New Dimensions in Customer Analytics

Data-centric direct marketers have long anticipated the state of marketing today. That is, marketing has plunged into the “era of analytics” that Tom Davenport and Jeanne Harris foretold seven years ago in Competing on Analytics: The New Science of Winning.

“Modern marketing is entirely data-driven,” asserts Geoff Galat, VP of enterprise marketing management at IBM. “Having the ability to analyze all available data provides the only effective foundation for marketing efforts.” While there is no backing out of this analytical era, there are questions about what lies ahead. Customer data represents a fast-growing supply of potential knowledge, which can only be harvested with the right tools and talent. And click-through and conversion rates are trusty standards for marketers. But what lies ahead?

The answers point to several evolving dimensions of customer analytics capabilities. Galat cites “struggle metrics,” which help marketers understand why customers don’t convert. Cate Vanasse, senior marketing manager of customer success for Expedia’s corporate travel arm, Egencia, relies on video “view metrics” to help manage another crucial measure: salesperson time. Predictive and real-time customer analytics are also gaining traction. MasterCard monitors external loyalty program measures; Audrey Messer, director of analytics for FreshDirect, says that the online grocer has shifted from “what” and “how many” metrics (e.g., sales) to “who” and “why” measures (e.g., customer engagement).

Marketers exploring new dimensions of customer analytics say that while the measures are important, the enabling processes, tools, talent, organizational culture, and even mind-set are equally vital. Elevating a customer analytics capability to a higher level of performance requires much more than “hanging a banner on the lunchroom wall that says, ‘We’re Now Customer-Centric,’” says Peter Fader, codirector of Wharton Customer Analytics Initiative.

Here’s a look at what’s required, from the perspectives of FreshDirect, Egencia, and MasterCard.

FreshDirect: Shifting from sales to loyalty

In recent years New York–based online grocer FreshDirect’s marketing team has been busy adding senior talent, opening a new headquarters in the Bronx, venturing into new markets, and responding to natural disasters and occasional Internet snafus (see “FreshDirect’s Secret to Tantalizing Its Customers,” April 2013).

Today the company is busy venturing into new customer analytics dimensions, Messer says. She describes customer analytics as a “key component of our ability to interpret, understand, and reveal customer behavior; these insights help us to understand not just what makes customers similar, but more important, what makes customers different.” And that understanding helps the grocer customize and send relevant communication messages in the right channel at the right time.

Recent results are impressive. By focusing less on sales and product analytics, and more on loyalty curves and segmentation-related analytics, the company has increased its loyalty segment by 14% and overall customer engagement by 4.1% in the past 12 months, Messer reports. Achieving these results “requires the right marriage between culture and technology,” she says. FreshDirect uses SAS analytics for customer acquisition and retention.

The primary challenge FreshDirect encountered when shifting its measurement focus was that the new analyses generated more questions than answers. As far as problems go it wasn’t a bad one to contend with, according to Messer. “To us, it was a good sign of great work,” she says. “Our insights are thought-provoking; they generate discussions and debate among the teams.”

These discussions, Messer emphasizes, produced lessons that are just as valuable as the gains in loyalty and customer engagement. Messer and her team learned to:

  • Align before analyzing: They needed to clearly lay out the nature of the problem and the specific questions to be answered before beginning the analysis.
  • Avoid analysis paralysis: They learned to counter their tendency to wait for more data or more time before making a business decision. “We have to incorporate into the analytics the benefits and risks associated with the information we have today,” she says. “For example, if we were to wait until we have more data, do we expect the story to change? If so, why? Would the business be able to adjust to a change or does the business only have one shot at getting it right? How would this change impact the customers?”
  • Allow the data to drive the learnings: It can be difficult to resist the sway of engrained organizational beliefs about customer behavior, even when those beliefs are not supported by the data. Customer tastes and attitudes change, Messer adds, so it’s important to understand how the belief began and the degree to which current data supports—or doesn’t—the belief today.

