An executive’s guide to customer data analytics and...

An executive’s guide to customer data analyticsand customer intelligence: How to get more outof customer data with analytics technology

It’s no secret that there’s valuable knowledge contained in customer data – ifyou can extract it. The challenge facing many organizations is exactly how todeploy analytics to unlock insight from customer data. This eBook offers anexecutive overview of customer data analytics and customer intelligence,with deployment advice and best practices from top performers.

Readers will:• Discover the benefits of leveraging customer data with analytics

technology and get insight for building a business case.

• Find expert tips for leveraging customer data analytics and readsome examples of common mistakes.

• Read exclusive case studies from leaders in customer data analytics,including a look at challenges and results.

• Get expert advice for selecting customer data analytics

technology.

Sponsored By:

TechTargetEnterprise Applications

Media

E-Book

http://www.infor.com/solutions/crm/

Table of Contents:

Exploiting the value of customer data with analytics

Improving customer data analytics: Tips for leveraging methodologies, metrics andtechnologies

Case study: Nationwide Building Society improves customer experience with CRM,customer interaction management software and process updates

Resources from Infor

Page 2 of 11Sponsored by:

An executive’s guide to customer data analytics and customer intelligence:How to get more out of customer data with analytics technology

Table of Contents

An executive’s guide to customer dataanalytics and customer intelligence:How to get more out of customer datawith analytics technology

E-Book


By Leslie Ament, Research Vice President, Hypatia Research, LLC

Attaining true “customer intelligence” is both art and science – requiring attention to technology, including customer

data analytics, processes and organizational mindset.

Prior to the recent global melt-down of 2008-2009, many executives believed that marketing, branding, customer

interactions and social media investments were mostly about creating buzz around an organization’s product or

service offering -- an intangible investment that didn’t require justification. The new post-recession paradigm calls

for senior executives and marketers alike to create alignment between key performance indicators (KPIs), market-

ing performance metrics, corporate goals and shareholder earnings in order to prove value and remain relevant to

multiple stakeholders. Hypatia Research LLC studies confirm that more than 50% of marketing departments, sales

and business development professionals, and customer service and support teams continue to be tasked and

measured in a non-integrated, often ad hoc, fashion. In short, companies actually committed to measuring market-

ing performance continue to rely on a patchwork of linear and non-integrated metrics.

Marketing executives become champions of technology enablers -- such as customer relationship management

(CRM), sales force automation (SFA), marketing automation, Web analytics and customer service, call center and

support -- that provide some level of metrics-based reporting inclusive of leads generated, sales converted, website

stickiness, point of sale (POS), clicks and click to buy, promotion uplift, customer satisfaction surveys, call center

resolution time and/or media placement. However, most if not all of the customer information gathered continues to

be stored in various systems -- organized and utilized primarily by the role, function or person who input the data.

In fact, this non-integrated approach is one corporate-wide addiction that is one tough habit to break!

Currently, a majority of organizations surveyed report utilizing customer data analytics for five main purposes (see

Figure 1). Surprisingly, less than a third of respondents utilize analytics for strategic corporate planning purposes or

to identify high-value customers and proactively interact with customers. Nearly half of companies use analytics to

retain customers, but if the customers being actively retained happen to fit the profile of “no- or low-profitability

customers,” the organization may actually lose money on this effort. Without a digital foundation upon which to

conduct comprehensive customer analysis, companies risk pursuing top-line growth at the expense of attaining

profit margins. What’s a marketing executive to do?

Figure 1: How customer data analytics are applied: Cross-Industry



Sponsored by: Page 3 of 11

48%

29% 28% 28%22%

0%

10%

20%

30%

40%

50%

60%

Customer Reten!on

Corporate Strategy Planning

Proac!ve Customer

Interac!ons

Customer Acquisi!on

High Value Customer

Iden!fica!on [Multiple choice ≠ 100%] Source: ©20109 Hypatia Research, LLC

Got a single view of the customer?

Product-driven and service organizations alike have greatly invested in amassing customer, product, service,

contract, and transactional data in a variety of “spreadmarts.” Unfortunately, poor-quality or inaccurate customer

data drains profitability by costing North America-based companies more than $600 billion a year.

