“Orbitz has found that people who use Apple Inc’s Mac computers spend as much as 30% more a night on hotels, so the online travel agency is starting to show them different, and sometimes costlier, travel options than Windows visitors see.”
Nefarious! the public decried. Shady business practices! However, President of Customer Relationship Metrics had a different take on what Orbitz was doing:
“This is an example of using BI to make for a better customer experience and provides Orbitz with a differentiated customer experience. It’s brilliant to anticipate what your customers want – and to give it to them.”
You Mined Your Data; You Should Use It
We might not take what Orbitz did to be “brilliant,” nor do we really think they were “anticipating what their customers wanted,” (as elitist as some Mac users might be, we doubt they want to spend 30% more on travel) but we also don’t think Orbitz stepped out of their bounds by testing what their data led them to test. Orbitz should be applauded for taking business intelligence seriously; simply the fact that they actually collect, analyze, and act on their data shows that they are already leaps and bounds ahead of many other companies (for example, only 22% of SMBs use BI).
The entire point of BI is to inform your company’s business decisions that directly impact your bottom line. In many cases, the data will be surprising, counter-intuitive, and even strange, as Orbitz exhibited. But though the analysis may reveal odd results, the business decisions that your BI sparks should be clear. In other words, data is tough but decisions are easy. Your company must, at the very least, test the theories that your BI presents.
Orbitz’s management would have been more foolish to ignore their findings than to test it, especially if they could stand to see a 30% lift on revenue from their Apple using base. Last we checked, Orbitz was a public company, and it has a duty to its shareholders to deliver profit. Ultimately, the negative PR that Orbitz might receive from this pricing change might not be worth the revenue lift, but again, it was a worthwhile test resulting from good business intelligence efforts.
No More Tough Decisions
Orbitz got it right by basing business decisions on data. More companies should take their business cues from their data, instead of relying on gut feeling or anecdotal evidence. A book on business management entitled Hard Facts, Dangerous Half-Truths and Total Nonsense: Profiting from Evidence-Based Management has a great quote about this:
“If doctors practiced medicine the way many companies practice management, there would be far more sick and dead patients, and many more doctors would be in jail…. Many companies and leaders show little interest in subjecting their business practices and decisions to the same scientific rigor they would use for technical or medical issues.”
Kudos to Orbitz on acting on their data. Of course, we’ll still be booking our hotels from a PC.
What business decisions does your data demand?