Analytics and the web: trust vs coupons.

Summary: Business Analytics represents a set of tools which has evolved from Data Warehousing  and Business Intelligence to Big Data, with some proposing Analytics 3.0 as the next big thing. Understanding its evolution from the perspective of the customer centric web can help us see its real value and limitations, and where we should be investing.

How can we control our business better? How can we plan for it, particularly when it’s a large enterprise with many products and thousands of customers? This question is behind the evolution not just of Business Analytics but also of many advances in IT; we can summarize its development in the following table.

Analytics 1.0. Analytics 2.0. Analytics 2.1.
NameData Warehousing, Business Intelligence. Big Data Information rich offerings.
What it does.Gather and analyze operations data: point of sale, inventory, customer contact.Vast data sets, much more powerful number crunching.Use Big Data to improve operations and transactions.
Who uses it.Most big companies.A few big companiesVery few companies.
Weak points.Stuck at reporting, seeing past trends, not actual analysis. Expensive and difficult to use for small and medium sized businesses.An end in itself? Correlations, not causality.Follows data, not actual customers.

CogAnalytics 1.0 had to innovate to gather all the information from operations, with the help from mainframes and later PCs; going from paper to computers meant a huge advantage in reducing costs, improving efficiency and controlling companies; as Davenport recalls, the most important task was always asking the right questions, to establish which information we needed to be gathering and analyzing, since these were such arduous, time and resource consuming tasks.

Most large companies use these tools in some way, although Business Intelligence has really mostly meant reporting about past operations, which is very useful but a long way from actual predictions. This sort of data gathering, reporting and analysis is still beyond the means of most small and medium sized businesses.

Analytics 2.0 means Big Data: suddenly we have tons of information available, and not just from inside the company; we could have the information for weather patterns, pay days and shopper visits to our stores; and we have the means to gather and process all that information, going from single local servers to many on the cloud, with innovations like in memory processing. Some companies such as Google, UPS and the port of Hamburg have thrived by using Big Data

Analytics 2.1, which Davenport sees as 3.0, is about the use of Big Data and the change it requires from companies to include useful information into their products. It’s useful as it completes the information loop, but it’s more of a 2.1 change because we are still talking about what companies do with all this information with respect to their internal operations and in some select cases about their products, which can result in a huge competitive advantage like for Google and Amazon, and does require changes in the organization; but there is a bigger and altogether different phenomenon going on, and that is how information access is changing our own customers.

On the web our customers are discovering many more aspects related to our products, and they are finding about them from other consumers. In many instances the purchase decision is taking place without any intervention from brands or retailers: our customers find which products best serve their needs among themselves and only contact us at the moment of purchase. Their experience is taking a whole new life after the sale, as they exchange impressions and experiences, which affect our future sales.

Telescope

In the “old” 1.0, 2.0, 2.1 mentality we can track customers just like we can track our products and operations, with tons of information and processing power, to then seek to improve the efficiency of our transactions; and this is very useful and profitable, but it doesn’t deal with our customers’ new expectations. And those expectations aren’t only about our products but also about ourselves.

A useful real life example example is the poor girl who found herself looking for certain products which taken together denoted an upcoming baby: the data collected allowed Target to send her pregnancy related coupons, which had an adverse effect on her as (a) it angered her parents, which she hadn’t informed, (b) probably made her feel uneasy about being spied on, and (c) probably put her (and others who read the story) off shopping at Target: great use of statistics, complete marketing fail.

What makes the failure even worse is that our customer is more than willing to tell us what she’s looking for, if we only know how to listen and help her find what’s best for her, which goes way beyond price cuts, coupons and promotions; in fact she’s more than willing to help our other customers find what’s best for them. Making customers feel like they’re spied on and used is exactly the opposite of what’s required, which is to earn their trust, make them feel safe and valued. We need to take into account our customer’s expanded experience and our own place in it.

The wording in the NY Times magazine story is telling: Target was fishing for times when customers were “vulnerable to intervention by marketers”  and wondered “How do you take advantage of someone’s habits without letting them know you’re studying their lives?”. If it isn’t already clear, customers don’t want to feel vulnerable or that they are being taken advantage of.

We don’t need “data scientists”, we need to know who our customers are, what they are looking for, why, how our product responds to their needs, how they find it, what they do with it; in other words we need to go back to the basics of marketing, now on the web. Business analytics and big data can indeed help, but they are only ingredients in the long term relationship we need to build with our customers.

