There is a lot of buzz currently about analytics and big data, and rightfully so. The pot of gold that analytics promises is the ability to fully understand customer behavior, derive actionable insights, and further tailor customer experiences to meet the needs of any segment. As evidenced by the projection that big data will grow to a $53 billion dollar industry by 2017, which is up from $12 billion in 2013, the mandate is clear1. However, while the investment and expectation exists across many industries, it is not an easy hill to climb to achieve the capabilities needed to derive deep insights and be able to make decisions. The investments are starting to pay off, though, which indicates there may really be a pot of gold that awaits those who pursue the analytics path.
There are many broad based indications that investments in analytics are working. A recent survey of B2B firms conducted by CMO Council/SaS indicates that more than half (52%) of those who participated indicated analytics is providing an assist in discovering new business leads and customer insights2. Further, companies who leveraged advanced analytics tools report 8% higher win rates3. Perhaps most importantly, marketing analytics tools pay back $10.66 for every dollar invested4. Investments in data access, which is a significant hurdle for many companies, yields results. A 10% increase in data accessibility translates into nearly $66 million in net income for a Fortune 1000 company5. An IDC survey indicates data-driven companies are 6% more profitable than those that are not. Finally, 63% of those firms that have established an integrated approach to analytics, where predictive modeling, customer analytics, and big data are working together using cloud services, report a transformation impact to their business, based on a recent Forbes survey6.
More specifically, financial institutions, such as banks, are using analytics to become more customer centric (i.e., to further develop relationships and create greater wallet share). Key Bank estimates it saved $35 million dollars in a year by shifting hours and staffing which was derived from insights gained from analytics. Furthermore, adjustments to client communications made based on analytics have reduced attrition by 25%. Another example is from Commonwealth Bank of Australia who realized that customers wanted a personalized web site that provided a tailored experience. Wells Fargo points to its investments in big data and real-time analytics as keys to the success they have experienced in mobile banking. Finally, Wal Mart has made huge investments in analytics to help target their customers further as well.
What this all indicates of course is an emphasis, or a shift in the case of some industries like banking, to a personalized based marketing approach. That is true even for B2B firms as well as those who are primarily consumer-based. A world in which messages are targeted to characteristics of individuals, where they are in the purchase process, previous buying history, preferences, and financial status is being realized. As a result of using analytics to gain insights and make marketing decisions, firms are uncovering what makes the most profitable customers and identify new leads and how to nurture them. A robust analytics capability can offer real-time insights that lead to faster and smarter campaigns that are positioned for success as they are specifically oriented to a customer segment that has discernible characteristics.
To be sure, achieving that nirvana is not easy. Many firms, such as banks, have infrastructures that are still oriented to products vs. customers and so collecting, storing, and analyzing customer data is a tremendous challenge. Many firms still struggle with capturing basic transactional information, even more do not have a good way to collect external customer information, social media information, and being able to measure wallet share. However, the technology exists to capture a tremendous amount of customer data, determine what specific customers will likely do in the future, and provide actionable insights. As noted, many firms are reporting payoffs in their investments. Those who have done so already have a competitive advantage in their industries. To provide a quality experience and to drive growth going forward, customer behavior needs to be highly understood and supported.