Forget the 4 Marketing Ps … It’s all about the Customer Analytics
For today’s organizations, marketing has evolved far beyond the traditional scope of product design, catchy commercials or glossy print ads. With the flood of consumer data now available at companies’ finger tips, the utilization of customer analytics has become the new wave of understanding existing as well as potential customers. Unlike previous generations, today’s consumers are blasted with massive amounts of information, due to mobile communications and social media, on everything from the hottest product trends to their friends’ opinion on the new IPhone. With so many products to choose from, consumers now have more power in their buying decisions, and are demanding products tailored to fit their individual needs. Not only are they asking for more individualized products, they also want companies to market to them in ways that fit their preferences and lifestyles, whether that’s customer loyalty programs or mobile discounts.
With an ever-increasingly competitive market and customers now seeking more individualized products, it is imperative for companies to embrace new methods to take advantage this changing market. This is where customer analytics comes into play. Customer analytics is the manner by which data from consumer behavior is collected, analyzed and thus utilized to create fresh and innovative marketing campaigns by way of Segmentation (Who are my customers? Where do my customers come from?) and Predictive Analytics (What are my customers’ behavioral patterns and why? What will they do next?). Throughout all organizations, the application of customer analytics can translate into a better understanding of customer needs and product preferences and thus create more effective marketing platforms.
Customer Analytics in the Spotlight: Nordstrom
Originally founded in 1901 as a men’s shoe store, Nordstrom today is one of the largest upscale fashion retailers in the U.S. totaling over $8.6 billion in revenues in 2012. Known for its excellence in customer service, Nordstrom has prided itself on understanding its customers and building lifelong relationships. During the 2012 Marketing Optimization Summit in San Francisco, Jack Steck, part of Nordstrom’s Advanced Analytics group, conversed on Nordstrom’s current use of JMP analytics. For Nordstrom, their use of JMP (analytics) was to determine what the buying behavior of their customers was and therefore determining how to “promote the right products and brands to the right customers, maximizing revenue in the process”. As discussed by Nordstrom’s Advanced Analytics Group, “Using JMP allowed us to figure out, for example, which segments of customers are more likely to buy brand Y and first buying brand X”.
Key Metrics used In Customer Analytics (citation from “Customer Analytics -- The Genie is in the Detail”)
§ Customer Profitability analysis by segments
§ Customer life time value analysis
§ RFM (Recency, Frequency, Monetary Value) Analysis
§ Customer Loyalty Index
§ Customer Cost Analysis – Acquisition and Retention Cost
§ Customer Churn Analysis
§ Brand Perception Analysis
§ Market Basket Analysis-Affinity Analysis
Benefits of Customer Analytics (citation from “Customer Analytics -- The Genie is in the Detail”)
§ Identify segments based on profitability
§ Assesses the life time value of the customer
§ Targeted marketing and campaigning
§ Manage better and more personalized customer relationships
§ Improved customer retention and satisfaction
§ Better utilization of marketing resources and increased ROI on marketing investments
§ Predict future buying behavior of consumers based on present and historical data
Brandel, Mary. The Science of Customer Loyalty. Computerworld [serial online]. August 13, 2012; 46(14):24-26. Available from: Business Source Premier, Ipswich, MA. Accessed January 16, 2013.
Sathyanarayanan, R. Customer Analytics -- The Genie is in the Detail. Journal of Marketing & Communication [serial online]. January 2012; 7(3):28-33. Available from: Business Source Premier, Ipswich, MA. Accessed January 15, 2013.
Thompson, Bob. Geeks Rule! Using Big Data Analytics at Nordstrom and LinkedIn. Customer Think.com. Http://www.customerthink.com/blog/geeks_rule_using_big_data_analytics_at_nordstrom_and_linkedin. Posted March 5, 2012. Accessed January 16, 2013.