How Big Data Analytics Can Dramatically Improve the Customer Experience.

James Creelman and Flora Lewin

By 2020, it is predicted that  the data universe will have reached 40 Zettabytes. To put into meaningful terms, if "707 trillion copies of the more than 2,000-page US Patient Protection and Affordable Care Act were stacked end-to-end and stretched from Earth to Pluto and back 16 times, that would equal about one Zettabyte. Now multiply by 40!! That’s a large volume of data and represents a 50-fold growth from the beginning of 2010.  However, despite the ever-increasing volume, studies find that less than 3% of useful data is analyzed.

Big Data Analytics

Improving from this small percentage will be increasingly aided through Big Data analytics – which provides the capabilities to analyze large volumes of data. Big Data can originate from anywhere, such as sensors designed to collect climate data, social networking sites, digital videos and im­ages, cell phone GPS signals, and sale transaction records, among others. Big Data analytics explores con­cealed patterns and unidentified connections and provides other valuable insights into the data.

 Customer Engagement

Consider how such insights can improve customer engagement as just one powerful example of how Big Data analytics can provide great value to an organization.

Think of retail organizations selling to consumers. Such organizations can get to know their customers better based on their past relationship with the retailer (e.g. sales habits, customer care history), alongside a variety of digital footprints left by customers online: conversations on social networks, visits to various sites, etc. These organizations can cross-reference information in real time with customers’ locations and inven­tory data at nearby shops. They can then send real-time recommendations to customers, offering them specific products at the nearest branch as they pass by. Walmart, as one example, sends personalized location-based coupons to your mobile phone based on such logic, enriched with additional data, such as the current weather (to ensure not to sell a barbecue grill when it rains).

KLM Case Example

As a further example, KLM Airlines identified passengers that were about to fly and tracked their behavior. Based on real-time infor­mation from check-in records or Foursquare, they were able to surprise some of these passengers, giving them a small gift at the airport: for example, an iTunes voucher for a passenger who tweeted that he just bought a new iPad.

Such actions demonstrated to customers that KLM puts effort into getting to know them and mak­ing them feel good. It made a great marketing buzz: surprising 28 passengers caused more than a million positive tweets from 88 countries within three weeks. Traditional advertisements with such spread would be considerably more expensive and less effective.

Creating New Customers

As an example of how Big Data can create new customers consider the work of Zest Finance, a company that calculates credit risk using Big Data technologies. By widening the set of parameters, compared to traditional risk algorithms, and combining machine learning techniques, Zest Finance has reached 40% better prediction scores than the best-in-class traditional tools. Using this technology, lender organizations can offer credit to customers that were never approached before. It opens new markets, making technology a real game changer.

Customer Measurement

Furthermore, Big Data analytics enables organizations to better measure customer-facing performance. As well as online surveys, customer satisfaction can be measured much more frequently and based on a wider population using sensors, web sentiment analysis and other approaches. Whereas companies used to analyze small samples of customers at a single point in time, now they can constantly keep a finger on the pulse of virtually all customer perceptions at any time: much more insight-rich than the relying purely on the conventional annual customer satisfaction survey!

Parting Words

Without question, excellence in advanced data analytics will be increasingly critical if organizations are to embed the agility required to really drive customer engagement and to fend off increasingly sophis­ticated and rapacious 21st century competitors. That said, in and of itself it is not enough. Analytics has to be supported by action. For example, software companies get a bad press for asking millions of users to report crashes but then failing to close the loop with those customers to fix the application.

Moreover, organizations must also not lose sight of the importance of inculcating a customer-centric culture. And this is about people and the quality of the human, as opposed to technology-driven, interaction. As Bain & Company commented in a recent article:

“The human dialogue between customers and employees still matters during many of the episodes that customers experience with a company. Sure, algorithms can instantly suggest remedies after a poor interaction or reinforce the company’s brand after a great one. And certain episodes will perform better through digital channels alone, such as simple online transactions. But only humans can fix or improve the underlying processes and policies that make up the customer’s experience, whether digital or physical. Only humans can tease out the nuances of, and empathetically respond to, a customer’s concerns.” (1)

Ends

1.      http://www.bain.com/publications/articles/what-big-data-means-for-customer-loyalty.aspx

With additional material, this is based on an article that first appeared in 2014 as a Palladium Point of view (by James Creelman and Flora Lewin).

James Creelman is an advisor and trainer in strategy management and related fields. He is the author of 24 books, most recently Doing More with Less: measuring, analyzing performance in the government and not-for-profit sector: (Palgrave Macmillan, 2014) with Bernard Marr and foreword by Dr. David Norton and Risk-Based Performance Management: integrating strategy and risk management, (Palgrave MacMillan, 2013) with Andrew Smart.

Flora Lewin is the global CIO of Frutarom. She has over 20 years of experience in informa­tion systems and organizational computing, leading technology innovation and related strategic changes in large and complex organizations. In addition, Flora is a lecturer and a coordinator of professional communities, focused on topics of information and Big Data in organizations.