Data-Driven Pricing: Biting the Hand that Feeds

Data-driven-pricingWe hear the claim all the time: Online shopping gives you the best opportunity to find the best pricing on goods.

But here’s the rude reality: Developments in “data-driven pricing” is putting the lie to that assertion.

Although it’s a turn of phrase that hasn’t received very much play – at least until now – data-driven pricing is the latest method by which sellers are hankering to extract every last dollar they can from buyers.

Think of it as the digital version of global zone pricing in the petroleum industry, wherein gas companies charge filling stations in well-heeled areas more for the exact same gasoline product that they sell for less elsewhere.

But in the digital realm, online retailers like travel sites are keeping track of customer IP addresses and recording past shopping activities in order to serve up higher prices to the people who are interacting with their sites.

These retailers are taking customer loyalty … and standing it on its head.

Using browsing and shopping data collected about each customer – including every time a site is visited via Google search results – retailers can determine in real-time if they can get away with charging a higher price.

And that may well be why you paid $75 more for your air ticket than the person seated next to you on the plane who also purchased their ticket online on the exact same day.

Now, this scenario isn’t universally true. When there are many retailers to choose from on a particular item, along with ample supply of a good, the consumer can usually hold out for the lowest combination of price, shipping (hopefully little or none), and sales taxes (hopefully none).

But on items ranging from airline tickets to concert tickets, the online consumer is often up against a stacked deck.

Believing that online shopping is the slam-dunk way to extract the lowest price from the retail channel is a notion that’s out of date at best … and naïve at worst. Simply put, data-driven systems have gotten a whole lot “smarter.”

Some consumers might respond by hesitating before buying – no longer assuming that the price they’re being offered is the “lowest available” one.

So here’s a question: When consumers become more cautious about buying online, who’s hurt more?

The consumer? Or the suddenly smarter retailer?

U.S. Green Energy: Sizzle? … or Fizzle?

Impending doom for Green Energy?  The economic model isn't working.Tempting as it may be to dismiss Solyndra, Solar Power, Beacon Energy, SpectraWatt and other recent horror stories regarding “energy subsidies gone bad” as just examples of governmental ineptitude resulting from overly exuberant ideological thinking coupled with political favoritism … it turns out that these events are also emblematic of a much more fundamental challenge to green energy prospects.

A report released last week warning of problems on the horizon for green energy bears this out. The report, titled “Beyond Boom and Bust,” is a collaborative effort between the Brookings Institution, the Breakthrough Institute and the World Resources Institute (WRI), and was authored by six researchers associated with these organizations.

According to the report, the federal government’s involvement in the renewable energy marketplace has led to an unsustainable system. Among the study’s key conclusions are these eye-opening points:

 Nearly all “clean” tech segments in the U.S. remain reliant on production and deployment subsidies or other policies designed to facilitate gaining an expanding foothold in today’s energy market.

 Many of the nearly 100 individual policies and subsidies that undergird clean energy – grants, tax credits, loan guarantees and the like – are getting ready to expire, with the potential for dire consequences. To illustrate: Total federal spending on the clean tech sector was more than $44 billion in 2009, but would shrink to only ~$11 billion in 2014.

 In the absence of legislation to extend or replace current green energy subsidies, America’s clean tech policy system will be largely dismantled as of the beginning of 2015 because of the scheduled expiration of ~70% of the policy provisions.

In the current political and legislative climate, it’s doubtful that many of the current policies can be expanded or replaced. And even if this could happen, the report sheds doubt on whether such policies can be successful:

“The maintenance of perpetual subsidies is not a sustainable solution to the new challenges facing the U.S. clean tech industry. Clean tech markets in America have lurched from boom to bust for decades, and the root cause remains the same: the higher costs and risks of emerging U.S. clean tech products relative to either incumbent fossil energy technologies or lower-cost international competitors, which makes U.S. clean tech sectors dependent on subsidy and policy support.”

