Analytics in Action

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Overcoming the top analytic challenges

Overcoming the top analytic challenges

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  • 1. Analytics In Action Overcoming the Top Analytics Challenges to Turn Data Into Dollars Tuesday, October 20, 2009 11:00 AM Eastern, 8:00 AM Pacific ©2009 Peppers & Rogers Group. All rights reserved. 1to1® is a registered trademark of Peppers & Rogers Group. Event logistics Please turn off your pop-up blockers You will not be able to hear audio clips or participate in today’s post event survey Downloading a PDF of today’s slides Click on the “download presentation” button If that doesn’t work, let us know by using the “submit question” button Have a question for the presenters? Click the “submit question” button in the lower left-hand portion of your screen Helpful tools Use the “enlarge slide” button to view a complex slide Use the help link for a list of FAQs just to the right of the “enlarge slide” link 1
  • 2. Analytics In Action Overcoming the Top Analytics Challenges to Turn Data Into Dollars Don Peppers, Founding Partner Susan Jacobs Director, Marketing & Client Services Onder Oguzhan, Partner ©2009 Peppers & Rogers Group. All rights reserved. 1to1® is a registered trademark of Peppers & Rogers Group. Today’s agenda Topics of Discussion Harness customer insight Make strategic, marketing, and operational decisions faster, easier and more efficiently Overcome cultural and organizational barriers to enable analytics success Q&A Survey 2
  • 3. Competing in a different dimension Customer Needs Satisfied Custom Centricity Share of customer mer Product Centricity Market share Customers Reached Competing in a different dimension Customer Maximizing the value Needs created by each customer Satisfied Custom Centricity Share of customer Maximizing the value created by each product mer Product Centricity Market share Customers Reached 3
  • 4. Customers create value in two ways First, they generate current-period sales and costs , yg p But second, they change their intent to buy, or their likelihood of buying, in the future Suppose a customer calls you with a complaint… Competing in a different dimension Customer Needs Satisfied Custom Centricity Share of customer Relationships are required Product Centricity mer Market share Customers Reached 4
  • 5. Classic framework for customer relationships Identify Differentiate Interact Customize …customers as …by value, …more cost - …some aspect of unique addressable behavior and efficiently and the company’s individuals needs effectively behavior, offerings, or communications Classic framework for customer relationships Identify Differentiate Interact Customize …customers as …by value, …more cost - …some aspect of unique addressable behavior and efficiently and the company’s individuals needs effectively behavior, offerings, or communications Customer Insight Customer Experience 5
  • 6. Return on customer Profit from investment + Change in value of investment ROI = Starting value of investment Profit from customer + Change in value of customer ROC = Starting value of customer ROI answers the question: How much value can I create for the money I have to use? ROC answers the question: q How much value can I create for the customers I have to use? Which metric to choose depends on what resource is scarcest Enterprise value and customer equity Total lifetime values of all current and future customers Customer equity = enterprise value of the firm Therefore, ROC on customer equity is the same financial value as “Total Shareholder Return” Profit from customers + Change in customer equity ROC = Starting value of customer equity Company profit + Change in company’s value = Starting value of company = Total Shareholder Return 6
  • 7. Leading indicators of LTV change include: LTV drivers Churn rate, frequency of purchase, share of customer, service contract, account penetration level… Behavioral cues Changes in account profile, interactions, sales, referrals, returns, complaints… Lifestyle changes New j b retirement, graduation, marriage, moving… N job, ti t d ti i i Attitudinal indicators Willingness to recommend, customer satisfaction, brand preference, level of trust and confidence… Technical enablers 1 Multiple connected media and platforms Major European Wireless provider running dynamically personalized and linked offers through PDAs, Web, VRI, Call centers 2 Better technology and newer modeling techniques Major retail bank treating each customer based on their LTV, Churn and ROC scores d Ch d dynamically calculated and di l i ll l l t d d displayed on d customer service agents’ monitor 7
  • 8. Data sources & trends 1 Access and use of new data forms Combination of transactional, online click-stream, POS, and customer demographic data with marketing research provides opportunities for determining customer needs with significantly higher accuracy 2 Rising customer power Social media and network analysis require new models for p predicting customer value g 3 Search for a new competitive advantage Financial crisis forced many firms to further optimize retention efforts, cost management, and differentiation in service levels All-State Legal analytics program Goal Gaining actionable insight into customers to improve marketing ROI and sales performance Results Quicker and more targeted decisions with a lower marketing investment Next steps p Use segmentation to redefine the sales model and prioritize operational processes 8
  • 9. Challenges that companies face include: Data ACCESSIBILITY, CLEANLINESS Data and ACCURACY Mission Having and LEVERAGING the right data for HIGH-VALUE activities Ability to GAIN CREDIBILITY for the ROI of Support the program - especially calculating the softer benefits Organizational BREAKING SILOS of conflicting Structure responsibilities, lack of accountability, etc. Dealing with data issues High-quality integrated customer data is the basis of analytics It is found that less than 10 percent of the companies have a single, integrated view of their customers Do not overlook the organizational challenges Remember: the success of any analytical initiative depends on the employees 9
