Predicting customer behavior is the core of customer analytics, which combs data for clues about likes and dislikes and attempts to guide a company’s marketing efforts. Once the domain of mathematicians with Ph.D’s, marketing and sales executives and product developers, customer analytics involves every facet of operations.
Companies have a wide assortment of products and services to choose from in developing a customer-analytics capability. Software for business intelligence, database marketing, customer-relationship management and statistical modeling are widely deployed both in-house and from managed-services providers. Market research and analysis firms design questionnaires, field customer surveys and provide analysis that can influence business strategy at the highest levels. Increasingly, these functions are being performed by offshore providers, who offer an abundance of expertise at prices well below the market.
Some of them provide specialized services such as market-research design and analysis, while others strive to be a one-stop shop for all kinds of services. Generally, these fall into buckets such as market research, database marketing, business intelligence, and sales-force effectiveness.
Companies also work with specialized database marketing service providers to design, build, manage and host private marketing databases. Annik Technology Services, an Indian firm, performs back-end operational work for NPD Research, a U.S. market-research firm. The work includes, data normalization and cleansing, fielding market research and customer-satisfaction surveys formatting unstructured data into structured data and data delivery, including charting and report-generation software.
Marketing companies contract with database marketing firms to manage, process and source data. According to Forrester Research, roughly two-thirds of firms that outsource cite access to outside technology and/or data processing as a key driver for outsourcing. Outsourcing engagements begin with the design and build a customer repository, usually hosted at the provider’s data center. The engagements also include maintenance, backup and other IT tasks. Other services include data cleansing, integration, matching enhancement and scoring.
Operational support plays a major role in database marketing outsourcing. On an average, firms devote 37% of their outsourcing spend to operational support such as direct mail services, database query and reporting and marketing program management.
Demand is also high for analytical services, including customer segmentation, modeling, data mining and visualization. Marketing firms devote 29% of their outsourcing spend to this category. Demand is also becoming more strategic, as buyers look for long-term relationships based on lifetime value, multichannel testing and online/offline integration.
One of the advantages of having its channel data analyzed offshore explains Jeff Brobst, VP, Finance, Symantec, a Silicon Valley software company, is the time- zone difference. “Because India is ahead of us,” says Brobst, “they are processing before we get in. It’s a big benefit.” Symantec works with Zyme Solutions, a provider with offices in California and India that specializes in gathering and analyzing channel data.
Achieving Business Intelligence
Customer analytics is a segment of the data-analytics market, which stands at two billion dollars worldwide, and is set to rise to $17 billion by 2010. Companies employ analytical tools and services for tracking and predicting customer behavior, deciding which promotion to offer which customers, finding out which sales channels are most effective and deciding upon the businesses to enter and exit.
The scope of problems that fall under the analytics umbrella raises questions about whose responsibility it is. “Should it be quantitative experts who analyze patterns in the data to assist in big decisions and direct strategy or a broad range of people and processes at the operational level, marginally improving performance repeatedly and often?” says Martin Ahrens, VP, Methodology and Quality Assurance, Inductis.
The answer is that analytics entails the compilation of inputs from all parts of the business, the full processing of all relevant linkages and the use of information to drive optimal business decisions. “True business intelligence ensures that each individual and department within the organization is supported with the information they need to make the right decisions; and some decisions require both sophisticated models and appropriately trained experts,” says Ahrens.
Inductis, an Indian service provider that specializes in analytics, employs a business model, which it calls staff augmentation, because it involves embedding consultants within the client’s organization to solve problems such as customer lifecycle management, product development, business re-engineering and financial management.
The work includes hosting, managing and creating an integrated view of the client’s customer data; generating samples based on ad-hoc or streamlined survey requirements, and performing complex data analysis; and model validation and scoring.
Inductis deploys its in-house methodology, MicroAnalytix, to discern meaning out of endless streams of data and to optimize customer targeting and acquisition, identify cross-selling opportunities and manage risk.