Analytics 1.0. Analytics 2.0. Analytics 3.0.
Name.Data Warehousing, Business Intelligence. Use Big Data Our customer's use of data.
What it does.Gather and analyze operations data.Vast data sets, much more powerful number crunching.Understand how our customer uses data.
What we can use it for.Manage operations better.Incorporate useful info into our products.Respond to our customer's new expectations.

We can take these steps to respond to our customer’s new expectations:

  1. Establish a centralized way of learning about our customers, including all touch points from analytics and Big Data. This is also the first step for other projects such as CRM, customer satisfaction and the web.
  2. Establish how our customer’s expectations are changing, and how we need to respond.
  3. Establish who we want to be for our customers on the web, not just what info we can gain from them.

 

Customer experience beyond customer service, knowledge management and CRM.

Summary: As we seek a competitive advantage and to better serve our customers  we come across concepts that seem nice, but might be difficult to implement or fit together: Customer Relationship Management (CRM), Knowledge Management, Customer Service. To help us cut through the jargon we can use our customer’s perspective on our product, which has been changing thanks to the web.

The subject of CRM, Knowledge Management, and Customer Service has been knowledge about our customers, we can sum up how they have been generally used:

Tool or function.Knowledge Management.Customer Relationship Management.Customer Service.
Actual use.Gather and distribute staff knowledge about customers.Mine data to learn about customers.Deal with customers after the purchase.
Goal.Efficiency, sales.Improve customer loyalty.Solve post purchase problems, complaints, warranties.

All of these tools and functions are useful, although their actual benefits might not match their grandiose names; CRM for instance has been synonymous with loyalty programs, not actually managing entire relationships; and customer service is a euphemism for solving whatever problem the customer has after the sale.

We should also point out that these projects may imply substantial investments and their return might take some time, depending for instance on our product sales cycle (buying toothpaste is a matter of months while a refrigerator takes decades, so hanging on to that loyal customer might not be easy).

Our own customer’s knowledge about our product helps us see that their experience can be much broader and deeper than what Knowledge Management, CRM and Customer Service cover:

  • With a simple web search our customer can find not only the best, but how other consumers have fared in the long run, and discover the myriad components that make up not just a product but the entire experience surrounding it: What’s the best quality? Which are the essential components? Which are nice to have but we can do without? What should we avoid?
  • Our customer can also contribute to other consumer’s quests: whether staff is rude or courteous, warranty responses quick or not, which products have worked out better in the long run, if a price is fair…

The difference between what we know about our customers and what our customers themselves know about our product is crucial.

We could give the tools that help us deal with our customer’s perspective a new name, such as Customer Knowledge Management, but that would miss the point, which is that we need to think and act according to the much bigger customer experience that encompasses all these tools. Marketing has long identified all the parameters that make up our product’s value, but seeing it from our customer’s perspective lets us answer the hard questions:

  • Is our customer loyal? Can loyalty be bought with bonus points or are we confusing it with something else? Are we selling our customers and ourselves short?
  • Does our customer appreciate our product’s quality and attributes? Or do we need to keep enticing him with lower prices? Is our in store staff prepared for our customer’s wider questions?
  • Does our customer appreciate a better experience, such as faster turnaround, efficient service, and how much is he willing to pay for it?
  • What are the limitations of CRM, Knowledge Management, Customer Service and traditional advertising for the greater customer experience?

We can already draw several lessons:

  1. For the first time we have the means for our customers to tell us directly what they are looking for, what they are and are not finding, as opposed to indirect means like data mining, our staff’s interpretation of what customers want, or biased surveys.
  2. We need to see our customers’ greater experience as an opportunity for growth and innovation, to complement the efficiency and loyalty goals for Knowledge management, CRM and Customer Service. This can help us put these programs in perspective, particularly when we are in need of growth and not just internal process improvement.
  3. We need to use the same medium our customers are employing to expand their experience: the web. This means thinking beyond our own stores or distribution channels, beyond the moment of purchase and more about everything that leads to it and everything that happens after.

To meet our customer’s new expectations in their expanded experience through the web we need to take several actions:

  1. We need to be more proactive to engage more proactive customers. The web is the only mass medium that lets us be a direct counterpart in our customer’s conversation.
  2. We need to give our customers the proper incentives to contribute and make them feel appreciated when they do so. We also need the right tools and incentives for our own staff to use our customer’s contributions.
  3. We need to change our mindset to see our customers as active agents and not just as the recipients of our actions,  as information partners and not merely as information sources. This might be the key to everything else and may require it’s own plan to keep it from becoming an empty slogan.
  4. We need to expand our data mining through the web beyond what happens at the store to feed CRM and Knowledge Management systems, while keeping our customers’ privacy concerns in mind and their information safe; the opportunities of the wider customer experience go beyond merely attempting to track our customers on the web.

