Now Why’d They Do That?
Advanced analytics tools are a priority for companies today. Because they show companies where to trim, where to expand and where to change ingrained business processes for maximum profitability, they drive real revenue growth. Most companies have been focused on tools providing operational reports of what already happened, but today it is becoming increasingly important to move beyond snapshots of past data to understand why it happened.
Focusing on Patterns
Traditional business intelligence reports allow marketing professionals to get a bird’s eye view of key performance indicators, but few are designed to directly help managers aggressively impact their business. They only tell companies the “what” about their data and not the “how, why and when.”
Assume you are a marketing manager at a large retailer. It’s Monday morning and you just received your weekly sales reports. Congratulations, the items on promotion last week were purchased 23,521 times, an increase of 10% compared to the prior week. You approve more funding for a similar but larger promotion.
What your typical reports fail to tell you, however, is that last week your customers came to your stores to purchase only the discounted items advertised in the promotion and then left. In reality, your promotion was a flop: It didn’t drive purchases of related full-price items, and actually reduced your margins.
New analytics tools tap the power of sophisticated, pattern-based modeling — customer behavior analytics — to help surface and explain complex patterns across millions of records and any customer-facing data (CRM, POS, transactional, customer behavior, completed purchases, Web traffic, demographic trends, and so on).
In the Clouds
Cloud computing takes advantage of Internet infrastructure to deliver products via the software-as-a-service, or SaaS, model. Salesforce.com paved the way, but cloud computing can improve the performance of solutions while also dramatically reducing start-up time and cost compared to existing software tools.
Cloud computing also allows companies to cost-effectively ramp up and down their use of data analytics software based on seasonal or other needs — whether it is for a holiday transaction surge, Monday morning reports, next year’s budget planning, or a new strategic study — without having to invest heavily in software and servers. Just like electricity, computing has become a utility where you pay for what you use and have nearly unlimited availability.
For companies to thrive during this economic downturn, they need fast, inexpensive, easy-to-use data analytics tools that empower them to make strategic marketing decisions.
Organizations can use customer behavior analytics, with its nearly instant ramp-up, to spot problems in their product mix and business processes, identify where new customers emerge and why existing ones are leaving, what they want to buy, how, and what they will pay.
By combining behavior analytics with cloud computing, anyone in a company can get access to analysis via simple-to-use “train of thought” analyses and easy-to-read reports.
Where to Begin?
- Just get the data
Identify the data that you’d like to analyze — transactional, clickstream, CRM, whatever — and prepare the extraction. Your data warehouse is already in place and is probably the ideal source of data.
- Involve the business managers from the start
For any project, it is important to get the frontline business managers involved. But even better is to let them directly interact with the mounds of customer data already captured. Once the customer behavior analytics program is launched, make sure to disseminate key analysis results to the right people — those who are going to make business decisions based on the findings.
- Start with a straightforward project
For companies selling to consumers, a “market basket” project is usually a simple yet valuable analysis. By analyzing the affinities among items or services purchased by the same person — whether the items are purchased online, in a store, over the phone or a combination — you can get an accurate picture of which products sell together and how promotions impact margins, but also which products are bought by whom, and if a purchase drives any follow-on purchases. For a business-to-business company, a good place to start is lead analysis. Customer behavior analytics allow B-to-B companies to spot the leads that are closing the fastest and see which offers sent to which customers at which time generated the highest close rates. Later, you can get more sophisticated by analyzing the effectiveness of individual marketing campaigns, close rates in different regions and industries, etc.
Brian Kelly is the CEO of Quantivo.
