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Companies are rating you, and those ratings are affecting you every day

These ratings aren't regulated and private
Posted: 9:02 PM, Nov 21, 2018
Updated: 2018-11-22 04:10:36Z
How do companies rate you?
How do companies rate you?

Popular mobile apps and websites give you the ability to rate and review everything from the restaurant where you had dinner last night to the driver who dropped you off there, but in a 5-star world, what's your rating?

You are being rated

That's right, it's a two-way street, and chances are you have more than one customer rating or score that is affecting you right now. 

We aren't just talking about dating, ride and home-share apps that are open about the selection, rating and review process.  You are getting rated and ranked, as a customer, even when you aren't doing the same, according to experts. 

Some call it a score, most commonly, a customer lifetime value score.

Who is rating you, and how?

"The more profitable the customer, the more focus of resources there are for that customer," Harvard Business School professor  Sunil Gupta  told News 5 in a phone interview. "Amazon may treat me very well, but Target may not treat me very well because I'm more valuable to Amazon than Target."

So, whose value is being calculated? Anyone who's shopped online, used a bank, has a cell phone or credit card, drives a car, or has traveled on a plane probably has a score. Likely, more than one. 

"Certainly we always had retailers that collected information on us. Our spending behaviors, what we bought. But now, because everything is digital, we can link data from one company with another. We can link service providers and your credit history and what kind of house you have and what you look like and how old you are and then we can create these algorithms to predict how you're going to behave," Case Western University marketing professor  Dr. Casey Newmeyer explained.

Those are a few of the overall factors that may play into a score: spending history, shopping patterns, age, address and number of people who live at that address.

The value scores can be behind what ads you see and whether you're offered that special deal or upgrade. They can be used to predict if you'll get sick, if you're expecting a child or if you're likely to give a company a bad public review. 

A good score can mean a better seat on a plane, a better incentive on that coupon in the mail and simply better service. 

"The customer who buys at full price, does not return, and buys frequently is the one given preferential treatment." said Dr. Jagdip Singh, a marketing professor with Case Western University.

For those with a low score? Some companies may offer incentives, like a discount, to get you back in a store, but don’t expect the red carpet treatment from everyone. 

"The lifetime value score acts as a compass," said Tal Kedar with Optimove , a science-first marketing hub, in a Skype interview. "It's not about giving preferential treatment at all. There's no difference than if you walk into a store and you know the shopkeeper, you've purchased there three times before, they recognize you and they treat you based on your past experience." 

Your rating is private

Never heard of these scores? Rankings? It's probably because they're private. 

"You could be treating a customer unfairly or actually treating them very well even though the history to prove that. It goes both ways," Dr. Newmeyer explained. 

That's right — stores are always looking for ways to get you to buy more and spend more, but a store's rating on you is secret. 

It's not regulated and you can’t even get your own rating.

"We have no idea how they are computing these scores, what data are they using," Dr. Singh explained. "They are not openly available for review."

He agreed that someone could be treated unfairly, or their rating or ranking could be developed unfairly.

"They are not perfect, and they can make mistakes," Dr. Singh said. 

Ratings studied locally

Right now, Dr. Singh is involved in research at Case Western University that's taking a closer look at these scores. The research is also questioning their fairness and transparency. 

Part of that study is looking into "The Retail Equation."

According to their website, The Retail Equation aims to "deliver a better customer shopping experience, while preventing retail fraud or abuse and protecting the bottom line."

If you've shopped at stores like Best Buy, CVS, or Victoria's Secret (just a few of their reported clients) The Retail Equation generated your "risk score" or likelihood to return what you buy. By monitoring shopping behavior, they can limit the amount of merchandise a customer can return. 

"Companies want to market how generous they are in their return policies, but they get concerns when people use it," Dr. Singh said.   

The Retail Equation allows customers to request their return activity report on their website.

Yes, there may be a reason you're on hold so long...

"Your 800 number may be different depending on your profitability to the company," Dr. Gupta told News 5. "Many companies don't tell you that, but effectively they route your call differently."

"I think there's a difference too between rewarding good customers and penalizing the average or the poor customer," Dr. Newmeyer said. 

Dr. Singh said that shouldn't mean customers refrain from reporting problems and holding companies accountable. "Being identified by companies as a complainer, and therefore worthy of either being treated unfairly or held on the line for a long period of time, is a diagnostic of which companies are worthy to work with. Customers should try to retain their power and bend the companies."

Customer service isn't responsive? Dr. Singh suggested writing a letter directly to a CEO. 

"Where there's a conflict is where consumers might feel like it's being used against them," said CEO of Affinitiv Marketing  Scot Eisenfelder in a phone interview. 

Affinitiv doesn't use the scores calculated against customers, but to hone in on those with higher values.

"When we have a customer with a high lifetime value or a potential high lifetime value, we invest more," Eisenfelder said.

The lingering question

"Why aren't you allowed to know your rating? Because if you have a bad rating, maybe you want to improve," Dr. Newmeyer said. 

Your rating, your score, may be secret, but can you improve it?

We asked.

"If you want to be treated like a valued customer, behave like a valued customer," Eisenfelder said.

"Customer websites continually play this idea on how to beat the system," Dr. Singh said.

Unfortunately, there is no magic bullet, according to the experts we consulted. But some told us, even in today's world, there's a tipping point.

"Consumers have negative feelings and emotions about the use of their data when they are surprised by it, and that can actually decrease customer satisfaction with a company. That can be a bad outcome," Dr. Newmeyer said.

Ultimately, the customer, one-star or five, will always come first. 

"Companies that do very well today may not be here tomorrow," Dr. Singh said. "We've seen examples of them in the recent past. The difference there is how to keep attracting and holding customers who see that you consistently add value. Ultimately the customer-centric idea is going to win."