In the News

3 Ways to Turn Customer Insight Into Customer Profitability

by Eric Krell

May 23, 2011

Source: 1to1 Media

What is the most valuable source of customer insight?

It's a trick question, of course. There isn't one be-all, end-all spring of essential data; instead there are many fountains: from surveys to social to face-to-face to voice of employee to ethnographic research—the list goes on and on. Companies can collect all that data until their servers burst; executives can draft reams of reports on conclusions drawn from the data. Then what? It all gathers dust until the next round of studies get bound into a new, soon-to-be-unread report.

The true value of any customer insight hinges on the action the information drives.

"We are listening to and aggregating customer responses on a number of social media platforms," says Kip Clayton, vice president, business development for Parasole Restaurant Holdings, which operates a wide range of restaurant brands. "But the most important aspect of any customer insights is: What are you going do about it?"

Taming and tapping Big Data
Until recently, structured feedback—satisfaction surveys and the like—represented the most common source of customer insight, notes Annette Gleneicki, senior director of customer success for Allegiance. Now, unstructured feedback dominates thanks to social media adoption and the flood of raw data housed in organizational information systems like call recordings in the contact center. And that's created a Big Data challenge. 

"For marketers, the data is just overwhelming," notes Lisa Arthur, CMO of Aprimo. "Companies should be able to take that big data, and structure it in a way that enables them to glean insights."
Extracting actionable insight from this deluge of structured and unstructured customer data may appear daunting, but the challenge is hardly new. For years banks and many large retailers (think grocery store loyalty cards) have had massive amounts of customer transactional data at their disposal. Yet, not all of these companies take action, or they use the data for marketing only and miss opportunities to harness the insight to spur sales and service improvements that could boost profitability and customer satisfaction.

One challenge has been integrating volumes of data from disparate sources. Organizations obtain the "best customer insight through a true, 360-view customer view," says Vinay Iyer, vice president, SAP CRM Marketing. "The customer engagement should be driven from the entire range of customer touchpoints, including marketing, sales, order and fulfillment, billing and support services." Not surprisingly, 62 percent of operational and IT professionals in a 2010 Forrester Research study report that their companies have implemented or are expanding customer business intelligence (CBI) solutions. "I think the one critical, essential source of customer insight consists of integrated channels, both off-line and online," says Arthur of Aprimo. But Arthur, like Parasole's Clayton, emphasizes that the value of these insights depends entirely on how they're used to drive improvements—in customer service, customer value, and revenue.

The following examples show three ways that taking action on customer insight yields profitable results.

Action: Process improvement
When telecommunications company XO Communications Senior Manager of Customer Intelligence Cris Payne saw the clever detective work produced by his company's IBM SPSS Predictive Analytics application, his first instinct was to corroborate the findings through another insight source: customer surveys.
The data mining software combed through 500 different data elements to help Payne and his team to understand why too many voice over Internet protocol (VOIP) business customers were churning—bailing from their one- to three-year contracts before renewal. Billing confusion turned out to be one of the most relevant causes of the churn.
To confirm this finding, XO Communications sent customers a "churn study," and the responses were illuminating: The telecom clearly needed to improve communications with new customers to address any confusion or surprises that their first bills generated. XO took action on the insight by instituting a First Bill Review, conducted by service representatives with all new customers—not just new VOIP customers—to educate customers about the bill and also to engage them. Retention has increased significantly as a direct result.

Benefit: This process improvement lowered the amount of revenue the company lost to early churn by 60 percent.

Action: Scorecards and compensation links
Parasole's Clayton, a high-tech industry veteran, distills the social CRM challenge as if he were dashing off an elegant piece of code. "The world is talking about us," he explains, "and the question is whether we are smart enough to listen and act on it." Parasole enlisted newBrandAnalytics to help structure the comments guests posted about Manny's Steakhouse and nine other brands on Open Table, Yelp, and other social media platforms.

The tool identifies relevant comments and assigns the comments to categories—including service, menu, food quality, and several others—that comprise the report card the company uses to assess restaurant and restaurant manager performance. The comments in each category translate into a letter grade based on their quality. The letter grades in each category roll up to produce an overall restaurant grade; and these restaurant grades roll-up to produce an overall company grade. These grades and how they trend feature prominently in Parasole's monthly profitability meetings.

"It's important to make money, but it's equally important to be able to qualitatively capture what people are saying about you," says Clayton, whose team is correlating social conversation quality to revenue now that they have six months of structured social insights. "We can very easily spot the fact that our Good Earth restaurants' revenues have increased with the improvements in customer service at the front of house. …And not only are we correlating your guest count and your sales against whatever your letter grade is, but then we're rewarding people who make these actions happen."

Benefit: Voice of the customer data prompts customer service changes that the company can link directly to revenue increases.

Action: 30X more contacts
Compass Learning recently gave itself relatively low marks on retention rates for some customers who use the company's subscription-based online educational curriculum software.  The challenge, reports Compass Learning Demand Generation Manager Sam Eder, was that "we were not gaining enough insights from our customers to address this business problem."

So, Compass embarked on a two-pronged discovery project: identify the root cause and take corrective action. "We poured over every statistic you could possibly imagine and hit on one truth," Eder relays. "When our customers used the product, they are more likely to renew. Now, no one wants to sign us up as a McArthur Fellow for that insight, but we needed that information before we could take action."
Compass Learning implemented marketing automation software from Eloqua to support a new program in which the existing service team could engage customers, especially at-risk customers, more frequently and in a more disciplined and orderly fashion. Four key renewal objectives have been identified and Eder's team developed corresponding scripts and communications "tracks" to address each one with the goal of moving customers with low renewal likelihoods to middle and high levels of renewal probability. Customers will now receive 90 "touches" during the course of a one-year subscription; customers used to receive an average of three touches per year. These communications include telephone calls or personalized emails from service representatives, as well as automated email, designed to ensure that customers are fully utilizing their educational software. "Marketing automation has traditionally supported lead generation," Eder notes. "To use it as a spark for reengaging customers who have sort of been out in the woods, so to speak, is very exciting." 

Benefit: Although Compass Learning will not have hard numbers on overall renewal improvements for another month, Eder reports that multiple low-likelihood customers already have renewed and one customer increased its subscription size by 10X.