As individuals, we are not all the same. Though we may share common interests and attributes, each individual is simply that; an individual. Similarly, customers are not created equal, yet often times; marketing efforts attempt to employ a one size fits all approach to targeting them.
Successful marketing requires that you understand who your customers are; your top performing customers with high persistence and contribution, ones who like to look but drive limited value, and ones who keep coming back but need an incentive to reach full potential. If we understand these customer attributes, we can more effectively market to similar groups.
Enter the new era of analytics and big data. Now, in cloud-based processes that take weeks instead of months or years, no infrastructure or equipment investment and minimal Information Technology (IT) support, enterprises can use analytics that score customers. These scores mimic the FICO score in their detail by presenting a scale of 0 to 999 rather than just a simple “profitable vs. unprofitable” option. They also indicate the current value of the customer to the enterprise.
Hence, the value of scoring your customers helps you approach your business with more intelligence. It is with this PowerVue Score (specific to VueLogic) that allows you to have an intelligent dialogue with your data. This enables you to:
- Understand the value of every customer at the individual level
- Increase revenue through a more targeted marketing approach
- Decrease cost by creating more profitable and effective campaigns
The value of PowerVue Score to your organization is that it can help you build a more effective campaign. At the same time, understanding what to expect from these campaigns can also be understood by leveraging the VueLogic technology. Also with VueLogic, we give you the ability to:
- Predict conversion rates for offers at various discount points
- Predict the expected number of transactions
- Predict gross and net revenues for a campaign
This is intelligent dialogue with your data; a unique approach to CRM analytics to help you understand your business, your customers, their loyalty, and conversion to offers. By understanding what, when, how, and at what price consumers will buy, you can more effectively communicate your offers with greater response rates. And in this market where companies are working harder to do more with less, it just makes sound business sense to use the data you already have at your disposal, to operate more effectively and efficiently, all while increasing your company’s revenue and customer satisfaction.
- Improve marketing ROI to drive increased and incremental revenue at less cost
- Improve and increase customer acquisition, retention, and cross sell opportunities
- Increase overall marketing effectiveness and efficiency with measureable results
As a business professional, you understand the importance of targeting your organization’s message to effectively acquire new customers, and keep the ones you have. Add to the mix social commerce, mobile, web, and e-mail to conventional marketing channels, and managing and understanding your customers behavior and demographics becomes very difficult; measuring nearly impossible.
Today, marketers want and more importantly need a centralized, comprehensive, and effective method to examine cross channel campaigns. All offers and all customers are not created equal. Even the best offer can miss the mark and fail to trigger a response from a traditional buyer. Ultimately, a deep understanding of who the best customers are and why they buy adds granular insight into where they come from and more importantly, what motivates them.
This is the tremendous value to an organization that customer intelligence ignites. Customer Intelligence further helps to deliver a better customer experience, improve customer service, enhance product development, and shape business operations and overall business strategy.
At the end of the day, organizations are working harder and harder to achieve more with less. Thus, those organizations who rely on customer intelligence are the ones poised for further growth, systemically and systematically, regardless of the economy.
Who Uses Analytics?
Who Uses Analytics?
The short answer is that you do. While we often don’t recognize it, analytics are a critical part of our everyday life. We use analytics to perform simple tasks such as a price comparison between two similar items, to more complex tasks such as deciding between investment alternatives.
The application of analytics in a systematic and repeatable process is what differentiates organizations. Think of it like tennis. The fundamentals of tennis are the same whether you are batting a ball with the kids, playing in an amateur league or at Wimbledon. The difference is the repeatability of the fundamentals and the speed of application. The greater the speed and repeatability, the more money!
So the question is, how effective is your organization in using analytics? Do you have the established repeatable process to return the 100 mph serve or are more equipped to deal with a soft lob?
What Is Analytics
What is Analytics?
Wikipedia defines ‘Analytics’ as “the process of obtaining an optimal or realistic decision based on existing data.” (http://en.wikipedia.org/wiki/Analytics)
However, the question remains; what does this really mean to a person looking to make a difference in the performance of their business? In the not-too-distant past, business leaders relied on intellect, intuition and observation to understand and decide issues in their business. As companies grew and information became increasingly abundant, it became impossible to rely on these old methods and demanded a different approach.