We also need to take into account the fact that customers might know more about the experience surrounding our product but they are not product or market experts, following them blindly might lead us to Homermobiles.

CRM, Knowledge Management and Customer Service are all useful and necessary, but their traditional uses respond to a more narrow, inward looking view of our customer’s experience, which has been expanding thanks to the web. We can use our customer’s wider experience as a focal point, to understand what each can contribute, as well as how to use the web itself to engage our customers.

How the web affects our marketing: Effect on our customers.

Questions and limitationsTo give us a better idea of how we can use the web more effectively we can look at its impact on our business through the classic Marketing scheme, as illustrated in the table below; in this first part we’ll be looking at the effect of the web on our customers (for consumer goods).

Analysis: 5 CsValue creationCapturing value (delivery and communication): 4 PsMaintaining value
CustomersMarket segmentationProducts and servicesClient acquisition
CompanySelect target marketPromotionClient retention
CompetitorsProduct and service positioningPrice
Collaborators
Context

Why does our customer buy our product? How does he choose among products? Where does he buy it? These are age old questions which the web is changing as consumers are finding more answers about our products, mostly from other consumers, and because of their exposure to products and prices from around the world.

Cultural, social, personal, psychological impact.

As a mass medium the web is a source of general news, entertainment, a work tool, and is used for personal communication. As such the web is changing our customers’ knowledge of what can better satisfy their needs, as well as their aspirations. They are exposed to other products, other cultural perceptions of our product, can find the latest fashion before it is retransmitted by their local media. They can now belong to online communities for their hobbies or life styles which may go beyond what is available locally; and their own experience is useful to other consumers.

During their search they are also exposed to worldwide prices, which has an impact on their views about ours: Are they perceived as fair? Too high? Are they comparing the same products or services? They also develop views on the difference between what’s available locally and elsewhere: are the same products available? Are they available at the same time? If not do they feel treated as second class customers?

The moment of consumption also has an influence; I define this as the relationship between disposable income and consumers’ aspirations. For instance in a society which has little experience with general consumption aspirations will gravitate towards personal rewards and marking social status by showing one’s wealth; on the web this is confronted with other consumption moments, for instance one in which health and respect for the environment are appreciated, while social status is shown through craftsmanship, as opposed to mass produced products.

Language plays a role in keeping consumers in their silos, with english as a lingua franca that carries the cultural message mostly from the US and Western Europe, but now anyone from the cultural periphery can have a big impact if they choose their language and audience well.

To make sense of the influences of the web on our customers we need to establish the impact on their expectations, on our brand promise and on our delivery of that promise at each stage of their consumption experience, for the different segments we serve. We can already derive a few general lessons for our marketing:

  • Our brand promise needs to adapt to our customer’s evolving expectations, and we then need to fulfill this new promise.
  • We need to participate in our customer’s quest by responding, being relevant and useful, showing the way, earning their trust.
  • Our customers’ experience when they search online can be richer, which can work to our advantage if we want to compete beyond prices, as they are able to better understand the different product attributes, everything that is required to satisfy their needs, and even its social symbolism. We need to compare this possible richer experience with the one customers are currently having (do they only buy mainly on price?).
  • Our customer’s path generates information which is itself useful to other customers and may thus be highly valuable to us.
  • Traditional media which push messages at our consumers and are not part of their search have a limited impact on their purchase decisions, particularly when consumers have learned to tune them out; and this applies to old school ads on the web itself, which can also be easily blocked on their browsers and apps.
  • Digital, Internet connected, viral, social media which isn’t relevant to our customers quest is of little use to us; it may be preventing us from seeing the bigger picture and diverting precious resources.

The danger is that we find ourselves out of loop with respect to our customer’s expectations; the opportunity is first to be part of this conversation and align all our contact points, from the web to our brick and mortar stores, and second, to help our customer have a more productive, interesting, even fun experience with our product.

In conclusion: As marketers we have the opportunity to make a better contribution to our company’s results by using the web more effectively. The web allows us to have a direct, personalized communication with our customers, and in many ways takes us closer to the primary mission for marketing; the other side of the coin is that our customers increasingly expect more relevant, quicker answers, which other media cannot help us provide.

To do this we can take three steps:

  1. Set our own expectations by taking a step back to understand how the web is changing our customer’s experience and expectations and how we can use the web itself to improve them. This will also help us decide on a budget and or marketing mix with other media.
  2. Set our company’s internal expectations by uncovering specific opportunities and their web solutions, and establishing how stakeholders are affected by them.
  3. Understand the resources required for web solutions, including a web project methodology which takes into account the functional differences between the web and other media.

