Beyond Analysis: Big data touchpaper Dec 2012
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Big Data and customer data can help businesses better understand customers and personalize engagement. To start, businesses should focus on one area of data and see quick results. For example, one business used customer data to design loyalty campaigns with 13% redemption rates, winning back dormant customers. The future is intelligent engagement through listening to what customers think and do.
Beyond Analysis: Big data touchpaper Dec 2012
- 1. Big Data Putting you back in control of your customer relationships
- 2. Content Are you a Big Data believer? Page 3 Data, data everywhere Page 3 New data sources are appearing all the time Page 5 So, where to start? Page 6 Short term rewards reap long term gain Page 7 Where to begin your Big Data journey? Page 7 To data infinity … and beyond Page 8 About Paul Hinds Page 9
- 3. Are you a Big Data believer? Do you remember when CRM was the next big thing? It was supposed to deliver ultimate customer engagement. In reality, it was all about software; and very expensive software at that. Sure, these expensive CRM software solutions did deliver a certain amount of segmentation, but they generally did not get to the heart of the issue – that the data itself was generally not very good in terms of quality. So what about Big Data? Is it the new CRM; the next Dot-com; the big brother of Web 2.0? If Google search data is anything to go by, maybe not: What the Big Data debate has done is ensured that Some organisations have been doing this for years, data itself has caught up with the aspiration of what but Big Data is all about doing it better and using businesses would like to do with it. Technology is data to positively impact the customer. now truly an enabler to achieve this, both in the ‘back office’ environment (which is increasingly in Data, data everywhere the Cloud) and direct customer touchpoints, such as mobile Apps. We are closer than ever to having truly The key challenges are the explosion of data and personalised customer engagement and how to collect it. The rapid emergence of new relationships. payment methods, such as mobile wallets, together with digital technologies, have revolutionised a Big Data, however, is nothing new. It’s simply about business’s relationship with its customers. Long joining the dots of all the relevant data sources. gone are the days when loyalty cards were the only Whether it is customer data, local market data or way to identify and collect customer data. communications data, every company out there has Increasingly retailers are using their online customer at least one data source at its fingertips. base as the equivalent of a loyalty scheme – they’re Page 3
- 4. using the same data and channels without the need huge increase in direct customer interaction and to maintain a separate currency for loyalty. feedback. For those who have been slow to embrace the brave new online world, the rise in Today, with multiple ways to identify a customer social networks has been a rude awakening. Many across a growing number of channels, it’s all about are now being forced to re-think their online Big Data; multiple data sources – both internal and strategies. external – being brought together to put the customer at the heart of business strategy. Amazon is something of a poster child for Big Data. They have, in essence, a very simple data model. Businesses everywhere are under pressure to better They don’t have stores and they don’t have a loyalty understand, engage with and respond to their scheme per-se. Their version of Big Data uses the customers. This requires data, and lots of it. The huge volumes of customer and payment data that good news is that there is so much wonderful they have at their fingertips to personalise the online behavioural data out there, ready and waiting to be shopping experience and offer products that are put to good use. The bad news is that although the related to what their data tells them about the opportunities for harnessing this data are pretty lifestyles and preferences of their customers. much infinite, the issues are also increasingly complex; particularly as the journey from need or Along with ebay they have set the standard for desire through to purchase becomes less providing a forum for sharing customer feedback on predictable than ever before. Analysing your data products (and now partner retailers) and measuring and quickly acting on the resulting insight is, customer satisfaction. therefore, crucial. Just knowing what a customer bought, whether a product or a service, is no longer They grow their data asset still further by prompting enough; businesses need to understand long term customers to share more information and confirm consumer behaviour, what customers are doing the intelligent assumptions that they make based on before or after they make their purchase, and what statistical models. Just glancing at my one ‘Amazon their interests and aspirations are. Betterizer’ page shows how well they know me from mining their version of Big Data - they know I am a Digital channels have added a whole new dimension parent, where I have been on holiday and target to the data debate, with new streams of ‘live’ data incremental spend by offering further categories for coming direct to a company from their customers. me to shop in: The advent of social media in particular has led to a Page 4
