Developing a Customer Insights Strategy


Published on

Customer Insights: a catalyst for a more integrated and data-driven organization

Published in: Business, Technology

Developing a Customer Insights Strategy

  1. 1. CUSTOMER insights Developing a Customer Insights Strategy An Overview April 2009 © Latente, LLC
  2. 2. Overview • Need for an actionable approach • So you know where to start • So you know what to focus on • So you can ensure a plan that aligns with the strategy • Real-world use of a Customer Insights Framework • Clear objective • Framework to guide thinking and activity • Examples of outputs • Recommended Approach 2 © Latente, LLC CUSTOMER i n s i g h t s
  3. 3. Strategic Objective Illustrative Example Define “deep”: for example, versus current understanding Define highest leverage points: of customers (through existing for example, common metric for data, reports, etc.) customer profitability “Develop a deep understanding of our customers, using a disciplined approach, that will be leveraged across the organization and create competitive advantage for the Company and its customers.” Define in terms of differentiation: what will do Define , document, fund: now that you, nor the common “customer competition, could do before? framework”; repeatable process to turn data into insights; institute required Define new, value-add for skills, education and customers: for example, more support structures “predictive” alerts and tools 3 © Latente, LLC CUSTOMER i n s i g h t s
  4. 4. Customer Insights Framework Deepen knowledge of customers, plus uncover and clarify opportunities. Apply to Company and other data Research, secondary and sources to improve targeting and primary, includes in-depth increase success of promotions interviews, focus groups, and development of products. surveys, and industry analyst sources. Improved Results Experimentation Choose an opportunity based on analytics and research, design one or more experiments, measure and document the results, feedback to refine future experiments. Repeat. 4 © Latente, LLC CUSTOMER i n s i g h t s
  5. 5. Framework Value Results include: • Deeper, actionable understanding of customers • Targeted, high-return marketing campaigns • Insights-driven product strategies & improvements • Sharpened focus on growth: Improved • Improved activity metrics Results (average deposits, fee-based product usage) • Improved share of wallet (cross-sell and up-sell) Experimentation • Deeper, more sustainable relationships with your customers, based on driving their real business objectives 5 © Latente, LLC CUSTOMER i n s i g h t s
  6. 6. Examples of Applying the Framework • Predictive model • Predicts likelihood of desired and sustained customer behavior in response to a marketing campaign • 2000+ variables considered; 24 variables included in final model • The Model assigns a „score‟ to each customer based on likelihood to respond • Model identified over 80% of the responders in the top 50% of the population • Attitudinal segmentation • six segments identified: two near-term priority segments, two next-wave (and begin to nurture), two low priority • Used to prioritize and drive product decisions for next-gen product release • “Quick Hits” Examples • Customer Life Cycle Model • “Simple” segmentation • Based on hypothesis about key customer characteristics – tenure and recent activity levels • Discovered actionable insights such as “low volume customers are most likely to churn” and “activity velocity in first 90 days predicts attrition” • Mapped to Attitudinal segments and used in targeted marketing campaigns • Activity pattern mining • Customer-level reporting metrics 6 © Latente, LLC CUSTOMER i n s i g h t s
  7. 7. Example: Customer Life Cycle Opportunity Model 0 Tenure Total Lifetime Tenure Highest Volume Activity Adoption Levels Hi Activity Hi Upsell Hi Cross sell Medium Volume Activity Med Activity Med Upsell Lo Cross sell Low Volume Activity Lo Activity No Upsell No Activity Attrition Population Online Adoption Lifecycle Phases and Related Optimization Opportunities ACQUIRED ACTIVATED ATTRITED Subscription Activation Retention Management (Short Tenure) Acquisition Subscription Reactivation Retention Management (Long Tenure) Service Usage (Low to High) Up sell Incidence (Low to High) Cross Sell Incidence (Low to High) = Optimization Opportunities 7 © Latente, LLC CUSTOMER i n s i g h t s
  8. 8. Approach for Building Customer Insights Strategy & Capability DISCOVERY TRANSITION OPERATIONALIZE Decision Point Decision Point • Develop Strategic Objective • Refine and formally roll out • Continue hiring plan & ramp of • Create a Customer Insight initial insights Customer Insights capability Framework & Life Cycle Model • Syndicate success & build • Continue communicating success & • Assess existing customer institutional support implementing change mgmt. plans data and insights • Inform and shape key • Continue to monitor & consult on •Inventory existing data strategic goal: e.g., “improve Insights usage, potential, and sources, reports & analyses the long-term forecast” measurements •Assess against the Model • Refine long term plans •Continue to monitor & drive data (e.g., score on “value” and and investment portfolio and technology improvements “quality” dimensions) • Adjust product, • Gap analysis: missing or promotion, channel • Develop longer range term plans high-value/low-quality strategies, as applicable and investment portfolio that drives insights; data quality, expanded use customer insights • Begin to implement new accessibility & tech. issues measurement methods (e.g., • Partner with your customers to • Develop & test initial forecast models, reports, harness customer insights data to hypotheses: new or improved dashboards) against key achieve mutually beneficial goals high-value customer insights “customer life-cycle” metrics (e.g., reduce costs, improve cash mgmt.) • Based on results, refine • Initial hiring & ramp of key goals & metrics, as applicable Customer Insights roles; • Build business case for monitor & drive data and further investment technology improvements 8 © Latente, LLC
  9. 9. APPENDIX 9 © Latente, LLC CUSTOMER i n s i g h t s
  10. 10. Defining Analytics Optimization What’s the best that can happen? Need to drive Predictive Modeling What will happen next? past this line to achieve break- through results Business Value Forecasting What if these trends continue? Statistical models Why is this happening? Query/drill down Where exactly is the problem? Reports What happened? Degree of Analytical Intelligence 10 © Latente, LLC
  11. 11. Customer Insights: catalyst for a more integrated and data-driven organization  Drives much-needed processes for tapping analytics, gathering insights, planning, execution and measurement  Laser-beam focus on building competitively differentiating knowledge of Customer data  Highlights value of capturing, codifying and distributing “common knowledge” across the organization  Adds value to corporate, LOB, and product line strategies, to customer service improvements, and to marketing plans and execution  Instills discipline to management of ROI and other measurement processes and can drive clearer accountability for results that matter 11 © Latente, LLC