Gartner: Customer analytics hinges on asking the right questions and change management
- 17 June, 2019 12:50
Customer analytics is ultimately an exercise in asking the right questions and successful change management, Gartner senior analyst, Melissa Davis, claims. And to get there, you’re better off giving up on a 360-degree of your customers and instead, building a minimal viable customer data view to inform your approach.
Speaking at today’s Gartner CX Technologies event in Sydney, Davis noted customer analytics as the number one investment for organisations looking to lift customer experience over the past four years. It also remains the top investment for companies exhibiting higher levels of CX maturity, running hand-in-hand with employee experience.
Yet while many tools and techniques support such a quest, technology is not the most important ingredient in customer analytics, Davis claimed. Instead, she identified two overarching principles. The first is being able to ask the right questions of your data.
“If analytics is the answer, what is the question? It’s the smartest questions that beat the smartest data scientists,” Davis told attendees. “And the simplest questions are most profound. Who is your customer? What do they want? And are they happy? That’s your starting point.”
Secondly, customer analytics is reliant on employee engagement, and finding those willing to trust and work with CX insights and ambitions.
“Customer analytics is a change management exercise. You need to find the parts in your organisation willing to change,” Davis said. “They can be stakeholders and partners for you with customer analytics.”
Davis pointed to Netflix as one such company that not only asks compelling questions of its customer data, but trusts and act on the insights. As an example, she noted Netflix’s data-led approach when customers experienced hiccups in the early days of the streaming service.
“Rather than defer the blame, Netflix asked for the underlying cause and looked to the data and found it was the ISPs,” she said. Using this data, Netflix created a leader board of ISPs by region, listing top to bottom streaming speeds.
“By asking a compelling question and sharing data, Netflix changed behaviours. Internet speeds got faster,” Davis said. “It’s one of the great examples of sharing customer data.”
What you need to do now
Clearly, both principles require organisations to have a strong data strategy. But Davis was quick to emphasise taking a rational approach to customer data collection.
“With good intentions, many of our clients collect massive amounts of customer data, put it into a structure but have challenges getting the data out,” she said. “Start with your data objective.
“I suggest you avoid a 360-degree view of the customer... The definition implies you collect every piece of data available on your customer. But that is impossible. Data is being generated continuously, so you’ll be continuously chasing something you can’t the hold off. Then there’s the diminishing returns – the cost of collecting data is more than value you get out of it.
“Thirdly, it forces a mindset of having all these systems you need to collect data from, versus thinking about the data you need in order to know your customers.”
Aiming for a single view of the customer is better and helps with consistency, but again, Davis suggested it’s not the optimal answer. The best approach is what she called a “minimum viable customer data” approach. Similar to minimal viable product, this is about recognising the minimal amount of data points required to fulfil a customer experience objective.
“What is the least amount of data you need to know about your customer in order to make a decision, change behaviour and create a better experience?” she asked.
Several other foundational elements then back up a strong customer analytics approach, Davis continued. A big one is the importance of mapping out the customer journey.
“I suggest you take a couple of views: First is understanding your customer by life stages relevant in your industry and that support multiple objectives so you can take those and create relevant experiences,” Davis advised.
For instance, based on life stages, an insurance company could offer new policies based on the age of a family’s children and those needs, while a telecommunications company could offer different plans to suit growing data usage. Or products and services could change based on a child going to college, marriage or retirement.
A second aspect of customer journey insight is channel preferences, such as email versus text. “It’s extremely important as you engage with customers that you talk to them in the way they want to be talked to,” she said. The third aspect is recognising the right moments and places to interact.
“You need to understand what’s happening and plan for those additional interaction points,” Davis said.
Moving forward, Davis highlighted continuous intelligence and real-time analytics that brings in situational awareness as vital pieces in the customer journey puzzle.
Another of Davis’ foundational elements to customer analytics is understanding and measuring the drivers of customer satisfaction. Gartner has devised a recommended framework for tackling customer satisfaction, encompassing what customers think is important, measuring performance to identify success and gaps, taking an internal view of success, and gauging customer actions off the back of activities.
“Many organisations have 2-3 of these, but in order to truly understand the customer, you need all four,” Davis said.
A fourth pillar is focusing on employee engagement. “It’s not possible to have a good customer experience if your employees don’t care,” she warned.
And finally, it’s vital to keep the focus on customer retention, Davis said. “Many organisations develop advanced customer churn models to predict when a customer is most likely to leave the organisation, then develop an action plan to try and save that customer. But that’s too late – you’re trying to save customers already leaving,” she said.
“Customer retention is your most important metric. You want to keep your customers so they don’t want to leave. It takes a lot of moving pieces, but it’s going back to the root cause: How do your business processes work and are they effective?
“Many times, your customer experience breaks down in the back-end processes. The way to solve that is to continuously ask the question: Why is a customer is leaving? Get a group together, workshop, brainstorm all the reasons they might be leaving. It could be price, competition taking your customers away. But also look internally – where are the breakdowns.”
Davis cited US-based Nedbank Group as a company that did this, measuring customer engagement based on online form completion. With completion sitting below 30 per cent, the whole business looked to find out why and solve the problem.
“When they examined the process, Nedbank realised how complex it was – there were 220 forms,” she said. “The company then identified the minimum number of forms to complete, questioned every field on those forms, automated and simplified down to four steps. Engagement rose from 40 per cent to 80 per cent as a result.
“It’s not a churn model, it’s solving the problem at its root cause.”
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