  • 10. Mining for gold in the database Not about data integrity, it was data overload Lots of data at the customer level, but needed the talent and technology to analytically mine this data Our IT team was great at “running reports” we asked for but could not analytically answer business gaps in way for us to take sales or marketing action Framework for customer relationships Identify Differentiate Interact Customize …customers as …by value, …more cost - …some aspect of unique addressable behavior and efficiently and the company’s individuals needs effectively behavior, offerings, or communications Customer Insight Customer Experience 10
  • 11. Managing the customer experience Integrate all customer- g facing operations Optimize by customer, not by product or channel Interact Customize Align enterprise-wide …more cost - …some aspect of p efficiently and the company’s metrics and incentives effectively behavior, offerings, or communications Ensure cultural “buy in” by all employees Customer Experience Customer experience at MCI US long-distance market, 1992: Long distance is a commodity-like business commodity like MCI saw itself as having a parity product, differentiated only by perception of value 10 million retail consumers Aggressive, check Aggressive “check in the mail” campaigns mail Serious retail customer retention problem Source: Enterprise One-to-One, 1997, Peppers and Rogers 11
  • 12. Retention is seen as a service issue Marketing task: Get customers in win them back in, Keep pouring customers into the top of the bucket Sales and Service task: Hang on to customers Serve them well, keep them happy Fix the leaky bucket Differentiating the customer experience Top 5% of MCI customers regularly accounted for 40% of revenue Roughly $75 a month in long distance Three needs-based groups of these MVCs, based on transactional analysis Frequent travelers Ethnic callers Work-at-homes 12
  • 13. “Customer First” program Customer recognition, membership Response required to initiate p g p q program Staged incentives, benefits, special call center staff Mechanics Mailing solicitations to most valuable customers Customers protected from program solicitations C t t t df li it ti Outbound calls to confirm participation “Customer First” is a great success Customer attrition falls measurably, compared t control groups d to t l Millions of dollars in increased customer revenues projected 13
  • 14. And then “Customer First” is killed Organizational and compensation conflicts: Product managers need access to best prospects in order to make product sales goals Mail and outbound calling channels belong to the Marketing Department Customer acquisition rates affect bonuses Significant cultural obstacles, also What should MCI have done? Aligning metrics and compensation with customer optimization is vital Customer management: Responsibility for optimizing by customer must be clear Fix conflicts between product, channel, and profitability management Pay tt ti t P attention to corporate culture, and the unwritten t lt d th itt career-makers and breakers 14
  • 15. Building blocks Steps to creating an analytics ready organization 1 Setting up the data driven decision making culture 2 Aligning to internal suppliers and customers 3 Hiring and retaining the right people 4 Getting the right tools and resources Gaining buy-in across the organization C-Suite Marketing Sales IT 15
  • 16. The outsourcing option: challenges Identify and hire the right analytical talent to do the analytical work Acquire the technical tools necessary to meet all requirements of the analytics program Manage all operational costs The outsourcing option: drivers Global Interconnectivity: Improvements in technology and communications systems allow the integration of a high-skilled, low-cost, remote workforce with an organization's analysis p g g y process Efficient Sourcing: According to Forrester, through 2008, 25 percent of CRM projects in the U.S. are estimated to be cancelled or postponed because of the skills shortage in consultants and systems integrators – outsourcing broadens the pool of potential resources Cost Savings: Outsourcing offers a more cost efficient alternative for both human and t h i l O t i ff t ffi i t lt ti f b th h d technical resources. Cultural Acceptance Shift: A recent Forrester Research survey of 650 B2B marketing executives in the U.S. found that 53 aimed to outsource more than half of their marketing activities in order to focus on their core marketing and operational activities 16
  • 17. How to make a strong case Focusing on cost savings and value creation is crucial First and easiest to measure is cost savings Value creation is more difficult to measure Find quick wins to gain and keep support Relate to benchmarks (different or similar industries) Conduct competitive analysis Run Voice of Customer studies Run experiments to prove the point Or provide sample results, creating the need for more Disseminate preliminary results even if conflict is on the horizon How to make a strong case Find political and financial support Get a champion at C-level (with an influence on key C level executives) Create allies in other divisions by aligning interests and objectives 17
  • 18. How to make a strong case Don’t let the best get ahead of better Start small and grow carefully Measuring ROI may necessitate: a sophisticated information management a disciplined and focused organization committed to fact based results and timely deliveries Consider outsourcing and get help Don’t try to “boil the ocean” This isn’t mass media – you don’t need to gamble everything with each campaign Instead, devise and assign pilot projects, and publicize successes Visualize this as a series of “experiments” using customer-specific communications Educate your company public 18
  • 19. Questions &Answers Don Peppers, Founding Partner Susan Jacobs Director, Marketing & Client Services Onder Oguzhan, Partner ©2009 Peppers & Rogers Group. All rights reserved. 1to1® is a registered trademark of Peppers & Rogers Group. For additional information please contact Don Peppers Onder Oguzhan don.peppers@1to1.com ooguzhan@1to1.com Susan Jacobs Ginger Conlon sjacobs@aslegal.com ginger.conlon@1to1.com 19