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Companies turning the tables, rating consumers on their habits

Posted at 9:23 PM, Jan 07, 2019

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DENVER – Many popular mobile apps give users the ability to rate and review most of their experiences these days – from the restaurant you eat at, to the ride you got home from the restaurant – but did you know that the same people and businesses you are rating are sometimes secretly turning those tables back on you?

Consumers are used to having the power in our five-star world, but it turns out that companies are increasingly rating and ranking their customers to determine how to treat you in the future.

They call it your customer lifetime value (CLV) score, and your score can impact the prices you pay, the products and ads you see, and the perks you can get from various companies. And a bad score could mean higher prices and being on hold for customer service for longer periods of time.

Data scientists behind the secret scores argue that the system is no different than what stores have been doing for years, while marketing experts question the fairness and transparency of the scores because there is no way for consumers to check or verify their own scores.

Some folks Denver7 spoke with for this story said they didn’t care if they were getting scores as customers so long as they knew what the score was and were told how to manage it.

The company Affinitiv uses the scores to help car dealerships weed out costly customers and argue the data is already public, so they ought to be able to use it. And they say that there is one easy way for consumers not to receive bad scores.

“If you want to be treated like a valued customer, behave like a valued customer,” said Affinitiv CEO Scott Eisenfelder.

But marketing expert Dr. Jagdip Singh sees the secret ratings as unfair for many reasons. Aside from not knowing exactly how companies are calculating the scores, consumers have no way to check them for accuracy, and the scores are not regulated.

“We have no idea how they are computing these scores. What data are they using? They are not openly available for review,” Dr. Sing said. “They are not perfect and they can make mistakes.”

That’s why Dr. Jagdip is part of a team researching the fairness and transparency of these scores, including how companies are using the data to monitor shopping behavior and potentially limit how much a customer can return.

Econsultancy, an online marketing research firm, is meanwhile warning companies to be careful with CLV scores. They say those who rely too heavily on them “run the risk of creating a culture in which delivering the highest-quality overall customer experience is jeopardized because there is too much focus on a small number of customers” with high scores.

Optimove, a company that helps marketers calculate CLV scores, has yet another view. They argue this is just the new way to do what businesses have been doing for hundreds of years: analyzing a customer’s value on how they look, shop and behave.

And still another viewpoint on the subject was brought into popular culture in 2016, in science fiction series Black Mirror, in the episode “Nosedive” – when society rates each other on a star scale for each of their interactions – which in turn can affect their status in society.

But Dr. Singh says despite concerns, the customer will always likely come first.

“Companies that do very well today may not be here tomorrow,” he said. “We’ve seen examples of them in the recent past. The different there is how to kep attracting and holding customers who see that you consistently add value. Ultimately the customer-centric idea is going to win.”