Analytics is essential for creating the best experience for your customers. It is the enabler for achieving experiences that are personal, engaging, integrated and convenient.
What are we going to build?
The process of how organisations create the experiences they deliver to customers have evolved considerably. The most successful have created a customer centric approach, putting the customer in the middle, giving the customer what they want.
Whilst the majority of readers would agree that this is a very logical approach, organisations are sometimes less clear about how best to go about it. What types of experience are customers going to want, or even expect, in the next 5 years? And therefore what types of propositions are we going to build for tomorrow? These are difficult questions to answer.
A data driven customer centric approach is required for developing new customer experiences. Organisations need to start by understanding what drives value for their business, the so called value drivers. For improving top line growth, a retail business might traditionally focus on driving footfall in store whilst also encouraging customers to buy as many products as possible, increasing average basket size.
The outcome of identifying the drivers should be a series of questions that the business needs to know, the answers of which give the vital information on how these drivers can be affected. For example, what drives a customer in-store? What do they like? What are their behaviours? Does this differ when you look at different channels? What combinations of products do customers purchase? What effects their purchasing decision? Are the answers to these changing? Why?
The list of questions is potentially long and winding, and the ways to answer them equally so as the amount of customer data collected is growing at an unfathomable rate. This gives organisations an opportunity as it presents them with the ability to answer questions in a number of different ways, but this also includes the wrong ones! Organisations must choose their approach carefully, spending time deciding what data they need and why. Anything can be counted, but not everything counted counts.
An organisation must then go through the process of answering the question. We do this through the application of analytics techniques, leveraging insight from the data and delivering business value. The ability to answer the question depends on the organisations analytical capabilities. Sometimes organisations don’t have the data or the skills to answer the question in the best possible way. Organisations need to be realistic in terms of what they can do in the now and invest in their capabilities for the future, tomorrows questions.
A simple approach is to conduct some form of primary research in store such as a survey. However, are the responses the correct representation of a company’s customer base? And do the responses reflect the view of your most valuable customers? A segmentation framework is needed to understand the needs of your customers according to the characteristics and behaviours that drive value within the business.
The size of an organisation’s customer segments will play an important role as there is no point in designing a great experience for your most valuable customers that represent a small proportion of overall customers. Irrespective of an organisation’s end decision on how to prioritise what to build, there will be a list, and the benefits of the experiences on the list need to be quantified over time.
How is an experience going to impact my business?
The components of any business case are made up of benefits and costs. If an organisation knows the cost of implementing a new experience, it can estimate the amount of benefit required to make this a feasible option. Organisations need to be realistic in forecasting what is achievable in terms of realising the benefits over time.
There are a number of factors that determine how quickly benefits can be realised. For example, the ease of implementation of the underlying technologies. Another maybe the lead time in raising awareness of the new experience. We use system dynamics to forecast how an experience will deliver benefit over time, the impact on existing experiences performance, as well as testing different scenarios to understand what could impact these benefits. This not only equips an organisation with a realistic view of when they can expect tangible benefit but also the necessary dependencies of what activities need to be carried out to ensure that new experiences have every chance of success.
Organisations are creating new experiences all the time. Some have the philosophy of being customer centric, but few are realising the benefits in practice. The above gives business an approach for how we recommend our customers develop new customer experiences that provide your customers with what they want together with deliver positive business results.
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