The report makes a number of recommendations for ushering in a “new era” of clean energy policy. Among these are:

 Foster establishment of a competitive market – development policies should create market opportunities for advanced clean energy technologies while fostering competition between technology firms.

 Create market incentives that demand and reward continuing improvement in technology performance and cost.

 Avoid technology lockout and promote a diverse energy portfolio.

Also, the authors emphasize the need for a “new national conversation” to determine the best route forward to accelerate technology improvements and cost reductions in clean tech sectors.

It would be nice if that conversation could start right now. But in an election year … don’t bank on it.

What people say: More believable than what brands say.

Word of mouth and review/ratings sites trump branding activityWord of mouth has always been a powerful influencer over the success or failure of a product in the market. So when surveys show that consumers value the opinion of their friends most when it comes to the value of a product, there’s nothing particularly unusual about that news.

But consider the explosion in the popularity of review sites like Angie’s List and Yelp, plus other sources of information and opinion in cyberspace over the past few years. These have made it possible to access the opinions of significantly more people than ever before.

Nielsen’s most recent Global Trust in Advertising Survey, which queried ~28,000 consumers around the world in late 2011, found that ~92% of respondents trust word-of-mouth recommendations from friends and family members.

Interestingly, that percentage is actually up from 2007, when Nielsen found ~75% of respondents trusting their friends as a good source of information.

What about online consumer reviews written by complete strangers? Consumers’ trust levels in those information sources has also gone up; it’s ~70% today compared to ~55% back in 2007.

The picture is different with branding and advertising, however. Trust in traditional advertising (TV, radio, magazines and newspapers) has dropped in recent years. Today, only about 47% of Nielsen survey respondents say they trust those sources of information.

Online advertising has actually improved its standing with consumers, but trust levels are still mired in the 30s: 36% trust online video ads … ~33% trust online banner ads … ~39% trust paid search engine advertising.

And when it comes to branded content like company websites, consumer trust in these “owned media” is running below 60%, while e-mail communiqués are scoring even lower on the trust scale (around 50%).

The Nielsen survey results underscore why developing a robust social media presence has become such an important strategy for so many brands. Clearly, recommendations and reviews from friends and strangers alike is having the strongest impact on the purchase decisions that are being made.

Of course, building a social media presence is only half the battle: Whether the content is positive, neutral or negative has huge implications as well. A few negative reviews or ratings can stop a purchaser dead in his or her tracks. Just ask anyone in the hospitality industry, whose establishments are in some senses almost held hostage by TripAdvisor and other rating sites.

Vacation time? What’s that?

Americans not taking their vacation daysIf you’ve been wondering if you’re the only chump in the business world who never takes advantage of all the vacation days you’re due … it turns out you’ve got lots of company.

We have three separate surveys conducted within the past six months that point to the same conclusion: American workers are the great ones for skipping their vacation time.

In a survey conducted by Kelton Research for the Radisson hotel chain, American workers reported that they are granted an average of 18 vacation days per year. But in 2011, nearly half of the ~1,000 survey respondents took 50% or fewer of their allotted vacation days.

A startling finding for sure. But Harris Interactive discovered a similar result in its American Travel Behavior Survey conducted for Hotwire.com. That survey of ~2,000 adult workers fielded in late 2011 found that the average American employee left more than six days of paid vacation “on the table” at the end of the year.

Lastly, a survey conducted for JetBlue Airlines in September 2011 found that nearly 60% of the ~1,100 workers polled didn’t use all of their allotted paid vacation days.

The average number of days not taken? In this survey, it was a whopping 11 days.

Why are so many people taking so few vacation days? Especially when it’s something nearly every social psychologist says is important for a healthy balance between work and social life?

The survey findings give us tantalizing clues: It’s a combination of “taking one for the team” and just plain “fear”:

 Excessive workload raises the “guilt level” for taking vacation time.

