Dunnhumby's, a data-analysis firm, uses algorithms to crunch data on customer behaviour for a number of clients. Its best-known customer (and majority-owner) is Tesco, a British supermarket with a Clubcard loyalty-card scheme that generates a mind-numbing flow of data on the purchases of 13m members across 55,000 product lines. To make sense of it all, Dunnhumby's analysts cooked up an algorithm called the rolling ball. .
It works by assigning attributes to each of the products on Tesco's shelves. These range from easy-to-cook to value-for-money, from adventurous to fresh. In order to give ratings for every dimension of a product, the rolling-ball algorithm starts at the extremes: ostrich burgers, say, would count as very adventurous. The algorithm then trawls through Tesco's purchasing data to see what other products (staples such as milk and bread aside) tend to wind up in the same shopping baskets as ostrich burgers do. Products that are strongly associated will score more highly on the adventurousness scale. As the associations between products become progressively weaker on one dimension, they start to get stronger on another. The ball has rolled from one attribute to another. With every product categorised and graded across every attribute, Dunnhumby is able to segment and cluster Tesco's customers based on what they buy.