Customer Analytics

What do your customers really want?

Businesses need a fresh approach to customer analytics in order to create a more effective customer experience and keep up with the competition.

by Paul Cushion (contact)
6 minute read

Customer experience has become one of the most important differentiators of businesses today. To achieve success in this area, organisations must revisit the way they collect and analyse customer data. But as Paul Cushion, senior manager at KPMG explains, this starts with two simple questions.

In this ‘era of the customer’, customer analytics is no longer optional, it is mandatory for ensuring growth. As a process, customer analytics is often managed by an interdisciplinary group made up of business owners from different departments within the company, including marketing, sales, customer service, IT and business analysts; each with different metrics for their differing needs and targets. But multiple instances of customer relationship management (CRM) applications, disparate enterprise resource planning (ERP) systems and poor customer data integration (CDI) can leave a fragmented view of the customer.

In order to be effective, the aforementioned group must first agree the business metrics they need to achieve a single view of the customer experience. This single, accurate view of the customer can then help these different business units make decisions about how best to acquire and retain customers, identify high-value customers and proactively interact with them.

Looking beyond traditional segmentation to gain customer insights

To cater for the new type of customers - and compete against other leading industry players - organisations have to adapt and focus on two key areas.

Firstly, to truly understand how to engage with customers and put the right strategy in place, organisations need to modernise their approach to customer segmentation and effectively organise their operating models to deliver insights from the analytics. Too often, the question of “What do my customers actually want?” is left unanswered by organisations.

Marketers have traditionally used descriptive segmentation as a basis for planning engagement strategies, pricing strategies or even customer experiences. The technique is simple and starts with the question “Who are my customers?”

Descriptive features such as geographic location, age, gender, interests (and so on) help to group customers based on what characteristics they have in common and then an appropriate strategy is put in place depending on the organisation’s objectives.

However, there are anomalies in these categories that are often overlooked (and questions that remain unanswered) that could provide the key to a more successful customer strategy. And, with the change in consumer behaviours as a result of technology innovation, these anomalies are getting more common. This all relates to the way customers interact and behave - which is often contrary to their expected segment characteristics - providing newer and richer insights into what customers actually want.

Adding to this, an understanding of customer groups that are interacting in a similar way then provides attitudinal insights to help make further customer led decisions for marketing and product design. Netflix is a case in point. It’s a data driven company using the rich data at its disposal to create a completely tailored customer experience.

The data points Netflix gathers from its user base of 83.18 million customers globally[1] enable almost microscopic analysis of user preferences. When do users pause, rewind, fast forward; what shows do they watch and which days of the week do they watch them on? They can also analyse the times users are active; postcodes where users are active; what devices users use to watch; what people search on; where they scroll; when they stop watching, etc. By analysing this, they work out how likely users are to cancel and when this could take place so the experience can be changed. Or perhaps they can surmise that users who watch 20 hours of content or more a week are less likely to cancel so they can drive that specific audience to watch more. The insight opportunities the data provides and the micro segments it creates are endless, meaning that no single experience is the same. As quoted by their Director of Global Communications, “There are 33 million different versions of Netflix” [1].

Using additional insights with external data

Having leveraged internal data, organisations now need to step back and ask another simple question: “What are the external signals which identify customer activities?”

We now have access to incredibly rich sources of external data. Data that’s left behind in the wake of customers’ lives that helps to describe their behaviour. Data such as housing prices, car ownership, education statistics, attitudes to technology, browsing habits and so on, all help to understand a customer’s motivations and rationale. Each of these brings a wealth of information that influences your customers' purchasing decisions and indeed the way they interact with your brand.

We recently supported an international food retailer expand their footprint. The retailer had already worked with KPMG’s team of data and analytics professionals to understand and predict store performance. They then wanted to see how this insight could be used to predict new store viability and profitability.

By looking across more than 6,500 different ‘signals’ – including local demand drivers and sales indicators – the company was able to create accurate estimates of customer demand. Based on this data, they were able to forecast the expected revenues for new and proposed stores.

Ultimately, the retailer was able to improve the return on their new store investments. In the future, the system has the capability to develop a new, improved and highly accurate forecasting, replenishment ordering and labour scheduling system.

Looking at customer data and analytics brings strategic value

We believe there is real strategic value to be gained in looking at customer data and analytics in a different way. Discussing these two simple questions within your organisation will help to provide a detailed view of why customers are interacting with your brand and what may happen to it in the future. There is nothing to be lost, only gained from having these conversations; they are crucial to increasing the lifetime value of your customers.

 

[1] July 2016 Netflix Letter to shareholders

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