In The age of The Customer, Insight Is not enough
For decades, marketers have recognized that customer knowledge is crucial to acquiring, retaining, and serving their clients, but merely knowing your customer is no longer good enough. Today, customers demand you use that knowledge to better serve them — faster. Speed is the new differentiator for firms across the globe and in all industries, and customer insights (CI) professionals are at the heart of this revolutionary change. This report explores the path needed to transform data to knowledge at the new pace the customer requires with the Real-Time Actionable Insight Delivery (RAID) cycle. In the age of the customer, the race will be won or lost based on your firm’s ability to know your customers and react faster and better than your competitors.
CURRENT MARKET DYNAMICS MANDATE NEW CUSTOMER INSIGHTS MOMENTUM
As society becomes increasingly, and perpetually, connected, putting unprecedented information at customers’ fingertips, customers are increasingly demanding instant, relevant information. But insight alone is no longer enough — it must be served up immediately so the firm can react to meet its customers’expectations. This cadence requires a new customer insights imperative that no longer concentrates on past performance but is focused on anticipating the customer’s next move so the firm can promptly deliver the bestpossible customer experience. CI pros are finding this venture to be no easy task. Here’s why:
■ The clock starts ticking as soon as the customer starts clicking.
We live in a world where instant gratification is expected with a simple click of an icon. Society has come to expect that if you “Google it” you will find it or by simply “Amazon-ing it” you can buy it. When customers click on your site or apps, they expect that same instantaneous response and they expect you to know who they are. Those expectations translate to a demand for quick delivery of customized solutions, relevant data, personalization, and meaningful messaging. Too many firms find this challenge daunting, leaving a real-time 1:1 approach to customer engagement out of reach. Today, time is either a marketer’s new best friend or worst enemy.
■ Constantly connected customers with countless channel choices create chaos.
The customer insights technology and process infrastructure needed to enable speed to insight is playing catch up, often missing essential components, or in many cases it simply doesn’t exist. Why is this important? Because in 2015 there will be 1 trillion connected objects and devices generating 2.5 billion gigabytes (2.5 quintillion bytes) of data every day and 80% of it will be unstructured.1 CI pros have the demanding duty to determine which data is appropriate to capture, translate, transform, and analyze if they are to understand current and future customer behavior. Speed to insight is impeded because much of that data is siloed in legacy systems built long before the existence of tablets, tweets, text messaging, tags, sensors, social media, and video chats.
■ The market has moved from requesting insights to demanding foresights.
For many CI teams, the task used to be complete when they delivered the requested data into the hands of the requestor — typically sales or marketing. But now those same teams are demanding predictive insight so that they can anticipate the customer’s future behavior and preemptively take action. When speaking with a new-world technology-driven consumer packaged goods (CPG) company, the CI leader shared, “We have more than enough data, and we have been talking insights for a long time but, candidly, my leaders don’t seem interested in what happened. They don’t want insight — they want foresight. They don’t want to know what happened — they need to know what will happen next.”
SPEED TO INSIGHT TRANSLATES TO IMPROVED PERFORMANCE
Few marketing challenges are more difficult than identifying and influencing what drives customers’ attitudes and behavior. Adding a real-time element to these imperatives sounds formidable, but this is no longer a pipe dream. What was once considered “bleeding edge” is today being implemented in leading firms across the globe. Industries as diverse as travel and leisure and financial services have embraced real-time marketing to enhance loyalty, increase customer satisfaction, and stay relevant in the age of the customer. Speed is the new differentiator; those who can execute that will have the competitive advantage and will be able to:
■ Anticipate client actions before they occur.
Foresight in this context is defined as knowing when your customers will make their next moves and what they will be. This foresight gives leaders time to calculate the right moves — whether upselling, cross-selling, retaining, or simply servicing them — and to optimize the outcome for both the company and the customer. Examples of foresight can range from a simple understanding of how often a customer places an order to an advanced knowledge of knowing exactly when they will order. Amazon is a prime example of this analytic apex as demonstrated by its recent “Anticipatory Shipping” patent filing. While it hasn’t yet announced plans to launch the service, the patent signals that Amazon feels confident in its ability to predict what customers want even before they order it.
■ Personalize the customer experience.
