Customer Analytics Pay Off - Bringing Science to the Art of Marketing

May 2012

Customer Analytics Pay Off
Bringing Science to the Art of Marketing

Marc Teerlink

© 2011 IBM Corporation


1 How well do you understand that you are being commoditized?

2 How well do you know the channels and business partners?

3 How well are you constantly present with your customers?

4 How well do you adapt business models?

There are four key questions you need
to answer to survive the future

Source: IBM Institute of Business Value Executive Report, Customer Analytics Pay Off, 2011 IBM Corporation

Analytics Correlates to Performance

"companies leading in use of predictive analytics and executing effectively
across [brands and] multiple channels have been able to increase top-line
growth up to five times more than their less sophisticated peer group"

5x


Analytically Sophisticated Enterprises Outperform

1.6x 2.0x 2.5x
Revenue EBITDA Stock Price
Growth Growth Appreciation

What makes them smarter?
they are able to…

Treating Across Channels Exception Based, External Focused
Information and Value Chain Information
Forward Looking, Foresight
as an Asset (upstream and/or
downstream) management
Action Oriented

Source: IBM Center for Applied Insights, State of Smart Study, 2012 IBM Corporation

Leading Companies executed Customer Analytics Strategies
that helped them to drive Top-line Growth
Customer Analytic Strategies

Information Widening the Information Predictive & Customer
Efficiency Eco-system Faster to Respond Foresight

Treating Across Channels Exception Based, External Focused
Information and Value Chain Forward Looking,
(upstream and/or Action Oriented
as an Asset downstream)
Information
Dynamic
management Multi-Channel Next
Integrated Information ∑ External Data
Best Action
Segmentation
proficiency
Demand Chain
Fact Based Marketing Consistent Information ∆ Big Data
integration

Information Information Information
Information Sharing
Cost Reduction Responsiveness on Demand

5 | May 2, 2012 Marc Teerlink IBM Corporation

Navigating the stages of the analytics framework

Analytics framework

Capability to move Capability to adapt
from reaction to business models
prediction that enable faster
creation of value

Capability to gain Capability to share
insight from the information internally
information explosion and across value chain

Internal External
data sharing data sharing

Analytics Strategies that successfully enabled the realization of Growth Driving Organizational Capabilities IBM Corporation
Source: “Customer analytics pay off, Driving top-line growth by bringing science to the art of marketing”,, Marc Teerlink and Michael Haydock, IBM Institute for Business Value October 2011,

Proven Benefits vs Analytic Strategies Analytics Framework

 

 


 Mass Marketing / Traditional Trade Promotion 0.2 -- 2.9%
 Target Marketing / Campaign Management 1.9 -- 4.8%
 Integrated Multi Channel Marketing 6.2 -- 18.7%
 External Data Change/Event-Driven Marketing 16.9 -- 38.2%
 Demand Marketing / Predictive Marketing 24.1 -- 64.3%
Converted Response rates (n=728, US, AUS & Western Europe, 1999-2010)

Source: “Customer analytics pay off, Driving top-line growth by bringing science to the art of marketing”,, Marc Teerlink and Michael Haydock, IBM Institute for Business Value October 2011,
IBM Corporation
Data and other visualizations can be found at : http://www-958.ibm.com/software/data/cognos/manyeyes/visualizations/converted-response-lower-upper-int

Bringing Science to the Art of Marketing 1







GAIN INSIGHT FROM THE INFORMATION EXPLOSION
Leverage Data Quality and Master Data Management to enable
the transformation to Transparency, Accountability, Ownership,
and Governance in order to be able to Manage customer
1 relationships for profits, not for sales

What kind of Customers do we have?
+
-
+

Strategic
Accounts?

+ -
-
Derived from "Manage Customers for Profits (Not Just Sales)“ by Benson P. Shapiro, V Kasturi Rangan, IBM Corporation
Rowland T.Moriarty, and Elliot B. Ross, Harvard Business Review Reprint 87513

Bringing Science to the Art of Marketing 2







Integrated Information ; Engage the Entire Value Chain
Visibility into every part of the value chain creates an ecosystem
that enables an organization to capture and share collective
wisdom, collaborate and make decisions with greater confidence .
2

LOW VISIBILITY HIGH VISIBILITY

Suppliers Partners Suppliers Partners

Employees
Employees

Customers Customers

BIG IDEA

Example : US Insurance Company : Real Time Analytic Matching,
Multi Channel Campaign and Contract Optimization

Contact Stream By Cluster with Timing
4 “Your claim has
been fast tracked.
Payment is being
processed now...” 4

3
“Please tell me
about the collision
in your own words.”

2 2 3
“Was anybody
injured? (Y/N) Total
damage? ($)”

1 Contact Center Analytics-based Matching
“Thank you for
calling. May I have •37% increase in Sales Revenue
your name?” 1
•29% increase in conversion of Sales Leads
•25% Reduction in Agent Attrition
•20% Reduction in requests to DNC IBM Corporation

Customer Analytics Pay Off 3







Move from Reaction to Prediction
Apply advanced analytics and industry expertise to a wealth of
3 information in order to more precisely predict—and continuously
act on—risks and opportunities.

