In the simplest of definitions, analytics is all about maximizing probability.
In other words, how do you use the information around you to gain a better advantage?
For marketers, business analytics has become an easy way to measure and prove success, but also to support the decisions that drive campaigns, help anticipate customer actions and even guide the selection of messaging and content.
Yes, a scientific approach has become an absolute necessity for modern marketing.
Lest not scoff at the idea of cold, clinical data driving marketing decisions. Heck, it’s been proven that spending $1 on business analytics technology will yield almost $11 in return.
Using analytics to drive better customer experience unshackles the organization from ignorance and maximizes the probabilities for increased customer loyalty, better up/cross-sell and sales conversion.
In fact, a new whitepaper from IBM’s Institute of Business Value, "Customer Analytics Pays Off," has identified four stages of customer analytics strategies.
In what stage is your organization?
Stage One – Cost Reduction
These organizations focus their analytics capability to gain insight on cost reduction and not at consumer personalization.
Most marketing efforts focus on segmentation efficiency, such as increasing the conversion of a selected group of customers by reduction and removal of messages (for instance, avoiding delivery of identical catalogs to multiple household members), thus lowering the cost of communication.
These firms can increase customer retention by up to 9 percent, capture 2 percent more wallet share and convert an extra 3 percent of inbound contacts into a cross-sell event.
Stage Two – Sharing the Goods
To keep pace with the mobile generation, organizations within this second stage must have a clear customer analytics strategy that enables information sharing across any digital device and channel.
In fact, research shows that tri-channel buyers spent an average of two and a half times more than single-channel buyers.
The most sophisticated marketing organizations in this stage apply analytics for marketing event optimization, an approach that leverages analytics as a “horizontal control tower” to optimize the organization’s various direct marketing events over a given time period over multiple channels.
This better aligns marketing with customers’ needs – and varying personas – related to those devices/channels.
Stage Three – From Reaction to Action
This stage focused on information responsiveness.
These organizations are leveraging “raw” data as it streams customers’ social commentary and changing moods.
To avoid a veritable data deluge, these organizations focus on identifying the questions that – if answered – will impact their business the most.
This acts as a filter on data collection and helps an organization avoid the task of collecting all available information and then deciding what to do with it after the interminable wait to standardize and analyze it.
Companies able to perform real-time external data analysis combined with rules-based actions have experienced average conversion rates of 16.9 to 38.2 percent.
Stage Four – Next Best Action
This stage focuses on executing a strategy that enables information on demand.
This approach combines all the skills developed in earlier stages with in-depth segmentation approaches and leading-edge work in multichannel customer monitoring and real-time action recommendation (read: Decision Management).
Using predictive analytics (combined with business rules), organizations are able to engage with the customer throughout the buying cycle – from the point of needs identification through the exploration and discovery phase to the purchasing cycle.
Those companies able to apply real-time predictive analytics while executing a multichannel next-best action strategy had an average converted response rate of 24.1 to 64.3 percent.
· Understand the different stages and get a better handle of your organization’s analytics maturity by downloading the full "Customer Analytics Pays Off" white paper.
· Also, read the "Five Steps to Improving Business Performance through Customer Intimacy” white paper.
· Register for the “Customer Analytics Pays Off” webcast (Feb. 15 at 1:00 pm ET)