These gleanings helped FreshDirect evaluate new customers’ early behaviors with greater accuracy, which in turn helps the company answer key questions, such as: Are new customers following the predicted path up the loyalty curve? If not, when and how is the best way to intervene? Is the predicted path the best predictive model, or does the model need to be refined based on new data?

These answers lead to the last (new) dimension to the analytics process that Messer identifies: sense of humor. “Sometimes customers do things that data can’t explain or capture by the data,” she adds. “And in cases such as this, we look to Clint Eastwood for guidance: ‘A man’s got to know his limitations.’”

Egencia: Corporate travel services sales take time

Corporate travel services represent a highly complex B2B sale, a factor that makes precious the time Egencia sales professionals have to identify, reach, and persuade the actual purchaser among a crowded field of decision-makers and influencers from corporate travel, HR, procurement, finance, and operations. “The ability to track how clients engage with our content is invaluable in spotting key indicators that could impact overall travel program health,” Egencia’s Vanasse says. Egencia uses video extensively to grab prospects’ attention; it uses Brainshark’s video presentations so it can track who, where, and how long analytics.

The manager who pulls the purse strings’ offer differs from the day-to-day owner of the relationship with Egencia. Even more challenging, the individual in the client or target company tasked with launching a new travel program may not understand the value of Egencia. “We’re all-hands-on-deck during the customer onboarding phase—sales, account management, implementations, and marketing—to ensure that the rollout is on track,” Vanasse says. Sharing information about Egencia’s travel services via Brainshark video is a key component of onboarding.

Viewership—who inside the prospect company is watching the content (and who isn’t)—represents a valuable signal of influence in the purchasing decision that the onboard team monitors. It’s also important to see where—embedded in emails, on their company site, or on Egencia’s site—they’re watching these videos. Once a prospect becomes a client, the key metrics tracked differ. For example, the onboarding team looks for retention-oriented metrics. So, when 81% of a customer company’s employees view a video explaining how to set up an individual traveler profile on Egencia’s site, Vanasse knows that it should place other instructional videos there, as well.

In terms of internally focused metrics, Egencia’s marketing team tracks productivity measures for itself and the sales team. The marketing team uses video content to prepare the sales team with a consistent message, via on-demand learning and development videos. These videos have saved Egencia’s marketing team hours of time it otherwise would have invested in responding to the sales team’s questions.

The company also created video content for prospects to replace the 60-minute in-person demos the sales team previously presented—and then frequently repeated as new decision-makers joined the buying process. The on-demand video provides a general overview of Egencia and can be easily shared with other decision-makers in the company. To date, this video has been viewed 984 times, which Vanasse says has saved sales the equivalent of 24 weeks of time. “It frees up our sales teams to tailor more deep-dive demos into the aspects that matter most to a specific prospect,” she says.

MasterCard: Customer acquisition hinges on personalization

MasterCard wants consumers to use its credit and debit cards more frequently. To achieve this objective, the financial services company must help the banks that issue the cards, as well as the merchants who accept them. A bank’s best customers typically are the focus of its loyalty and reward programs; customers who use their credit and debit cards the most reap the greatest payback from card-based loyalty programs.

But loyalty programs can be more popular than effective, judging by the metrics that MasterCard Global Head of Loyalty Solutions Nandan Mer monitors. He reports that the typical consumer is registered for seven to eight loyalty programs, but only active in half of those programs.

“The biggest obstacle today related to customer loyalty is relevance,” Mer says. To help its bank and merchant clients send relevant message to their customers amid this loyalty noise, Mer and his team added a new customer analytics dimension that produces a sharper signal: location. By matching merchant offers to issuers’ cardholders who are most likely to use them, MasterCard helped one merchant generate incremental revenues of 43% and a 7X return on advertising spend, Mer reports.

The trick was not only providing the customer analytics to personalize the merchant’s offers based on how cardholders spend, but also on where they make those purchases. “Customers who were geographically close to a location where served up these offers,” Mer explains. “The more a cardholder spent with a merchant, the more personalized their offer became—encouraging those customers to keep coming back and spending at our merchant partner’s store.”

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