Does your data determine your discount? - WBRC FOX6 News - Birmingham, AL

Does your data determine your discount?

Some online companies are using data to help determine what consumers are willing to pay. (Source: NPN) Some online companies are using data to help determine what consumers are willing to pay. (Source: NPN)

(RNN/NPN) - Online retail sales are predicted to hit $414 billion by 2018, up from an expected $294 billion, and some online companies are using data to help determine what individuals are willing to pay.

For working mom Tara Dhar, going shopping is as simple as sitting down at the computer.

"I do about 90 percent of my shopping for the family online; everything from clothing to household goods to vacuum cleaners and computers and everything," Dhar said.

She says she's loyal to a handful of retailers, and she's always looking to get a good deal.

One thing that's not always on her mind is the data some companies are collecting as she shops.

"I don't really think about it, but obviously it does happen," Dhar said.

As online retail sales continue to soar, experts say the amount of consumer data online retailers collect is also taking off things like: previous purchases, your web browsing history even social media activity.

And, the information could affect what the cost of a particular item.

"Everyone wants to maximize the profit potential and price sensitivities are going to vary between individuals, but having access to all this data will really help to determine what sort of discount, if any, that individual will receive," said Mark Johnson from Loyalty 360.

It can help companies differentiate between customers who are often willing to pay full price for new merchandise and those who will only shop if they've got a coupon.

Are there times when being a loyal customer might not lead to the lowest prices? Johnson says yes.

"Discounting, if you're a loyal customer may not be something they're going to offer," Johnson said. "They know that they may not have to offer you that discount, so why should they?"

But, Johnson and other industry insiders point out the idea behind the data is to understand what individual consumers value and send them targeted messages and offers tailored to their individual priorities.

"In some instances a customer may be very price sensitive and looking for the best deal. Other customers are perfectly happy paying full price for an item if it means they can have it first," said Jenne Barbour, Teradata Solutions Strategist.

If a shopper is not happy paying full price experts suggest:

Always look for retailer promo codes, using them will send the message you value deals.

Avoid impulse purchases sometimes keeping items in your online shopping cart will encourage retailers to send you a discount to complete the purchase.

If all else fails, hit the “contact us” page and ask.

"There's still the human factor of simply asking someone if, if you can have that extra little something that might help close the deal for you," Barbour said.

As for Dhar, she does see the benefit in getting marketing messages specific to her preference and says she's going to continue to make getting the best price a priority.

"As a consumer you don't want people giving you a higher price because they think you'll pay a higher price," Dhar said.

Johnson says the number of companies able to do this kind of detailed data analysis is limited, but he predicts that as data becomes less expensive the unique pricing structure for individual consumers will become more and more common.

He also points out that some companies are giving out free gifts, or other special offers like VIP events to customers who value those extras in order to increase consumer loyalty.

Copyright 2014 NPN Media via Raycom News Network. All rights reserved.

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