Concern about asking for vacation days even when the time is due, because of lean office staffing and how the time off will affect work colleagues.

 Reluctance to play “catch-up” in the workplace following a vacation. Overstuffed e-mail inboxes are just the beginning.

 Concern about job security in a time of high unemployment.

Looking ahead, will workers will start taking more of the vacation days they’re due? If these surveys are a correct barometer, the answer is a firm “No.”

U.S. Government Driving Pecan Growers and Pecan Buyers Nuts

Pecan harvestingThose who contend that the Federal government has no business managing the nation’s healthcare system because it can’t even manage its way out of a paper bag got fresh ammunition this past week.

The Wall Street Journal published an article chronicling how incorrect government data has wreaked havoc in the pecan industry. Evidently, the government vastly overstated the amount of pecan exports to Asian countries and other destinations in 2010 and 2011.

The relatively small size of the U.S. pecan industry (just shy of $700 million production) means that there isn’t a futures market for the crop. Instead, pecan buyers look at trade statistics to determine whether demand will be strong or weak – and lock in purchase contracts accordingly.

When U.S. trade stats purported to show heavy overseas shipments – and with the Chinese market ramping up purchases for the Lunar New Year celebrations – pecan buyers locked in their purchases early. And pecan growers in the Eastern U.S., where the crop is harvested first, did well with supplying the product at these lucrative prices.

But when the “phantom demand” from overseas failed to materialize, pecan prices tumbled. Growers in the Midwest and West found themselves facing pecan prices nearly half the levels of just a few weeks earlier.

The culprit? The Federal government, which published the completely bogus trade figures based on “a computer malfunction” at the Census Bureau’s foreign trade division.

“There were internal processing errors,” division chief Nick Orsini reported.

When and how did the government find this out? Not until one of the industry’s buying firms questioned the figures and reported its concerns to the agency.

The foreign trade division’s “internal processing errors” have since been fixed. But in its wake is a trail of debris that reaches into every corner of the pecan industry.

Some buyers are miffed because they were led to lock in purchases when the market was at its peak, wasting hundreds of thousand of dollars on high-priced buying.

Midwestern and Western growers who harvest later in the season found themselves having to sell their crop at a deep loss, the market having crashed. So they’re not happy campers, either.

One thing’s for certain: Everyone in the pecan industry now knows what it’s like to be burned. And because it’s the government … there’s nothing anyone can do about it.

Oh sure, the National Pecan Shellers Association sent an official letter to Federal officials outlining its concens with the faulty data … but that promises to have as much impact as a pecan tree falling in the forest.

And from the Federal officials’ point of view, what’s the big whoop, anyway? What sort of political clout to these people have?

After all, it’s just a ~$680 million industry.

About on par with Solyndra.

Gut Check for the American People

Heartland-Monitor-PollAfter being whipsawed by sharp economic headwinds over the past few years, how exactly do “regular people” see their position in the grand scheme of things?

We now have a reading in the form of the “Heartland Monitor” poll, a field study commissioned by Allstate Insurance Company and conducted by National Journal magazine, which queried ~1,200 middle-income Americans on a variety of topics pertaining to the U.S. economy and family finances.

The findings are an interesting blend of persistent optimism tempered by cold, hard reality. On the “sober” side of things:

 Nearly two-thirds of respondents feel that they face more economic risks today than their parents did at the same age.

 Nearly half reported that they’ve made significant reductions in spending over the past year, including putting off major purchases.

 About one-third have withdrawn funds from savings or pension funds to make ends meet.

 Approximately one-fourth have reduced contributions to their pension or retirement funds.

Beyond this, only about one-quarter of the respondents reported that they haven’t faced significant negative changes in their lifestyle or financial security.

But on the other hand, even fewer (15%) have reported falling behind on mortgage or rent payments.

Now for some viewpoints that reflect the perennial optimism of middle-class Americans:

 Nearly 9 in 10 respondents feel that America is still a land of opportunity.

