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Cracking the Code: Capture, Analysis and Utilization of Customer Information

Originally published June 23, 2009

In most organizations, customer information resides in multiple data marts, is utilized by multiple departments and is captured through multiple channels. Across numerous industries inclusive of both B2C and B2B models, customer data is analyzed and applied primarily for operational and/or strategic decision support. In short, it is all about revenues and customers.

Visibility and Usability Pose Challenges

Previous quantitative research performed by Hypatia revealed that use of timely, complete and accurate information leads to improved customer service levels, reduced operational costs, increased revenues and higher customer satisfaction and retention rates. In short, it’s all about revenues and customers – market share growth and enhanced retention rates. In fact, use of marketing science and information analysis services has moved beyond a competitive advantage for companies that seek to grow aggressively. It has become necessary to stay in the game. Leading companies consistently focus on retaining customers and growing revenues through the use of customer data for the following business functions:
  • Customer service and support: Operational (64%)

  • Corporate planning: Strategic (56%)

  • Product design: Strategic (48%)

  • Business development / sales: Operational (36%)

  • Marketing: Operational (20%)
Gaining customer visibility across all channels, trading partners, distributors, suppliers, end users and stakeholders with the goal of gleaning customer insight is a top priority for organizations. In B2C industries such as telecom, retail and financial services, companies struggle to understand and respond to their best customers within a multi-channel environment. The leveraging of customer information requires visibility across purchasing channels, products and customer value metrics as well as demographic information, transactional history and lifestyle stages. According to a line-of-business leader interviewed, “Modern business has to exploit customer data to grow, run and to expand.”

In today’s highly competitive global economy, knowledge of consumer and business behavior, socioeconomic, lifestyle and/or demographic information can be transformed through information analysis (known as decision analytics, marketing science or customer analytics in North America) into actionable insight. It is this insight that provides key decision-making support to companies that seek to enhance profitability and/or gain a competitive business advantage.

Sources of Business Information

By virtue of federal tax and state tax laws and financial reporting regulations, business or professional license application and vehicle registrations, numerous public and proprietary data marts capture information on businesses in the United States. Moreover, credit history, incorporation documents, business transactions between partners, suppliers and customers is both taxable and, thus, traceable. Many of the information analysis and services providers also rely on subscriptions to professional and industry-specific publications, online business purchases (e.g., office furniture or computers purchased on corporate accounts), legal filings or complaints to reporting agencies such as the Better Business Bureau.

Business to business industries such as telecommunications, software, manufacturing, professional services (law, accounting and advertising agencies), retail office suppliers, financial services and insurance rely on this type of data to ensure company contact records are up to date, companies are credit-worthy, and that service and transaction histories are accurate. Typically, B2B information analysis services are utilized by organizations that seek to optimize their investments in business development and marketing initiatives.

Sources of Consumer Information

Similar to business information, consumer information is sourced through multiple channels, consumer touch-points, proprietary and public information. Moreover, consumers are very aware that industry is tracking them at a granular level – by brand preference, warranty card registrations, product and service transactions, online behavior, demographic information and lifestyle stage. In fact, customers expect that information gathered will be used to personalize the next interaction or communication they receive from businesses from whom they regularly purchase. At a high level, Figure 1 illustrates the most common avenues used to capture information.

 
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Figure 1: Sources of Consumer Information
Source: ©2009 Hypatia Research, LLC

To create an operational foundation for data analysis and decision support, leading organizations most often take one of three approaches in capturing, analyzing and utilizing consumer information:
  1. Self-Reliant: Create an internal center of excellence comprised of statisticians, analysts and database marketing experts for decision analytics services. Partner with the internal IT department to develop a cohesive customer data management process through utilization of a robust data warehouse and business intelligence platform (inclusive of ETL, data and text mining, data modeling and predictive analytics capabilities) in addition to select marketing automation, web analytics, customer relationship management, data integration and quality tools.

  2. Source Expertise: Partner with one or more providers of information services for flexible, on-demand expertise.

  3. Hybrid Approach: Utilize in-house expertise combined with outsourced information services on a flexible per project basis, annual retainer or subscription model.
Case in point: Large office supply retailer Staples utilizes a hybrid approach to capturing, managing and applying marketing science techniques and services. An internal database marketing group comprised of 12 data modelers, analysts, statisticians, project managers, and marketing operations staff is accountable to help boost results by providing specific models (e.g., customer value, retention, acquisition or loyalty) to the direct marketing, merchandising, corporate strategy, catalog, online and SOHO business units. Additionally, they source consumer data from Acxiom, business data from D&B, and data enhancement, lifestyle cluster modeling and scoring services from Experian’s marketing services group.