In fact, the last time Hypatia Research LLC managed a large-scale customer data integration and migration project

(it was akin to a root canal), we discovered the customer data resembled “garbage in, garbage everywhere.”

Without standardized fields, consistent database structures or data quality and governance processes in place, all

the analytics, algorithms and business intelligence tools on earth could not supply our client with a believable

operational report upon which to base decisions.

Moreover, from the customers’ perspective, receipt of multiple catalog and direct mailings is annoying, filling their

mailboxes with redundant and incorrectly addressed media -- a telling sign that the company doesn’t know or care

enough to understand their needs, preferences or correct names. Think about the market segments that purchase

hybrids, shop organic, care about their carbon footprint and recycle. How likely are they to buy from companies

that waste natural resources in pursuit of greater profits?

Our research revealed that top performers, defined by performance metrics1, more often utilized advanced analyt-

ics, rules-based interactions and supplemental customer data. As a result, the top 20% of companies surveyed

realized higher returns on investment for each metric tracked.

Figure 2: Ability to exploit customer data


[Multiple choice ≠ 100%] Source: ©20109

Hypatia Research, LLC

1 Multiple, weighted key performance metrics.



Post-recession customer data analytics paradigm

The new post-recession paradigm calls for senior executives and marketers alike to create alignment between KPIs,

corporate goals and shareholder earnings in order to prove value and remain relevant to multiple stakeholders.

Consequently, successful executives will exploit the value of customer data and deliver key performance metrics

along with actionable customer insight and market intelligence.

To create alignment, companies will need to develop role-based competencies and business processes and deploy

technologies that empower them to measure how profitably they interact -- and manage relationships -- with multi-

ple stakeholders.

Forward-looking solution providers should be ready to provide organizations not only visibility into customer behav-

iors but also the ability to analyze, report and measure both transactional and interactional customer information

from a bottom-up and top-down perspective. Savvy companies have already realized significant gains from building

a culture of high performance marketing.




http://go.infor.com/crmdialogues

Improving customer data analytics: Tips for leveragingmethodologies, metrics and technologies


Implementing customer data analytics requires attention to methodologies, metrics and technologies.

Before trying to secure additional budget or resources, audit all customer-related performance metrics along with

the methodologies or formulas used for each. For example, does your organization capture:

√ Campaign metrics based on uplift?

√ Trade promotion results based on single products or multiple product attachment rates?

√ Percentage change in customer complaints?

√ Percentage change in customer migration rates?

√ Customer risk profile?

√ Net promoter score?

√ Customer recency, frequency and monetary (RFM) value metrics?

√ Customer profitability per customer on a quarterly, bi-annual or annual basis?

√ Customer lifetime value (CLV) metrics?

The holy grail of customer analytics is closely tied to a virtuous circle of closed-loop performance metrics -- which is

next to impossible to accomplish in a multi-channel consumer environment. However, it is highly possible to

improve an organization’s customer analytics processes with a goal of enhancing the customers’ experience and

corporate profitability. To do this, organizations must define and standardize performance metrics at the corporate

level.

Corporate-level agreement on how metrics are defined and calculated is as necessary as enterprise standardization

of data dimensions across data marts. Failure to do this renders any report analysis and insight derived wildly inac-

curate. Do you want your senior executives making critical decisions based on highly inaccurate information?

Some examples from our research at Hypatia Research LLC include:

► An office supply retailer utilized specific marketing metrics to calculate “uplift” from a trade promotion

run on printer ink and internally announced the promotion as a rousing success. However, at the profitabili-

ty level, the company actually lost revenues on the promotion as market-basket analysis revealed that the

promotion did not influence shoppers to buy other products with higher profit margins. In short, they paid

for expensive media advertising, store signage, direct marketing and reduced the price of printer ink below

cost and realized a negative return on both trade promotion investment and product sales.




2 ©2009 Hypatia Research, LLC. “Decision Science & Customer Analytics: Competitive Advantage or Necessary to

Compete?”

► Another company utilized activity-based costing (ABC) as the preferred methodology for calculating prod-

uct category profitability. However, Hypatia found that one team included the actual cost of both production

and raw materials in their calculation while other departments added in an average cost of sales per prod-

uct SKU.