 

So I’ve been put in charge of our web projects… Where do I begin?

Two people questions 1One day the boss decides that someone should be in charge of “our web site”, “our Facebook page” or whatever it is that our company has been using… Usually when a refresh is required and no one quite knows who is in charge… And you are the one chosen by the gods. Congratulations, this is a great opportunity, and I will try to give you some ideas.

The good news is this position can be a learning experience, a good stepping stone for your career and even a lot of fun. Beyond being the “it” guy or gal at your company, at the center of all things new and cool, you will also have the opportunity to generate actual value for your company, by making your customer’s lives easier, more interesting and more productive.

The bad new is there is a confusion between web media and its actual use. In the mind of your boss you will be in charge of “being on the web”, coordinating with existing marketing campaigns and presenting reports on the number of visitors and “Likes”. None of that will actually generate any value for your company, and while your boss means well, you will need to change this perception so everyone is on the same frequency and has the right expectations for the web and for you. In the end your boss is thinking of results, sales, costs, profits, growth, and you will need to make the connection with the web; fear not, you won’t be doing this on your own.

The first thing you need to ask for is a job description; If the job description doesn’t exist your HR department may need to ask a specialist to generate one, but you need to be aware that not all descriptions are equally useful, and some may put you on the wrong track.

The right job description for a Web Coordinator (or whatever it’s called at your company) will first establish two high level goals, which are “How the web affects our business” and “How we can use the web to improve our business”; together they can be heartily accepted by your boss and define a Web Medium Strategy. At the heart of these goals is knowing our business and our customers, and is not something that can be expected immediately of someone new to the position. Knowledge of our customer already exists somewhere in your company, and your first task may be to find a way to collect it, usually from stakeholders; the second part of the equation is for you to express to these stakeholders how the web is affecting their customers and how we can use the web to help their results.

A second level goal derived from this is a Content Strategy defined by specific projects, their goals, and scope. My way of generating a content strategy is through the customer’s experience with our product, unearthing specific opportunities to improve it.

A third level goal is to manage projects and in particular to understand the resources involved in each project, from Information Architecture, to Usability, to Development and Design. The Web Coordinator doesn’t need to be a specialist in these areas but needs to understand them well enough to know which ones are more important for each project and what to ask of each web specialist. There are many courses and books available to understand each area, but your boss needs to understand they will require a specific investment, mostly in time.

The wrong job description will make your life a lot harder because it falls back on a default that isn’t working, which will have you running after specialists who in the end can only generate empty media like web sites and social pages devoid of any interest for your customers and thus of results for your company. You can find a way of rating your website here.

The wrong assumption here is that we will be generating web forms like web sites, or social pages, or pretty design, or fancy technology, to which we can later bolt on some content or functionality; what we need is to be generating whatever it is that helps our customers and our business, which defines our content, which we can then deliver in whichever form our customer is using or is likely to find most useful: a very clear case of function first, form second.

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How can we move beyond competing on prices and promotions?

IMG_9055AWith increased global competition it can seem that options for businesses are limited, beyond stepping up R&D with the implicit risk and limited ROI, integrating price discounts into the overall strategy, packing up and moving to lower cost countries… Or buying up the competition. And yet seen from another perspective there remain many opportunities available.

Think of the typical small business purchase of computer equipment: the consumer has a specific need (a new employee needs a PC), goes to a few retailers… And is faced with a wall of unintelligible technological terms which only confuse him (Four cores! 3.2 Ghz!), and price promotions (20% off!). In the end the customer is none the wiser as to which one is best for his business: it might be cheap, the technology might be super, but is it worth it?

The typical reaction by the consumer is to ask a technology savvy friend (a.k.a “the geek”) who will ponder the different processors, hard drive space, memory and half heartedly make a recommendation. But here’s the catch: the consumer’s needs are not about technology, but about the use of technology: Will it be easy to use? Will it have everything that is needed, from programs to energy protection? Will it help us work better? Will it be reliable? WIll it be durable? The customer doesn’t express these needs, his geek friend cannot help with them even if he did, and brands are left competing on price, newness and razor thin profit margins. Everyone loses compared to a situation in which brands responded to the customer’s actual needs.

Other markets may not be as dramatic but if we follow our customers’ quests and establish the end result they achieve we can realize there is usually a better possible outcome and a better experience along the way, which our customer can appreciate and be willing to pay for. In fact that better outcome might be exactly what our brand promises, but then we need to ask ourselves to which extent it is fulfilling that promise and how much room there is for improvement. This isn’t a critique of manufacturers and retailers, it may simply reflect the limitations of traditional advertising based marketing, but is intended to show the opportunities to compete on improving the actual value for our customers, which would let us move beyond competing on prices.

