Just as the 1960s were called the age of distribution, and the 1990s labeled the age of information, the 2010s have been dubbed “the age of the customer.” In this age, companies are reinventing themselves to better understand and serve customers who are becoming increasingly powerful.
As a side effect of the age of the customer, companies have been gathering massive amounts of data. While this data can take many forms (e.g. social, behavioral, mobile, sensor) and can differ from company to company, most of this new data has at least one thing in common: it’s not being used.
We work with smart people at some of the best companies in the world every day to tackle this challenge, but we can never pass on an opportunity to open the conversation to others. In that vein, we invited customer insights expert, Brandon Purcell from Forrester, to be a guest presenter at our webinar on the use of analytics to better leverage customer data.
We covered a wide range of topics with Brandon from fancy french restaurants, to Star Wars, and even Google Glass, but the biggest takeaway was these three steps to start using your customer data more effectively. (you can watch the full conversation below)
1. Understand your business requirements.
Like any business project, the use of customer analytics should be backed by a business goal. Do you want to reduce churn? Increase your loyal customers’ repeat purchase rate? Bring in new valuable customers?
Here are some of the questions we find many companies have left unanswered.
In addition to choosing a key business objective, you’ll need to assign a project owner, measure costs and benefits, understand your constraints, and decide how to measure success.
By doing this at the beginning of the project, you may be able to focus on a smaller set of data and you’ll set up the right metrics to understand program success.
2. Choose customer analytics methods
Once you have a business objective in mind, you can start to look toward customer analytics. If customer insights are the gold buried in your data, customer analytics is the pickaxe used to mine them.
During the webinar, Brandon stated that, “customer analytics uses customer data and analytics insight to design customer-focused programs that win, serve, and retain customers.” While that value proposition sounds exciting, the intimidating menu of customer analytics methods often prevents companies from fulfilling that vision. Buzzwords such as predictive analytics, data-mining, optimization, forecasting, NLP, and more leave marketing professionals unsure of where to begin.
Luckily, the business requirements set up in Step 1 can help clarify the best first steps. As with most new initiatives, decision makers must weigh expected benefit with the level of effort. A project that will bring in billions of dollars, but that will also take ten years to launch may not be the best place to start.
While this balance will look different for every company, customer segmentation can often be a great place to start. While rudimentary segmentation is often looked at as oversimplifying customer data, advanced segmentation methods can help with a variety of business goals like acquisition, retention, loyalty, and even personalization. Once the groundwork is in place for basic segmentation, it is easy to scale up or down for individual projects and questions.
3. Have an activation plan
While best-in-class analytics are a great tool for any company, they accomplish nothing without an action plan. Brandon shared a personal favorite metaphor for this phenomenon, from Indiana Jones nonetheless.
Without an action plan, great analytics are like the swordsman in that scene: they look fancy, but are ultimately pretty useless.
Our advice to retailers is always to create an action plan for both generating insights and making them easy to use. We like to demonstrate this with something we lovingly call The Hexagon of Power.
It’s not enough to pull together your data, surface insights, or even keep those insights updated. To make them really impactful, you need to provide the marketing team with access to those insights, make them easily usable in the marketing stack, and be able to measure their success.
It’s important to remember that even with these three steps, developing best-in-class customer analytics is an evolution. But with a focus on business requirements, choosing the right methods, and developing an action plan, you can be on the path to the Yoda of analytics.