Challenged by information overload, Staples explored a phased approach to executing a “single view of the customer initiative.” Designed to integrate and standardize the volumes of multichannel customer, product and transactional information residing in more than 5 unsynchronized internal databases, this retailer struggled to understand its customer base through in-house efforts at segmentation, profiling and model creation. Sourcing information and analysis services from multiple third-party vendors allowed this retailer to maintain control over proprietary customer information while enhancing their knowledge of customers.

Current Vendor Landscape: Major Players

In today’s highly competitive global economy, knowledge of consumer and business behavior, socioeconomic, lifestyle and/or demographic information can be transformed through information analysis into actionable insight. It is this insight that provides key decision-making support to companies that seek to enhance profitability and/or gain a competitive business advantage.

Customer-centric organizations that strive to deliver anything, anytime, anywhere to their own customers now demand this same granularity and knowledge from information and decision analytics vendors that service them. Scores of companies now offer these services – but major players primarily continue to serve mid-market to larger enterprises – the majority of these with product categories such as: consumer goods, food and beverage, retail, banking, travel, hospitality and entertainment, insurance, healthcare, pharmaceutical, telecommunications/media and automotive.

Among major players specifically, analytical database licensing, syndicated and custom research is a differentiating value-added product created from repurposing data from within a unique domain or product category. Organizations that invest in selective monetization of this value-added information – often repackaged and priced via a subscription model, annual license, or custom research – show a greater profit margin for repurposed assets than for revenues realized through consulting work, list enhancement, database marketing and infrastructure services. This is a direct result of lower labor costs associated with adding value to information assets already owned. In addition, several vendors have taken an innovative approach by offering consumer-oriented products using existing business information assets.

Alternatively, Information Resources, Inc. (IRI), Nielsen, Acxiom and IMS Health generate revenues by providing consumer information (demographic, transactional and market-basket) to the companies from whom these consumers purchased products. For example, a super chain grocery such as Jewel, Albertson or Kroger will sell Dannon yogurt in-store. Point of sale transactional information such as what other items were purchased most often along with Dannon brand of yogurt during a trade promotion/coupon offering would yield valuable insight into what triggers influence yogurt purchasers. How often and in what quantities do they stock up on yogurt (weekly or monthly)? Is price, day of the week or number of shopping trips monthly an indicator of shopping habits? What stocking, merchandising or pricing decisions can be made based on this information? Vendors such as IRI partner with POS device manufacturers to capture, analyze and sell this insight back to the grocery stores. Nielson captures television viewership and monetizes this information by selling it back to the entertainment companies that produce the shows and to advertising firms that create ads bought by the entertainment companies.

Conclusion

Scores of companies now offer these services – but major players continue to serve mid-market to larger enterprises primarily, the majority of these with product categories such as: consumer goods, food and beverage, retail, banking, travel, hospitality and entertainment, insurance, healthcare, pharmaceutical, telecommunications, media, and automotive.

Note: All content excerpted from “Decision Science & Customer Analytics: Competitive Advantage or Necessary to Compete?” ©2009 Hypatia Research, LLC.


  • Leslie AmentLeslie Ament

    Leslie Ament, Senior Vice President and Principal Analyst at Hypatia Research Group is a customer intelligence management thought-leader and industry analyst who focuses on the business value of technology in regards to how organizations capture, manage, analyze and apply actionable customer insight to improve customer management techniques, reduce operating expenses and to accelerate corporate growth. Her research and advisory services include: Customer Analytics & Interaction, Advanced Analytics, Business Intelligence and Big Data Analytics, Social Media Intelligence/Text Analytics, CRM, Digital Marketing Automation, Customer Data Management/Data Quality and Governance, Risk & Compliance.

    Editor's Note: More articles and resources are available in Leslie Ament's BeyeNETWORK Expert Channel on Customer Analytics & Insight. Be sure to visit today!

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Posted June 23, 2009 by Dale Paulson allegianceresearch@gmail.com

Thank you for this very comprehensive article. You mentioned consumers are being tracked at a granular level – by brand preference, warranty card registrations, product and service transactions, online behavior, demographic information and lifestyle stage.

There is one other approach that I developed called "Context-Driven Qualitative Research." I believe that this is a game changer because it tracks consumer behavior in context. This allows the consumer to explain themselves in greater detail that ever before. I thought this approach should be added to your detailed list of information sources. You can learn more by visiting my blog at http://beyondfocusgroups.blogspot.com.

Thanks, Dale

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