The Kroger Company, the nation’s largest traditional grocery store chain, believes that customer data and the speed in which you use it is so important to improve the customer experience that it owns 50% of dunnhumby, a database marketing firm. Kroger recently purchased the Southeast’s Harris Teeter supermarket chain and one would assume that Kroger officials quickly called in their data partner, confident that it could enhance the customer journey and glean more insight from Teeter’s loyal e-VIC program card carrying customers. By using customer data to customize the weekly specials sent to each loyalty member, the shoppers feel the store understands their needs and Kroger improves its sales.
■ Increase overall profitability.
Every business has an obligation to its stakeholders to become more profitable and enhance revenue growth. By knowing your customer and anticipating his next steps, you can hasten the process to determine the right channel to serve him, the right products to sell him, and the right time to service him in order to retain him. Firms use this forward knowledge to carry optimal inventories, staff for demand, and optimize the path to maximize both the customer purchase behavior and the overall profitability to the firm. Happy customers stay longer, buy more, and advocate for and evangelize companies that best serve their needs. Just ask loyal customers of Neiman Marcus, a company renown for best-in-class customer satisfaction and service. They will tell you how they happily pay a little more to get much better service in return.
ADOPT A FRAMEWORK TO GAIN SPEED
If you wish to fix the issues that are impeding your speed in serving the customer, start with understanding thetime and effort needed to execute each phase of the RAID cycle below (see Figure 1). RAID enables you to:
■ Turn data into insight.
Data allows firms to report what happened; insight allows them to report what should have happened. If you report how many blue widgets were sold, shipped, or consumed, you deliver data. This is often referred to as looking in the rearview mirror. Telling the firm how many blue widgets should have been sold, shipped, or consumed and by whom, based on past performance, is delivering insight. The first piece of information is interesting; the second piece is compelling because the firm can rapidly engage those who didn’t purchase.
This provides a clear forward-looking vision of what should be done based on what happened. Acknowledge which type of information you deliver and take the first step in the cycle.
■ Evolve from insight reporting to presenting predictive foresight.
Insight is transformed into foresight when data scientists use advanced algorithmic approaches based on past performance to foresee or predict future probable events. Intelligent enterprises effectively prepare their firms to know what is likely to happen next by delivering foresight.4 Dick’s Sporting Goods uses customer behavior knowledge to learn what actions customers have taken; it then marries that knowledge to social media behavior to determine why.5 Firms can then translate this insight into a predictive model that presages future customer behavior and internal activity, e.g., the number of incoming calls expected in customer service, how many returns to anticipate, and even which coupons drive which customers to purchase shoes versus socks.
■ Seize the opportunity to turn foresight into action.
When foresight is delivered to an infrastructure that can respond with a fully automated, preemptive call to action before or at the time of the transaction or event, the firm maximizes opportunity or minimizes threat. Monsanto Company strongly believes in the power of using data to predict the effects of external factors such as weather on crop production, so it bought a big data weather company, The Climate Corporation, to help boost yields and profits.6 Monsanto knows that if a farmer can be preemptively notified about an anticipated water shortage, he can use different products to take corrective action on weeds and pests. The results will lead to more yield per acre and higher profits for both the farmer and Monsanto.
■ Measure the action.
Return on marketing investment, average acquisition cost, and average retention cost are a few of the key metrics an intelligent enterprise tracks to determine success or failure of every marketing initiative, event, or engagement. These measurements enable speed in the decision-making process by offering insight into the success of the current campaign or incentive. Marketers are rapidly developing new marketing mix models to measure success and increase marketing performance. This gives the marketer the knowledge required to decide to continue the program or terminate it and move on.
■ Turn measurement into new knowledge.
CI professionals will need to translate the measurement results into new insights about the customer. Every touch point or encounter is a new learning opportunity. Updates to segmentation schemas, lifetime value and propensity to purchase models, even next best offers should now reflect the newly acquired knowledge. Sometimes the insight will be specific to a customer, other times it will be about the benefits of a campaign type or channel choice of a group of customers. While RAID is a standard process, the types of information moving around the circle are dynamic. The CI pro should apply flexibility in the use of the process, depending on the data type. Continuous updates are required if the real value of the process is to be realized.
■ Return measurement to the source of knowledge.
By ensuring that the knowledge gained from the measurement step of the RAID cycle is brought back to the original data source, the firm can continuously learn from every customer encounter. If a customer is sent three emails and fails to act on or even open them, that fact should be automatically noted and tied to the customer record. The understanding that email is not the most effective touch strategy for this client can then be fed into future projects and marketers can act accordingly. The process is brought full circle as the knowledge gained feeds the CI professional with new insights on into how to ensure the success of upcoming initiatives.