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Whom should we hire to do our web site?

Wrench and screwdriverThe very first question should be: what do you want your website to do? What should you be using the web in general for? The problem with not having these questions solved first is that you’ll find yourself with a default answer provided by web vendors: you’ll want a pretty site, will say the designer; you’ll want a cool platform, will say the developer; you’ll want to be popular on social media, will say the twitter user; you’ll want the magic of SEO will say the SEO expert… But none of these are directly related to your business goals. How can you tell? Because your website will be empty of content, won’t address anyone and thus won’t be found by anyone, or it will have generic content of little value for your customers, which may even hinder your long term relationship with them.

A second related question is that not all web functions can be outsourced. If you think of your web presence as a tool to help in the delivery of your brand’s promise, this is something that can only be accomplished inside your company, as no one outside will know your customers better.

So who should you hire first? Whoever knows your customer best, whoever has a stake in sales to customers and your customer’s experience… In other words, probably you or some of your colleagues… Who already work with you. Once you’ve established what the web can do for you, you can then ask specific tasks of web specialists, and they’ll thank you for being more specific.

How do we rate our current website?

IMG_20140310_114530037The web and our business:

  • Is our web site relevant in our customer’s quest?
  • Does our web site have a positive impact on sales? Do we have business metrics for our web site or are we relying on generic traffic?
  • Does our web site help our customers appreciate our product’s attributes and quality?
  • Can our customers find the info they are looking for quickly?
  • Can our customers act on the info they find on our site? For instance they may follow up by looking for a nearby store, see if it has the product in inventory, look for an important parameter they had not thought about before.
  • Is the web helping specific strategic initiatives?

Our web site as part of our overall web presence:

  • Which media and touch points do our customers use in their quest related to our product?
  • Which media is more useful or would be more useful in their quest, how does our web site rank among the other web options?
  • Are we investing in what offers a better return or in what’s available by default?

The web as a process:

  • Do we have control over digital assets, like the domain, hosting, FTP?
  • Is all our content regularly backed up and available?
  • Is our content easy to update?
  • Is there a specific process to generate, edit and sign off on content?
  • Who’s in charge of our web projects? Who are the stakeholders?
  • How do we measure the web team’s success?
  • What are the web team’s functions?

 

Who should be in charge of our web projects?

Staff

Ultimately the web can be profitably used to attract clients, help them solve their needs through our products and services, and make their overall experience with our product more productive and pleasant. This can also be seen as delivering on our brand’s promise, and catching up to our customer’s expectations which are being changed by the web itself. This gives us some idea of who should be in charge of our web projects.

Since the web can be used to reach more clients and expand their experience around our product, a logical choice would be whoever is charge of new business development: depending on your organization this could be your CEO or your brand or product managers. The relationship is even stronger when our use of the web has implications for adapting or improving our product itself. For instance a coffee brand may use the web to help its customers express how they prefer their drink, which may be different from the custom in the brand’s country of origin. In this case the person in charge needs to balance the opportunity to serve a new market with the risk of diluting the original brand.

Web projects can also be seen as the natural purview of Marketing, since we are talking about the brand and fulfilling its promise. There is a specific danger as the marketing department can easily fall on its default use of other media but now on the web, with the resulting campaigns generating advertising that is irrelevant or annoying to our customers. The biggest cost of traditional advertising on the web is that we are missing out on the stream of queries from our customers, eroding their trust in us and putting our long term relationship with them in jeopardy.

Given that the web has an effect on many business areas the CEO may need to be the team leader. Taking into account the amount of work CEOs already have to cope with, they may need to delegate this task but remain the ultimate stakeholder. The easiest way to begin is to define the stakeholders, and from this an executive team.

From the impact of the web on our business we can also see who should not be in charge: our web projects are clearly not design projects, so the arts department or an external designer with no knowledge of our customers and our business cannot generate the goals and the specific web solutions. Once we have a web medium strategy, a content strategy that responds to specific opportunities, then we will certainly require functions such as information architecture and usability testing that will help us give form to specific web projects – and even this is far removed from “web decoration”.

The same logic applies to our IT department or external developers: some technology will be required but technology by itself with no content is of no value to us. Our IT department’s contribution could be invaluable once we define the goals of our projects and a content strategy, as they could help us choose the best web technology, manage suppliers and have better control of our digital assets.

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