 More than 55% believe that the U.S. economy will improve over the coming year (versus around 35% who believe it will worsen).

 Nearly three-fourths of respondents believe that owning a home helps rather than hinders living the American dream.

When it comes to retirement, middle-class Americans seem to be looking at things with harsh realism. Respondents who are near retirement age expect to retire six years later than those who are already retired. And a clear majority believe that they’ll retire at a later age than their parents did.

Here’s an even more interesting finding from the survey: Even in retirement, about three-fourths of the respondents anticipate that they’ll continue to work.

By that forecast alone, we can see that the very definition of retirement is changing.

More results from the Allstate/National Journal Heartland Monitor poll can be found here. It’s an interesting read.

Is our hyper-connected world changing us for the better, or the worse? Pew looks for answers.

One of the great questions about the digital and interactive age is how it may be affecting the way people fundamentally think and behave.

The Pew Research Center’s Internet & American Life Project has been studying this question, too. In late 2011, Pew queried a group of technology experts and stakeholders and asked them to prognosticate on the impact of hyper-connectivity on today’s younger generation.

It is the fifth in a series of surveys conducted by Pew on “The Future of the Internet.”

The question posed to these experts was: Looking out to the year 2020, will the younger generation’s “always-on” connection to people and information turn out to be a net positive or a net negative?

And the consensus response to this question is … no consensus at all. In fact, the experts broke down in roughly equal camps on either side of the issue.

The optimists believe that:

 The brains of teens and young adults will be “wired” differently from their older counterparts … but this will yield positive results.

 They will not suffer any notable shortcomings as they cycle quickly through work-related and personal tasks.

 They will be more adept at finding answers to questions, and will be learning more precisely because they can search effectively and access collective information in cyberspace.

An equal proportion of experts holds a decidedly less optimistic view of the future. Their opinion is closer to this:

 Even though teens and young adults will be “wired” differently than their older counterparts, they will not become more knowledgeable as a result.

 They will use cyberspace not to become better informed, but to be “faster” informed.

 Instead of becoming better educated and better informed, they will depend on the Internet and mobile devices to deliver quick results, with little retention, introspection or further study.

 They will spend most of their energy sharing short social messages, being entertained, and being distracted away from a deep engagement with knowledge and with people.

Here’s a link to the Pew report summary, and the results are well worth reviewing.

As for my own view, it seems to me that the environment we’ll see in 2020 is probably somewhere in between these two posts.

It’s true that many people will interact with digital technology in ways that have little to do with any sort of hard, intellectual labor. But is that so different from what we’ve seen in society in general over the past half-century?

There are thought leaders. There are thought consumers. And then there are the clueless. The digital tools and techniques people choose to use just make it easier to play in whatever league they wish.

It reminds me of that old adage about the three types of people found in the world: Those who make things happen … those who watch things happen … and those who wonder what happened. (And there are precious few people who fall into the first group.)

The fact is, no degree of Internet connectivity and social interactivity is going to change fundamental human nature. It doesn’t matter whether we’re hyper-connected or not.

… But let’s hear some different perspectives from others …

Sometimes “permission slips” aren’t enough when it comes to e-mail deliverability.

Bounced-emails-undelivered-emailsIn case you’ve been wondering how much marketing e-mail actually reaches its intended targets, a recently released benchmark report from e-mail scoring and certification services provider Return Path has some answers. It finds that only about 75% of “permissioned” e-mails are actually making their way through.

That means one in every four e-mails are either hitting a spam or junk folder, or are being blocked by ISP-level filtering.

The report was based on analysis of data from Return Path’s Mailbox Monitor service, which tracks the delivery, filtering and blocking rates for more than 600,000 e-mail campaigns.

Interestingly, the delivery stats for business-to-business marketing e-mail aren’t much lower than for business-to-consumer e-mail. This was considered somewhat surprising because of company-level filtering systems like Postini, MessageLabs and Symantec that are installed at many large corporations. Presumably, they do a more thorough job of filtering e-correspondence.