- 5. New data sources are appearing all the time SpendographicsTM which we’ve developed in partnership with Visa Europe, helps businesses to In addition to all the data now being generated understand their customers on the basis that ‘they through digital touchpoints, new commercial data are what, where, when and how they spend’ – a sources are also available which bring a third monumental departure from the traditional and, dimension to customer insight. Previously, some would say, outdated geo-demographic profiles businesses have been able to use their data to see generally used to drive customer segmentations. which customers are shopping through their stores and channels, and which of their products they are This new segmentation tool improves the resolution buying. at which consumer behaviour can be analysed and works at a market, brand and sector level. A recurring challenge is how to accurately determine Individuals are grouped into 10 different “spender what their customers are doing when they’re not modes”, which comprise people with similar shopping with them. Which of their competitors are characteristics and behaviours who can be also on their shopping list? How frequently and how communicated with in a consistent and targeted much are they spending with other brands? What manner. The segments have been given a name, does this behaviour say about their customers in tagline and pen portrait to help understand their terms of preferences, lifestage, purchasing power spend behaviour and how to engage with them. This and brand loyalty? insight can be used to improve business performance at both strategic and tactical level. URBAN SPENDERS WORK HARD, PLAY HARDER CARD USE: 5 TIMES A WEEK SPEND BEHAVIOUR SALES METRICS CARD TYPE ATV £26 CREDIT 3% AV. AV. 97% ANNUAL SPC £6,908 DEBIT AV. AV. INT’L SPEND 2% AV. COMMERCIAL 1% AV. POS CHANNELS 64% 26% 10% 59%AV. 22%AV. 19%AV. 3% 4% CARDS - 1.9M OF 68M SPEND - £12.8B OF £335B FACE TO FACE ONLINE MAIL / TELE ORDER Urban spenders are very active, using their card a large amount (especially in the SHOPPING HABITS TOP THREE SECTORS BY SPEND afternoon/evening) for both cash withdrawals and card transactions across a wide range of merchants. Being commuter-types, they spend a significant proportion of their 8%AV. 18%AV. 3%AV. budget on TFL and rail tickets. Their social agenda is packed and these spenders often frequent bars, restaurants and clothes shops. They enjoy a high quality of life and are therefore likely to go to a gym or health-club and although they spend less than others in supermarkets (possibly because they like to eat out), when they do they will visit the high-end grocers. They are also active online and use their cards with online retailers ENTERTAINMENT SUPERMARKET TRANSPORT and budget airlines. 15% 14% 14% LIFESTYLE INDICATORS TOP THREE SECTORS DIFFERENTIALS MORE LIKELY TO... LESS LIKELY TO... COMPARED TO THE UK TOTAL, THESE CARDHOLDERS ARE MORE LIKELY TO SPEND MORE IN THE AREAS // WHERE CAN YOU FIND THEM BUDGET HOME SOCIAL YOUTH MATURE 8% 6% 3% IMPROVEMENTS ORIENTED MARKET 15% 8% 14% ENTERTAINMENT CLOTHING TRANSPORT 24* 8* 6* HAVE A CAR HAVE A PET HAVE KIDS GYM MEMBERSHIP CITY SPENDERS * NUMBER OF DIFFERENT BRANDS WITHIN THIS SECTOR SPEND BEHAVIOUR SHOPPING HABITS SALES METRICS CARD TYPE 8%AV. 18%AV. 3%AV. ATV £26 CREDIT 3% AV. AV. 97% ANNUAL SPC £6,908 DEBIT AV. AV. INT’L SPEND 2% ENTERTAINMENT SUPERMARKET TRANSPORT AV. COMMERCIAL 1% 15% 14% 14% AV. Page 5
- 6. Collecting, interpreting and acting effectively on your So, where to start? customer data can be a real differentiator in terms of developing positive customer relationships and It’s not as hard as some are making out to make Big loyalty. It can provide the best possible competitive Data deliver a quick return for your business. The advantage; it is your chance to make sure that you mistake many companies make is trying to bring all put their needs at the heart of your decisions around of it together, all at once. product, price, place, promotion and people (yes, that old marketing classic). Take the time to understand what your version of Big Data needs to look like for your company and your customers; then pick one area of focus and put your energy and resources into that. From this... PRODUCT DATA www. Brand Style type Home etc. Purchases Reviews Searches Warehouse Store COMMUNICATIONS LOCAL MARKET DATA AND PROMOTIONS Geography housing Online Customer behaviour types competitors Financial Sales Customers Customer Care CUSTOMER DATA www. Voice of the Payment Cards Basket and trolley PRODUCT DATA Customer data overtime Brand Style type Home etc. Purchases Reviews Searches Service and product. Feedback and opinions Feedback, reviews price comparison Focus group Loyalty Cards E-mail, Address, Name To this... Warehouse LOCAL MARKET DATA Geography housing Store COMMUNICATIONS AND PROMOTIONS Online Customer behaviour types competitors PRODUCT DATA www. Brand Style type Understand what your version of Home etc. Financial Sales Purchases Reviews Searches Customers Big Data needs to look like for your Warehouse LOCAL MARKET DATA Geography housing Store COMMUNICATIONS AND PROMOTIONS Online Customer behaviour business and your customers. types competitors Customer Care Financial Sales Voice of the CUSTOMER DATA Payment Cards Customer Customers Basket and trolley data overtime Customer Care Voice of the CUSTOMER DATA Payment Cards Basket and trolley Service and product. Customer data overtime Feedback and opinions Focus group Loyalty Cards Feedback, reviews Service and product. Feedback and opinions E-mail, Address, Name Feedback, reviews price comparison price comparison Focus group Loyalty Cards E-mail, Address, Name Page 6
