Creating Value From Insights Into Customer Data
I have been writing recently about the requirement for data to be more strategically linked to value creation and how the customer experience (CX) is designed. My most recent articles have focused on a McKinsey research paper that highlights three key areas that executives need to understand:
- Internet of Things; what data is being captured? What is possible to capture? Are you capturing information that can be used to shape insight?
- Capturing value; how does your business define value? What insights do you want to find from the data you have? Can you see, or define, a path from the raw data to business intelligence?
- Insights Value Chain; defining the complete set of requirements that lead from the capture of the data to the creation of intelligence. What physical attributes, properties, systems, or skills are needed for you to make this work in your business?
In this article I want to focus on capturing value. Many company executives believe they have a need for Big Data or improved data analytics and yet they are often just responding to business journals talking about business trends. Data analytics can play an important role in improving the customer experience, but you do require a vision for how you might benefit from the data first.
The main advantage you can get from an improved use of data is insight into customer behavior and therefore the ability to loop back and improve the customer experience – clearly if you understand their behavior better you can improve your service. But it is important to also analyze your customer journey and ensure that at every interaction you are actually capturing data that can then be analyzed. An example that is easy to visualize is a retail customer browsing an online store. You don’t just capture information on what the customer purchases, you should be also tracking their browsing behavior; where did they linger before moving on? Which products do they immediately ignore?
The benefit of having this data and being able to analyze it can influence the customer experience and even the product or service itself. Here are my thoughts on ten different areas where you might want to explore an improved use of customer data to create more insights:
- Fraud prevention; with data available on genuine customer behavior it is easier to flag up genuinely unusual behavior as potential fraud, rather than relying on very rigid or fixed rules – such as the customer is not in their home country.
- Make the customer’s life easier; by knowing more about what they like you can make their path to the product easier and more streamlined.
- Increased loyalty; an easier experience with better personalization leads to increased customer loyalty.
- Automated feedback from social networks; instead of relying on surveys you can use a Big Data approach to constantly monitor anyone saying anything about your brand or products;
- Personalization; ensure that your interactions are shaped by knowledge of the purchase history and former behavior of this customer.
- Recommendations; creating new sales opportunities by recommending additional relevant items;
- Improve retention; reducing churn is important for many subscription businesses and an ability to predict those customers who may soon leave allows for interventions.
- Test new products; a detailed knowledge of your customers allows you to choose ideal beta testers for new products.
- Improve the customer journey; a combination of streamlining the path to purchase and offering relevant products and advice creates an overall improved customer journey and experience.
- Predict customer behavior; the ability to predict customer behavior based on data is extremely powerful because it allows you to constantly improve the customer journey based on what the customer is likely to do.
This is just my brief list of ten observations on the advantages of taking data collection and analysis seriously – you may be able to add more. I don’t think that any organization today with a serious intention to improve their customer experience can afford to not be taking a data-driven approach. Not only can you use the insights created to improve the customer experience, you can also retain more customers and constantly improve your products and services. No executive can afford to not be exploring what the data says about his or her customers today.
Let me know what you think about the importance of data analytics by leaving a comment here or get in touch via my LinkedIn profile.
Photo by Marco Magrini licensed under Creative Commons.