The Return Path report also included a few cautionary notes for marketers:

 Many e-mailers believe that whatever gets deployed and doesn’t bounce must be reaching inboxes. But senders are notified only when the e-mail is a hard bounce – not if it has ended up in a spam or junk folder.

 Relying on rented e-mail files in the B-to-B world can be dangerous, as those files can be riddled with spam traps. Commercial entities are always on the search for new prospects and leads … but merging a good in-house list with a few of these bad boy rental lists can result in compromising the entire database.

 In the consumer sector, many marketers aren’t paying close enough attention to inbox placement rates. For example, data about Gmail shows that while many marketers are ostensibly achieving a 90%+ deliverability rate, fewer than one in five of those emails are actually being directed to the “priority” inboxes within Gmail as designated by the recipients. And you can bet that precious few of the other ~80% are getting any sort of attention at all from consumers.

More details about the Return Path report can be found here – well-worth checking out.

David Goodis, the “Poet of Losers,” Finally Gets His Due

David-Goodis-Noir-NovelistWhen the Library of America’s republishing of five books by the author David Goodis hits the street later this week, it will reaffirm this writer’s preeminent place in the realm of “noir” fiction.

If David Goodis is a novelist almost no one recognizes, it’s not hard to figure out why. He was an author who worked in a genre of fiction writing that was popular from the late 1930s to the early 1960s that’s somewhat difficult to classify. Not quite mystery, not quite thriller, these “noir novels” take on the sober work of describing the grubby reality of life.

Cultural historian Geoffrey O’Brien says it well: “David Goodis is the mystery man of hardboiled fiction … He wrote of winos and barroom piano players and small-time thieves in a vein of tortured lyricism all his own.” The way O’Brien sums up Goodis: “He was a poet of the losers.”

O’Brien seems on target. Goodis’ 17 novels are filled with characters who epitomize the three Ds of disaster: Depressing, down-and-out, desperate souls who can’t ever seem catch a break. Many of them have experienced a fall from grace. Most have made wrong choices at seemingly every fork in the road.

Just consider some of the titles of the novels in the Goodis canon:

 Street of No Return
 Black Friday
 Night Squad
 Down There
 The Moon in the Gutter

They tell the tale all by themselves.

As Brian McManus, a writer for Philadelphia Weekly magazine put it: “This is noir: a literary genre that does the sobering and thankless work of describing the life you’ve been dealt, not the one you wish you’d had.”

Several Goodis books were considered good enough to be made into screenplays, and one – Dark Passage starring Lauren Bacall and Humphrey Bogart – made it to the big screen in 1947. But in some respects the Hollywood connection to David Goodis led to the author’s own downfall.

Dark Passage, by David GoodisIn fact, Goodis’ life almost reads like a character in one of his novels. He was born in 1917 and raised in a middle class section of Philadelphia. After graduating from Temple University with a degree in journalism, he began his career as an advertising copywriter with a Philadelphia ad agency while moonlighting as an author.

His first published book, Retreat from Oblivion, came out in 1939, following which Goodis moved to New York City to pursue a career in writing.

Goodis was soon active in the pulp fiction-writing business, penning as many as 10,000 words a day under numerous pseudonyms for periodicals like Dime Mystery Magazine. He also wrote scripts for radio serials such as Hop Harrigan and House of Mystery.

In a major coup, in 1946 Goodis’ novel Dark Passage was serialized by The Saturday Evening Post and later came out in book form – the same work that would be produced by Warner Brothers as a film. This newfound success enabled Goodis to travel to California and try his luck at screenwriting.

And here’s where the trajectory of Goods’ life begins to turn downward. Fame and fortune were destined to slip through Goodis’ hands like so much sand. Not only was his screenwriting career wholly undistinguished, he found himself ill-suited to and socially awkward in Hollywood society. A short-lived California marriage to a transplanted Philadelphian would prove no more fulfilling.

