My favorite iPhone app is Pandora Internet Radio. Not only am I captivated by the depth of the music offered, but being a data geek, I am fascinated by Pandora’s ability to dissect a song into 400 attributes to deliver me song after song that match my unique music tastes.
For those of you who are unfamiliar with Pandora, it is based on the Music Genome Project, which breaks songs into data points that are stored in a database. When I create a station based on a particular song or artist, it searches the database to find and play similar songs. Sounds good, right? Well, it gets better. Then I refine my station by eliminating songs through a “Thumbs Down,” or encouraging the repeat playing of a song with a “Thumbs Up.” I get music I love; Pandora gets ad revenue, and the artists get revenue when I buy songs, which I do on a regular basis.
So this got me thinking. This is database marketing in action. You use and apply data to deliver relevant, personalized content. When people respond and purchase, you just got the “Thumbs up.” No response = “Thumbs Down.” When you apply the Thumbs Up and Thumbs Down learning over time through a predictive response model, you become a very wise, and profitable, direct marketer.
Both Pandora and direct marketing deliver what ultimately counts: happy customers and profitable revenue, but they certainly aren’t the only ones who have figured this out. Amazon.com, iTunes and hordes of other retailers have already discovered the magic of predictive analytics. What other companies do you know that use data to generate relevant content, recommendations and sales?