How Can Companies Predict The Future?

With advances in technology, you now don't have to be a mind-reader to predict the future.

FORTUNE -- “Credit card companies can now use your purchasing decisions to predict whether you're going to get a divorce with 95% accuracy — two years out.” - Marissa Meyer, Google

Target, a supermarket chain in the USA, faced a problem with birth records being public, new born mothers were being mailed with multiple offers as soon as the baby is out of them. Target faced competition from several other companies to get new mothers to purchase from them. If only they could somehow know the mothers were pregnant before the rest of the competition. They identified the second trimester as key point to get the mothers buying at Target. Once they start buying nappies and baby bottles maybe they’ll pick up a DVD they happen to want or a magazine. Before they know it, this new mother is now a Target customer for life, as ingrained shopping habits are incredibly tough to break.

MORE: How Companies Learn Your Secrets

They started off with a baby shower register, and used the information about the confirmed mothers buying patterns close to the birth of the child. It turned out that these pregnant women, around the time of the second trimester were buying large amounts of unscented lotion. They then identified 24 other products that pregnant women bought frequently and using shoppers buying patterns created a pregnancy “score” when any of these 25 products were frequently bought together, if the pregnancy score is high, they send out coupons for similar items to get the mothers in the store buying.

A Target employee provided a typical example:

Take a fictional Target shopper named Jenny Ward, who is 23, lives in Atlanta and in March bought cocoa-butter lotion, a purse large enough to double as a diaper bag, zinc and magnesium supplements and a bright blue rug. There’s, say, an 87 percent chance that she’s pregnant and that her delivery date is sometime in late August. What’s more, because of the data attached to her Guest ID number, Target knows how to trigger Jenny’s habits. They know that if she receives a coupon via e-mail, it will most likely cue her to buy online. They know that if she receives an ad in the mail on Friday, she frequently uses it on a weekend trip to the store. And they know that if they reward her with a printed receipt that entitles her to a free cup of Starbucks coffee, she’ll use it when she comes back again.

In the past, that knowledge had limited value. After all, Jenny purchased only cleaning supplies at Target, and there were only so many psychological buttons the company could push. But now that she is pregnant, everything is up for grabs. In addition to triggering Jenny’s habits to buy more cleaning products, they can also start including offers for an array of products, some more obvious than others, that a woman at her stage of pregnancy might need.”

This goes to show, that Behavioural Analysis can be one way companies can predict the future, if you know what someone does in the past and their buying patterns, then it makes sense that you can predict what they will do in the future, using their previous actions.

So if your wife or daughter comes home with some Cocoa Butter Lotion - there may be a discussion to be had...

Using Twitter To Predict The Stock Market?

With the instantaneous nature of Twitter, more and more information is now publicly available. There was speculation that with so many high value individuals using Twitter, then surely if you collate this data it could be useful for something? Well, Derwent Capital Markets believe they have come up with a way of harnessing this information and interpreting the emotions of these Tweets and to predict the rise and falls of stocks traded on the market. Derwent Capital Markets have created a program that takes a random 10% of all Twitter feeds and compares positive and negative comments. It then breaks down these comments into 6 emotional different moods: calm, alert, sure, vital, kind and happy.

But just how accurate is it? Well, in terms of measuring the direction of the movement of the Dow Jones Index - 87.6% accurate! Mr Bollen, the inventor of the technology had the following to say about his efforts:

"We recorded the sentiment of the online community, but we couldn't prove if it was correct. So we looked at the Dow Jones to see if there was a correlation. We believed that if the markets fell, then the mood of people on Twitter would fall. "But we realised it was the other way round — that a drop in the mood or sentiment of the online community would precede a fall in the market. "That was a eureka moment. It meant we could predict the change in the market and that gives you a considerable edge."

Emotions seem to play a big part in predicting the future, when greed is high then the prices rise, and when fear takes over then prices fall tremendously. Perhaps companies in other industries can harness this technology and apply it to predict how a new product will fare on the market, or maybe even who wins the next election. There could be a lot of potential in using emotional data to make projections into the future.

Who Needs GPS Trackers When Everyone Owns a Smartphone?

Nowadays with the high usage of smartphones, our locations are never secret, even my family members find it easier to log into app's to see where I am than, and to predict whether I'll be home soon.

So to no-one's surprise if anyone can do it, mobile phone companies have the capability to do the same tracking. A group of Computer Science students at Birmingham University used 200 people in Lausanne, Switzerland as test subjects, and by using their movement data and comparing it to their social networks, they managed to come up with an algorithm that predicted where they were headed, with a 60 ft accuracy.

This sort of data could prove very useful for Law Enforcement, or even marketing. If you know someone is going to be walking by your store, why not send them a coupon beforehand, so instead of walking straight past, they might come in and be a brand new customer. This is a great way that not only companies can predict the future, but also artificially alter it. They might have had no intention of shopping with you, until a coupon triggered when they were in clsoe proximity of the store. Now their daily plans have changed as they want to stop off to check out your shop's deals.

Obviously there is a big controversy brewing with this sort of technology, at what point does it become too far for companies to know where your next destination is? However, it's merely a process that has been used for years; all your Google searches are tracked, all your shopping purchases are tracked, everything you browse on Amazon is tracked. Companies can now use this data to predict what your next move as a customer is, it's their way of trying to predict and control what happens in the future.

Ever visited a webpage and for the next week, you see it advertised on every Youtube video, every sidebar and every banner ad? It's not that they are just really pro-active with their advertising budget this month, it's an advertising technique called Retargeting.

Retargeting is the prediction that if you visited my compnaies website, then there's a chance you are interested in purchasing my products or services. I use browsing data to track when someone visits my site, then I pay Google to follow you around the web, showing my advert on everything you browse, in an attempt to get you to come back and buy something. This is how companies can predict the futre, because they use advertising techniques like these to shape the future, to make you as a consumer buy from then in a few days or weeks or months.

Companies Need Data To See The Future, Where To Find It?

Recorded Future is a venture that has garnered heavy investment from giants such as Google, and it trawls the internet through SEC filings, blog posts, Twitter Feeds and news articles to put together a timeline of events. This timeline of events can be made on absolutely any topic ranging from product launches, to whether there will be violence surrounding the Kenyan elections.

Recorded Future tracks any unusual behaviour from companies, words that indicate lies such as 'frankly' and 'as you know' along with any specific dates mentioned and collates it together so that someone at Samsung could figure out the release of the new iPhone simply by looking at what this collated timeline indicates.

"Tons of governments around the world were interested in the Kenyan elections because the past ones have been so violent," Matt Kodama [VP at Recorded Future] says.

Kodama indicated that there were government officials using Recorded Future as a resource. 

Using the feed, government officials potentially can look at a timeline view to see the sequence of events. They can also look at the map and see which regions of Kenya are generating the most election-related information. 

"That’s our innovation, looking at that text and sorting out what people mean when they talk about time," Kodama says. "The reason that’s important is because analysts are trying to understand sequences of events, causation, and predict the future. They can see that information organized by time and start making guesses about what’s going to happen next."

If Companies Want To Predict The Future, They Should Look Around Themselves

There's a huge amount of information available on any topic in this information driven age. Companies can predict the future by collecting this information and using it wisely. Whether it's buying history, location data, twitter feeds or news articles; Businesses should look at what their customers are doing and connect with them and that's the easiest way to see into the future. Listen to your customers: Take their feedback, look at what they are saying and buying, and expand on your services or change your advertising campaigns, because at the end of the day your customers, are your company's future...