The result is an evolving art known today as ‘Analytics’. While data continues to accumulate in corporate data stores, complex mathematical algorithms and statistics look for relationships in the data that for the most part are not obvious. The intent of this analysis is to gain a detailed understanding of, “if you do this then that should happen”. The “that should happen” can be either positive or negative for an organization. Both are valuable, either from knowing what to avoid or what to do more.
Applied Math x Data = Better Decisions = More Money (Analytics Simplified)
Analytics for the Masses?
VueLogic attended the annual Direct Marketing Association show in San Francisco in October (DMA2010 Conference http://www.dma2010.org/attendees/program.php), and during our travels up and down the aisles, one common theme that I frequently heard was that “everyone is doing analytics” these days. If this is indeed the case, that is good news for the end users and certainly for the analytic services providers.
But – upon further discussion with quite a few people, there was a wide-ranging definition of not only what type of analytics were being done in the market (i.e., custom modeling, or using preexisting analytic frameworks, etc.), but also who was using them, and at what cost.
Certainly, not everyone really needs a custom model. I believe that there is a new breed of “analytics” available today – far more powerful than before, but stopping short of being built for a specific user. Before making a large financial commitment, resellers and end users should consider whether an existing analytic framework will fit their application needs – you may save a significant amount of time, money, and resource!
“If only I had a crystal ball” – Predictive Analytics Can Give You That Crystal Ball View
At the Retail Summit conference this week, we had a chance to listen and talk to leading retail executives. Richard Scott Saban was one of the attendees and offered great insights during the conference.
I really enjoyed his Feb 18, 2010, Retail Touch Points article, “Powering Customer Intelligence with Predictive Analytics”. (http://retailtouchpoints.com/retail-crm/429-powering-customer-intelligence-with-predictive-analytics.html)
Scott talks about the question that these economic times spark for all of us, “If only I had a crystal ball…” Scott comments that predictive analytics put the crystal ball in our hand. He notes that that seeing the future and what our customers want from us is based on leveraging our customer data. Creating a single view of our customer offers us the ability to differentiate their experiences and motivate engagement. With that single view we can determine which customers will respond to a particular promotion – thus giving us a virtual crystal ball.
I had to smile when I read Scott’s reflection on mass messaging as a “weapon of mass destruction”. He shares what we all know about promotion fatigue – “The destruction is a direct result of becoming an annoyance to your customers by bombarding them with offers that have no relevance to them”. Aren’t we all too familiar with those providers that send us messages too often and don’t seem to have any idea about what we are interested in? Let’s commit to eliminating those “weapons of mass destruction” and leverage what we know about our customers to give them what they want and get what we need. (There is another blog idea in that “Rolling Stones” song!!)
NRF 2010 is like FAO Schwartz this year
I just returned from attending National Retail Federation’s “Big Show” in New York. You might not be directly related to the retail industry but it’s important to note that NRF celebrated its 99th show this year. That means their first show was in 1911…that is amazing! All kinds of conferences and tradeshows come and go, but NRF has not only survived but had record attendance this year by being a showcase for the latest technologies. Borrowing from retail analyst, David Weinfeld’s, Jan 14, 2010 post (NRF 2010 Recap), “going to NRF’s Big Show this year was like walking into FAO Schwartz for the first time.” The variety and richness of the technologies was amazing. From IBM to the early stage innovations, the record crowd of attendees was taking it all in.
With that in mind it was terrific to be part of the show this year! Transaction Tree’s digital receipt solution (http://www.transactiontree.com/NoMoPaper/corp/ProductDemo.action) is using VueLogic to power their new micro targeting and scoring solution (http://www.vuelogic.com/products.html). Echoing Gartner’s Top 10 Technology selection, advanced analytics and green IT are key focuses for retailers.
Transaction Tree’s partnership with VueLogic allows consumers to positively impact the environment by removing paper receipts while offering a green IT solution, eliminating retailer’s need for mass messaging with critical insight into their POS customers’ interests and preferences.
