A Viewpoint on Evolution of Consumer Analytics

16.12.2013 Nitish Srivastava

The focus of consumer analytics has been shifting from traditional market segmentation to strategic one-to-one marketing. Organizations are moving up in the analytical ladder from pursuing descriptive analytics (like exploring the root cause and generating ad hoc reports) to predictive analytics (like forecasting and optimization).Analytics now rely upon virtually unlimited sources of data especially unstructured data to carry out the complex statistical analysis. This paper focuses on the recent trends in the field of consumer analytics and highlights how organizations can leverage modern consumer analytics techniques to gain competitive advantage.

How Consumer analytics has grown?

In past, the focus of consumer analytics was segmenting the target audience into well defined and large segments which were based on few segmentation parameters like demographics, income, geography etc. An example of such traditional customer segmentation can be classifying the target audience into high, medium and lower income groups and then using those segments to develop differentiated marketing campaigns. Another instance can be simple segmentation of customers into Mens merchandise shoppers and Womens merchandise shoppers and having different promotional schemes for these segments .Over time, as volumes of data available for analytics has grown rapidly, segmentation parameters have become complex and no. of segments has also increased.

Today, customers are segmented based on what is meaningful to the business and strategy. It is the job of the analyst to do a lot of ad-hoc research, looking at which segmentation parameters seem to result in the segmentation of customers with fundamentally different behaviors. It is important to do the research ahead of time, find the specific parameters that really separate customer behavior into unique segments, and then drill down within those segmentation parameters. As competition heats up, organizations must get smarter and more creative about whom they should target for new acquisition and retention programs. Focus of marketers has changed from large customer bucket to individual customer needs. The use of segmentation has become a fundamental strategy for companies that wish to increase sales, uncover new opportunities and improve customer retention. Now days, Segmentation has become more strategic and actionable and it acts as a tool to identify high-opportunity customers in the marketplace. For instance, an energy utility company focused on developing greener technological solutions identified its niche target segment that could never have been imagined in the past :-Green-minded customers- who are heavy energy users conscious about the environment and looking for advice about green solutions. In this way, utility company was able to launch highly successful marketing campaign focused on this actionable segment. The results were quite favorable as revenue increased and marketing cost decreased. Another instance where organizations are banking on customer analytics as key driver of their revenue is case of online fashion retail companies (like www. jabong.com, www.myntra.com) where they are aggressively using the user browsing/click stream data to identify their preferences. After identifying individual customer preferences, they are highlighting the relevant promotional schemes to the specific user on their social media (Face book, tweeter) webpage in collaboration with social media companies. Similarly, telecommunications industry is successfully capitalizing on modern consumer analytics to pursue one-to-one marketing. Telemarketers are employing techniques like Universal user profiling (UUP) and Customer experience management to boost their revenues. We will explore these techniques later in this paper.

Comparison of low, medium and high maturity consumer analytics Low

Segements defined by marketing team (5-10 key segments) Customers force-fitted into these segments or ignored Few parameters such as demographics, income, geography used Movement of customer from one segement to another not tracked

Medium
About 50 segments identified Customers force-fitted into these segments, very few ignored Transaction history and recent activities taken into consideration, loyalty programs developed, customers score developed Movement of customer from one segment to another tracked frequently Medium promotions ROI Larger selection, but still limited customization

High
Segements defined by data and advanced statistical techniques such as machine learning One-to-one marketing based on unique customer needs Multi-dimension scores or vector define customers, future behavior predicted Virtually unlimited sources of data included, expecially unstructured data High promotions ROI, and customer loyalty High customization

Low promotions ROI

Limited customization Analytics used for reporting only, not a business driver

Role of Analytics increases

Analytics drives the business

Consumer Analytics in Telecommunications industry

As revenues declined and margins shrank amidst the economic downtime and increased global competition in the market, Communications service providers (CSPs) have newly defined priorities to fulfill. These are: Finding new revenue sources with greater margins Enriched customer experience Improved efficiencies and cost reduction

Actionable consumer analytics is the key driver in fulfilling the above objectives as it helps CSPs build upon real-time customer profiles to grow revenue- by providing highly customized services. We will discuss few of the modern techniques that leaders in telecommunications industry are adopting to achieve the goals of increased revenue and enriching customer experience.

Universal user profiling (UUP):-

CSPs use Universal user profiling to create dynamic user profile of each of the telecom subscriber which captures user interests, priorities, current geographic location etc. These user profiles are used by telecom operators to predict future buying behavior of their customers. This information can then be used to send the subscriber personal advertisements on products and services which matches their priorities. Hence, successful advertisement personalization can be achieved through universal user profiling which is by-product of recent advancements in the field of consumer analytics. Such customized advertisements are much valuable and have a significant impact on consumer buying decisions when compared to random ads. These personalized ads are the sources of revenue booster for CSPs and assist them in gaining a competitive edge. Following steps are followed in creation of universal user profile:a. Defining major categories of websites (like sports, news, entertainment, fashion etc.) and classifying websites among these categories. b. Tracking the URLs (websites) visited by a particular subscriber (whose profile is created) through his mobile device. c. Calculating scores for each of the website categories visited by the subscriber-Parameters used to assign score are time spent on particular website category, no. of clicks etc. d. Scores are used to rank the website categories for a subscriber. e. Categories with highest scores determine the users interest and priorities. f. This information along with location (dynamic) and demographics details of user are maintained in the user profiles which are used to predict future buying behavior.

Customer experience management: -

Analytics can also be used in enriching the experience of the customer by providing customized services which meets unique individual needs. For e.g. tracking the historic web usage of the particular determines that this customer is accessing contents rich in videos and hence bandwidth requirement for him is high. Having this information, CSPs can choose to promote subscription plans well suited for his unique needs. Hence, consumer analytics enables the telecommunication providers to carry out strategic one-to-one marketing.

Rapidly diversifying consumer segmentation parameters