CUSTOMER ANALYTICS: Understanding Customers
What
is customer analytics?
Customer
analytics
is a process by which data from customer behavior is used to help make key
business decisions via market segmentation and predictive analytics. Customer analytics help
to turn data into something which could be really used. It helps in finding out
the hidden value in an organizations data. It also gives the organization the customer insight necessary to deliver offers that are anticipated,
relevant and timely.
Why
customer analytics is necessary?
In today’s era customers are more
empowered and connected than ever. Customers have access to information
anywhere, anytime. They can easily get information on different things like-
what to buy, what offers are available, etc. So, if an organization has a
deeper knowledge about customer’s behavior, his buying habits and preferences,
it can more accurately predict what he will be buying in near future. This helps
in providing relevant offers which attracts customers.
So, the top three reasons for why customer analytics is necessary are:
·
1. Need to increase customer loyalty/retention.
1. Need to increase customer loyalty/retention.
· 2. Need
to increase profitability.
· 3.
Need
to predict what customer’s desire for new product.
Data Mining
There are two types of data mining used
in customer analytics:
·
Predictive
models:
These models use previous customer interactions to predict the future events.
By taking everything into account like, credit card purchases, magazines subscriptions,
web events a customer’s profile can be created which can be used to plan
marketing.
· Segmentation
technique:
It places the customers with similar behaviors and attributes into distinct
groups. According to an article by Jill Griffin for Cisco Systems, traditional
segmentation focuses on identifying customer groups based on demographics and
attributes such as attitude and psychological profiles. Value-based
segmentation, on the other hand, looks at groups of customers in terms of the
revenue they generate and the costs of establishing and maintaining
relationships with them. Segmentation helps a company to identify a particular
group of customers easily.
Difficulties in managing Customer Analytics
In the "State of Customer Analytics
2012" report, Forrester customer intelligence analyst Srividya Sridharan
concludes that lack of data management, integration, and quality are the
biggest inhibitors to making better use of customer analytics. A full 54
percent of companies surveyed have difficulty managing and integrating data
from the many varied sources, while 50 percent are concerned about consistent
data quality.
Companies also grapple with assembling
the right type of analytics professionals, communicating the results of the
analysis to relevant colleagues, performing real-time analytics and making
insights available during customer interactions, protecting data and addressing
privacy concerns, and keeping pace with the velocity of data generation.
Present and Future of Customer Analytics:
According to the report, predictive
analytics as a growing trend, with 40 percent of firms claiming to use it.
Conversely, 70 percent have been using descriptive analytics and business
intelligence reporting for more than 10 years. By continuing to improve
customer prediction techniques it will become a necessity rather than a
convenient commodity for businesses to use customer analytics.[5]
At present customer analytics is vastly
used by sectors like retail, finance, health-care etc. May be in future we can
see its application in political races, jury selection, and developing clinical
trial communities.
References:
www.sas.com/software/customer-intelligence/customer-analytics.html http://www.marketingpower.com/ResourceLibrary/Documents/Content%20Partner%20Documents/Aberdeen%20Research/CustomerAnalytics-IM-10NSP.pdf
http://public.dhe.ibm.com/common/ssi/ecm/en/ytl03120usen/YTL03120USEN.PDF
http://en.wikipedia.org/wiki/Customer_analytics
[5] http://www.destinationcrm.com/Articles/Columns-Departments/Insight/Companies-Struggle-to-Manage-Customer-Analytics-85661.aspx
www.sas.com/software/customer-intelligence/customer-analytics.html http://www.marketingpower.com/ResourceLibrary/Documents/Content%20Partner%20Documents/Aberdeen%20Research/CustomerAnalytics-IM-10NSP.pdf
http://public.dhe.ibm.com/common/ssi/ecm/en/ytl03120usen/YTL03120USEN.PDF
http://en.wikipedia.org/wiki/Customer_analytics
[5] http://www.destinationcrm.com/Articles/Columns-Departments/Insight/Companies-Struggle-to-Manage-Customer-Analytics-85661.aspx
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