REACTION PREDICTION

Goal Goal

Unforeseen Decision Point
Predicted Decision Point BIG IDEA

The goal of the project is to “take the largest
Example: sports brand in the world and turn it into largest
participatory brand in the world.”*

Inside Gatorade’s Social Media Command Center http://mashable.com/2010/06/15/gatorade-social-media-mission-control/
* Bauerlein, Valerie. “Gatorade’s ‘Mission’: Sell more drinks.” The Wall Street Journal. September 13, 2010. http://online. wsj.com/article/SB100014240527487034667045754896732 44784924.html


Customer Analytics Pay Off 4







Create Value Faster
Operate with speed by delivering trusted insight that
4 gives decision-makers the confidence to take action
faster, driving innovation and optimizing business
results.

INFORMATION Action
GATHERED
OVER TIME Risk/ Information Information Information Information
Opportunity

TIME

INSTANT
Action
INSIGHT

High confidence
Low confidence
Insight


Example US Retailer : Foresight: Marketing channel optimization
Four major sub-systems: Economy, Customer, Channel Analysis, and Optimization

Economy
Optimization
IBM R&D Innovation

Customer Behaviors

IBM R&D Innovation

Each pass makes over 80K total
Channel decisions and considers 10K-20K
different alternatives
Analysis
IBM R&D Innovation IBM R&D Innovation


Getting through the Fourth Quadrant by Smarter Analytics
- The next Three Years

• Learn with each iteration

• Capable of navigating human speech

• Dynamically evaluating hypothesis to questions asked

• Responses optimized based on relevant data

• Ingesting and analyzing Big Data

• Discovering new patterns and insights seconds


Securing Success in Every Step
Governance and Culture Change – Treating Information as an Asset


Key questions to assess your current organizational capabilities

1. Do you understand what drives your 4. What is your strategy for protecting
target consumer’s purchasing your brand(s) in the marketplace?
behavior?
5. How well can you integrate channels
2. Do you understand in what areas and business partners?
you are being commoditized?
6. How well are you geared up to adapt
3. How do you communicate or change your business models?
information with your customers and
7. Do you have a roadmap for
how do you measure the
customer analytics?
effectiveness of your
communications? 8. Within each customer analytics
opportunity, do you start with
questions, not data?


Get Started

Start with Use an Focus on the Embed insights to Keep existing
questions Information biggest and drive actions and capabilities while
Agenda to plan highest value deliver value adding new ones
for the future opportunities

In a world drowning in data, IBM´s approach ensures that
you can realize the value of Smarter Analytics


http://www-935.ibm.com/services/us/gbs/thoughtleadership/bao.html

Download the complete IBM Institute
for Business Value studies

VISIT THE ANALYTIC COMMUNITY
www.analyticszone.com

http://www-935.ibm.com/services/us/cmo/cmostudy2011/cmo-registration.html?cm_sp=MTE18682


Want more examples ?

Foresight: Media
http://adage.com/article?article_id=146137
Optimization http://adage.com/article?article_id=147432

Loyalty & Affinity
http://www.brandweek.com/bw/content_display/
Marketing news-and-features/shopper-
marketing/e3i4ef51a35fea2a26d2bb005c48a53ec6
1

http://www.washingtonpost.com/wp-
Industry Forecasting dyn/content/article/2010/11/14/AR201011
1404062.html
http://articles.chicagotribune.com/2010-10-
21/business/ct-biz-1021-spending-black-
friday-20101021_1_doorbuster-deals-
shopping-day-retailers

Direct Marketing Patented, Edelman Award
Winning Analytics Capability
Optimization
(Representative Sample)

Next Best Action www.mediapost.com/publications/?fa=Articles.sho
Real-time Decisioning wArticle&art_aid=146430
www.nytimes.com/interactive/2010/06/16/magazi
ne/watson-trivia-game.html
IBM Corporation
25

How can IBM Help?

 IBM’s Business Analytics and Optimization services bring together a unique combination of
expertise and capabilities to help your organization realize your analytics potential. Our
capabilities include:
 An unmatched combination of skills and experience, including unrivaled breadth of deep
foundational business intelligence, performance management and advanced analytics
capabilities, including world-class software and IBM Research.
 Strong industry and business process expertise enabling us to apply proven industry
models.
 Cross-industry and industry-specific best practices for how to manage information, and for
next-generation value creation through the use of analytics and optimization techniques.
 Proven opportunity and stakeholder assessment techniques.
 A patented value case approach to develop trusted business cases.
 To learn more about how you can partner with IBM on your analytics journey, please visit
ibm.com/gbs/bao.

IBM Corporation

Customer Analytics Pay Off - Bringing Science to the Art of Marketing

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