Many industry associations, market research firms and industry analyst firms publish industry best practices and/or

benchmarks that can be used for guidance. Understanding industry norms, maturity models2 and best practices is a

good starting point for organizations that want to improve their customer analytics capabilities.




Case study: Nationwide Building Society improves customerexperience with CRM, customer interaction managementsoftware and process updates


For U.K.-based financial services firm Nationwide Building Society (NBS), improving the customer experience meant

changing their mindset and operating environment from a transaction-based relationship to one that enhances

every customer interaction.

The financial services provider, with £111 billion in revenues, is authorized and regulated in the U.K. by the

Financial Services Authority for life assurance, pensions, unit trusts, insurance and regulated mortgage products.

Primarily a traditional transaction-based financial services provider, NBS realized it needed to evolve into a more

customer-centric organization to remain competitive. Towards this end, NBS focused on the following challenges:

√ Improve customers’ experiences by building stronger relationships through their preferred interaction

channel through personalized communications

√ Increase customer acquisition and retention rates

√ Boost up-sell, cross-sell, and sales conversion rates

√ Provide a single 360° view of the customer at employee point of contact for enhanced service levels.

With customer data stored in numerous legacy data-marts, NBS lacked the integration and infrastructure necessary

to effectively manage, analyze and apply customer intelligence towards their goals.

In order to improve its customers’ experiences, as well as to increase both revenues and customer satisfaction

rates, NBS thought it would invest in a comprehensive CRM solution.

Nationwide takes an operational approach to customer centricity

NBS’s strategy was not limited to merely implementing a CRM system. Conversion from a transactional, product-

centric business model to a services-oriented customer-centric culture would require more than merely leveraging

CRM technology.

The goal was for all customers to have a consistent experience through whichever channel they chose for engage-

ment -- in person, phone or online. Additionally, NBS wanted interactions personalized using both purchase and

behavioral information. “Intelligent prompts” would empower the teller, agent or online interface to determine the

best course of action. Customer data would be updated nightly to guarantee currency. Three main types of prompts

would provide direction and structure for all communications displayed during subsequent contacts. For example:

• Sales prompts: “Have you considered converting your overdraft balance to a loan?”

• Service prompts: “Has your replacement credit card arrived yet?”

• Data gathering/validation prompts: “May we please check when your insurance is due for renewal?”


Case study: Nationwide Building Society improves customer experience withCRM, customer interaction management software and process updates


NBS created a closed-loop process to manage, analyze and apply customer intelligence using several technology

solutions, including customer interaction management software and CRM technology.

NBS now recognizes all customers as individuals rather than account numbers and interacts with them in a more

consistent, yet personalized, manner. Improvements in creating a culture of customer-centricity include:

• A customer interaction management tool is now used by 4,500 employees to support more than 25,000

interactions per day.

• An average of 10,000 callers per day receive personalized offers via the CRM platform.

• With an integrated multi-channel contact history, NBS now knows which customers are interacting with

them, through which channels, and for which services -- improving their ability to segment, profile, under-

stand and measure customer value.

Importantly, the company has also been able to quantify the results of its efforts, according to Simon Baines, head

of customer insight, Nationwide Building Society.

“We are delivering approximately 15% more messages than we did before, at a marginal cost of £0 … and these

messages are typically 10 times more effective,” Baines said.



Case study: Nationwide Building Society improves customer experience withCRM, customer interaction management software and process updates


A Silver Lining for Communications, Media, and Entertainment Companies

1to1 Executive Dialogue: Dialing in on Customers

1to1 Executive Dialogue: Cashing in on Customer Intelligence

About InforCustomer Relationship Management leaders view every customer interaction as an opportunity toimprove retention, increase revenue, build loyalty, and strengthen their brand. Infor CRM Epiphanyoptimizes customer interactions by integrating marketing, sales, and customer service. By provid-ing a full 360-degree view of customers, Infor CRM technology enables consistent and continuouscustomer dialogues based on real-time information. With an advanced CRM solution set from Infor,you can make the most of every interaction with every customer across every channel or touchpoint. As a result, you will gain true customer insight, along with the ability to act on that insight.




http://www.infor.com/solutions/crm/

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