For many businesses, customers are mere anonymous cogs in the sales machine. So how can firms better use data to see each customer as an individual and understand what they truly desire?
Classic British sitcom ‘Open All Hours’ starred Ronnie Barker as Arkwright, a miserly shopkeeper, and his never-ending ploys to sell an eclectic range of products to his customers. Arkwright may have been a miserable old curmudgeon, but he knew his customers. He knew who they were, which ones were valuable, their habits, and what he could sell them. He was able to intuitively use what we would now call customer intelligence to sell everything from fig rolls to inspirational toilet paper.
In many ways the series was a fond farewell to the world of grocers and their traditional customer service. By the late 70s the advent of mass retail and later e-retailing turned the customer into a cog in the sales machine; faceless, anonymous and unloved. Yet most businesses aspire to do for their thousands of customers what Arkwright was doing for his few. So how do you find out about your customers and what they like? It all begins with data.
Sources of data
There are many potential sources of data. Market research provides some useful insights but it tends to be costly, slow, appeals to few customers, and is open to that lovely euphemism, ‘respondent error’. Empirical demographic data tells us much - how old the customer is, their gender, if they have children - but on its own leaves you guessing what they really need. However, every time your customers interact with you they leave a trace which, if examined, can reveal secrets about them and their true attitudes and preferences.
As well as the obvious places to start, like the sales ledger, valuable insight may be found in any of the systems that support your business processes from customer complaints to web browsing, quotations, returns or payment. Most of this data sits on its own in your systems, unconnected and unanalysed. If you can bring this data together and analyse it then your business will become more like Arkwright, and make those connections that tell you how to offload those surplus fig rolls on that middle-aged housewife who only popped in for polish and some strong bleach!
The uses of analytical customer intelligence stretch way beyond just being used to promote products. By asking the right questions, and making the right connections in your data, these techniques can impact the complete
customer experience. For example, a classified advertising publication which tied together data on the sales ledger with data on artwork amendments, discovered the tipping point where customers became so unhappy with the service that they cancelled. With this insight they were able to identify the right moment to introduce remedial action and limit the numbers of cancellations.
Addressing a range of challenges
By making these connections between the systems businesses are able to address a whole range of challenges including:
- Mobile phone companies that identify the best person in a group to influence their friends to take a new service.
- Banks that create cost and profitability models of individual customers to adjust their retention and acquisition strategies.
- Gaming companies that use changes in a customer’s regular betting pattern to tell if a they are about to churn.
- Charities that predict if a customer will donate more when their letter features the polar bear or the snow leopard.
- Hotels that offer the just enough discount to encourage a customer to make a booking when occupancy levels are low.
Over the last 20 years, information technology has delivered enormous benefits to businesses. Today, enterprise resource planning systems allow business to automate, connect, and control internal business processes. Customer relationship management systems are used to record and manage customer contact so operatives have access to the complete customer story at their finger tips. Business intelligence systems allow us to extract and summarise the data contained in these systems quickly and easily. All these developments have provided huge benefits to businesses, but they have been largely inward facing, focused on reducing costs and improving effectiveness of operations.
Stock management, cash control and timely deliveries were all important to Arkwright in running his store. However the most important lesson we can learn from him, is the value of the knowledge he had about his customers and how he could use it to make their small grocery store more successful. Analytical customer intelligence allows larger businesses to turn their gaze outward at their customers in ways never before possible. No mass retail operation will be able to produce the same familiarity and understanding that Arkwright had for his customers. With a bit of thought, some good data, and the right tools, a business can see each customer as an individual and understand what they truly like, dislike, need and desire.
Charles Randall is a customer intelligence expert at SAS UK.
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