- 7. Short term rewards reap long term gain These offers were delivered to customers in 32 different campaigns over 8 weeks. Although true customer loyalty is about long term retention and engagement, in today’s challenging The results have been astonishing: an overall economic environment retailers need to act fast to redemption rate of 13% across all campaigns, with entice new customers and win back the lapsed. some cells getting as high as 54%. We won back 3% Customers are less and less likely to wait around for of customer who had not visited a store for 6 their reward; they want instant recognition and months. And we identified the categories with the gratification. The trick for retailers is to deliver this best opportunity for retention. loyalty kick without devaluing their brand offering. We all know of high profile retailers that are all about Interestingly, new media channels were a key discounts and vouchers; savvy customers will rarely component part of the success of these campaigns, buy from them at full price when you can search including the use of optimised barcodes for SMS. online for a 20% off code. And it doesn’t end there; the results of these data-led tests have formed the foundation for the For example, Beyond Analysis is working with a business case to apply the benefits of insight to all leading South African retailer to use their loyalty areas of the business, from promotions to store scheme differently in order to: merchandising. - Drive more spend and visits from their top This is the power of data in action. shoppers - Win back dormant and lapsed customers, and Where to begin your Big Data journey? - Ensure customer retention in key categories and locations We used customer behavioural data to construct campaigns which were both relevant to customers and met the client’s strategic objectives. Using 12 months’ worth of data, we undertook a customer behaviour analysis, identified core target segments and built tailored offers to meet their needs. Here’s the Beyond Analysis 6 point plan for getting started: 1. Be clear on your business objectives, and those of your customers 2. Understand what data you have right now (and what you don’t) 3. Align 1 & 2 and then create your own Big Data plan 4. This should NOT be a 3 year, all-singing all-dancing plan; plan in detail for the first 12 months, then in high level for years 2 and 3 5. Only include actions that can be tested and measured – so you can learn and develop proof points 6. Be committed to your data; if you’re in it for the long haul, so will be your customers Page 7
- 8. To data infinity … and beyond The future is about intelligent customer engagement. It’s about marketing to and engaging with the individual. To achieve that, we need to know what customers think, and to understand what they do and why. In order to know all that, we need to listen. In today’s challenging and competitive economic climate, we must reassess whose views matter. Our employees, partners and customers could just be the best people to tell us how to make our business succeed. Do it right and do it consistently, and loyalty and engagement will be the happy result. Page 8
- 9. About Paul Hinds Since graduation Paul has spent the majority of his professional life working in data insight consultancy and customer strategy. His core skills centre upon strategy development, programme design and stakeholder engagement with the focus on delivering actionable insight that make a tangible difference to the organisations with which he works. Paul is passionate about ensuring Beyond Analysis does everything possible to enhance client understanding of their customers and maximise the value of their data asset to provide relevant information that has a meaningful commercial impact. In his spare time Paul can be found persuading his 3 year old son Lucas that Liverpool FC are the team he should be supporting and serving charred meat at family barbeques, whatever the weather. Page 9
- 10. Author Paul Hinds E-mail paul.hinds@beyondanalysis.net London office 0208 875 7099 Please contact Paul Hinds for further information about the paper and for enquiries regarding how Beyond Analysis can help your business. About Beyond Analysis Beyond Analysis is a leading customer insight and strategy business. We believe that the customer should be at the heart of everything we and our clients do. And we’re passionate about using the power of data to achieve this: finding it; collating it; interpreting it; unlocking its value. We work with some of the world’s largest consumer brands to harness the power of their data and adopt a customer-led approach to their decision making. We bring together multiple data sources to interpret consumer trends and give our clients a clear line of sight to help them grow their business. We have offices in London, Sydney, Singapore and Denver. Beyond Analysis Limited. Registered Office: Unit 10 - 12, 116 Putney Bridge Road, London SW15 2NQ Registered in England. RGN: 06059028 T: +44 (0)20 8875 7020 W: www.beyondanalysis.net F: +44 (0)20 8875 7099 Page 10
- 11. Beyond Analysis 2012 Thought leadership series