By 1950, Goodis was back in Philadelphia, living with his parents and taking care of a younger brother diagnosed with schizophrenia. For the remaining 17 years of his life, Goodis would spend his days at home writing paperback originals for publishers like Gold Medal and Lion … and his evenings plumbing the depths of Philadelphia’s infamous Southwark skid row district that once ran along the banks of the Delaware River, in the truest “don’t ask, don’t tell” fashion.

If a Goodis novel seems to capture the realism of its bleak atmosphere with uncanny authenticity, it’s because Goodis actually “lived and breathed” that very atmosphere – nightly.

During the last few years of his life, Goodis was engaged in a legal challenge against the producers of the TV series The Fugitive, claiming that they had stolen the idea from his novel Dark Passage. His suit appears motivated, at least in part, to gain monetary compensation he would use to support his brother’s institutionalization (by then his parents had died). But the suit would drag on for years, long past Goodis’ own death.

In the “no hope left” school of living and writing, it would seem that Goodis had no peer. In fact, his own death could have been ripped from the pages of one of his novels: He died at age 49 from injuries sustained in a nighttime mugging that occurred outside a seedy diner in North Philadelphia.

Appropriately enough, his last novel, published posthumously, was titled Somebody’s Done For.

Within a few short years of his death, none of David Goodis’ books remained in print in the USA, and it seemed as if his name and legacy would be destined for the literary dustbin.

Except for one thing: France. As it turned out, Goodis’s noir novels took off like a rocket with French readers. Most of his books were translated, and their existentialist nature proved highly appealing.

Brian McManus believes that without the French connection, Goodis would have probably been forgotten forever. “They threw a giant croissant tied to a line into the abyss … and they fished him out. Plucked him from the obscure fate of so many pulp novelists of the past,” he writes.

In fact, famous French filmmakers like François Truffaut would adapt several Goodis novels for the screen.

And today, the circle is now complete. Goodis is finally getting his due here in his native land. Not only are many Goodis novels back in print, the author’s fame has taken on mild cult status.

There’s a David Goodis website devoted to his life and work. And the city of Philadelphia, whose bleak neighborhoods and seedy streets were the hardscrabble backdrop for nearly every Goodis novel, plays host to NoirCon, an annual gathering of genre fans that includes film screenings, lectures, literary awards, and “Goodisville” field tours of the city’s now-gentrified former skid row neighborhoods.

Should you wish to take the night train to Philadelphia, the next NoirCon event is scheduled for November 8-11, 2012.

Hotel in a Hurry: 30 Stories Built in 15 Days

Chalk up another eyebrow-raising construction engineering marvel in Asia. Malaysia and Taiwan may have the world’s largest skyscrapers, but China is becoming the “quick construction” center of the universe.

The latest example is a 30-story hotel prototype structure built in Changsha, China in just 15 days at the end of last year.

Broad Group, the construction company responsible for the feat, claims that the 183,000 sq. ft. hotel can withstand a 9.0 magnitude earthquake, along with being substantially more energy efficient, sound and heat insulated than conventionally constructed facilities.

Broad Group completed this hotel just a few weeks after completing another “quick construct” project in China’s Hunan Province — the 15-story Ark Hotel — in just six days.

Here’s a time-elapsed video of the Ark Hotel construction, spanning a grand total of 360 hours. Reportedly, there were no on-the-job injuries despite the hyper-compressed timeframe.

How did Broad Group accomplish this feat? The company reports that it uses prefabricated modules rather than building the entire structure onsite. These modules shorten the time while making construction management coordination much easier. It’s interesting to see in the video how that coordination works to telescope the time needed for building.

Of course, the next question that comes to mind is whether something like this could ever be “exported” to the United States. Or would there be a raft of regulations, safety and environmental obstacles in the way to make it impossible?

Anyone care to weigh in with thoughts?