue to be a vital undertaking. As famed business author Geoffrey Moore puts it, “Before data’s an asset, it’s a liability.”
Perhaps it’s hard to fully understand the true shape and nature of this phenomenon because it’s a bit like the fabled elephant in the room. But those marketing executives who do truly understand how to leverage code halos will be the leaders in these incredibly exciting times when a new architecture of competition—for our new “age of me”—is being created.
Many fascinating and tough questions are being raised as new social, mobile, analytics, and cloud (SMAC) technologies reshape various aspects of society, business, and our daily lives. Understanding this evolution is key to understanding how to take advantage of the once-in-a-generation opportunities in front of you (and your competitors) today. Using these halos of information to build and leverage markets of me will be the new competitive battlefield on which we will all play over the next few years.
Ben Pring is the author of Code Halos: How the Digital Lives of People, Things, and Organizations are Changing the Rules of Business.