The sessions and exhibit halls were packed. The Transaction Tree booth was swamped and we talked to industry analysts, press representatives and retailers of all sizes. Everyone is recognizing the changing technology landscape and need to leverage innovation to stay ahead. Transaction Tree and VueLogic spent 2009 working hard to gain traction and it is exciting to see our efforts are paying off!!
Are Your Customer Data Practices Above Average?
A recent Aberdeen research article Data Driven Marketing (October 2009) indicated that Best in Class companies have a 2X performance differential in Return on Marketing Investment (ROMI) and a 5X performance differential in current revenue growth over Average companies.
The research also disclosed the percent of Average companies that have a:
- Process to identify high value customers 31%
- Process to validate the quality of customer data 34%
- Customer data centralized into one data base 33%
- Defined process to improve quality of customer data 30%
- Have established data hygiene processes 30%
- Utilize marketing dashboards 31%
- Utilize reporting and Analytics 47%
- Measure campaign performance 36%
The number one challenge identified in the research is data quality. Inconsistent and incomplete customer data result from the lack of a process for collection, hygiene, storage and enhancement. If the data cannot be trusted then the insights derived from the data cannot be trusted.
The bottom line is that data is meaningless without analysis and context. As a result, process becomes a critical component in an organizations ability to develop useful insights and information from customer data.
How does your company’s data practices compare? If you would like to know more about how Data Driven Marketing can help your organization increase revenue and ROI download our White Paper Integrating Analytics into the Customer Experience at http://www.vuelogic.com/resources.html
It’s All About Analytics
Analytics is at the top of everyone’s mind in the marketing industry today. At the NRF show in January 2009, the analytics breakout session was offered in a relatively small space and drew a standing-room-only crowd. The same thing happened last week at the Internet Summit in Raleigh. With increasing pressure on marketing organizations to increase revenue and customer loyalty with fewer people and lower budgets, we are all focusing on analytics – we want to know what is reaching and what is resonating with our target customers.
The analytics panel at the Internet Summit gave us a chance to hear an email marketer, a newspaper executive, an online response marketing executive and VueLogic’s CEO, Ron Garmon, discuss where analytics are focused today and where we are going. The participants agreed that companies struggle with multiple non-standard data sources and a lack of analytics expertise in leveraging data today, but everyone believed that the focus on analytics will be driven by the need to target and personalize customer communications. (Twitter comments on panel discussion – #isum09 analytics)
Gartner released their 2010 Top Strategic Technology list at their October Symposium (http://www.gartner.com/it/page.jsp?id=1210613). Cloud Computing and Advanced Analytics topped the list. Comparing the 2009 list with 2010, it’s interesting that business intelligence dropped in favor of analytics. There is a great graphic showing the year to year change at http://blogs.zdnet.com/BTL/?p=26191. The standing-room-only interest in analytics at conferences is reflective of Advanced Analytics move to the top of the 2010 list.
Web analytics have matured and offer insight into site traffic and user behavior; they allow us to optimize search results and leverage recommendation engines to guide visitors through the site. Focusing offers and messaging to the right consumer at the right time involves understanding customer transactions – the analysis of actual consumer value.
Analyzing customer data can help increase or maintain loyalty, create a return visit or convert the current interaction into a transaction. Whether it’s increasing your email marketing ROI or targeting offers and messaging – it’s all about analytics.
The Quest for Customer Value
In today’s world, understanding what constitutes customer value is an immense challenge. It is no longer a simple measure of Lifetime Value (LTV) because what happened one or two years ago may not be relevant. Additionally, customers are contributing value in ways other than just spending money, they contribute content, they provide reviews, they invite friends – all of which are measurable and build value for your organization.
In our recent Action Brief “Offer Differentiation Based on Customer Value” we begin the exploration of how a customer value score can be used to motivate customer behavior that will increase their customer value and customer ROI during their interaction.
Download the Action Brief and let us know what you think.
Jim Deffenbaugh
Ron Garmon
Tom Gordon
