forrester spotlight session

Evolving To Strategic Customer Intelligence

Dave Frankland, VP & Research Director

@dfrankland

DMA Strategic SummitOctober 1, 2011

Beware those that would predict and prognosticate!

What’s driving the interest in customer intelligence?

How do leading firms apply customer intelligence?

How can you evolve your CI maturity?

Agenda

Macro trends facing marketers

1 Post-recession Austerity.

2 Spend is shifting.

3 Experience is king.

4 Technology is core.

5 Mobile.

6 The Splinternet.

7 Data explosion.

8Empowered consumers.

We have entered the “Age of the customer”

June 2011 “Competitive Strategy In The Age Of The Customer”

Customer obsession

Focusing strategy, energy, and budget on: – Processes that enhance knowledge of and

engagement with customers

– And prioritize these over maintaining traditional

competitive barriers

The role of Customer intelligence

What is Customer Intelligence?

The management and analysis of customer data from all sources, used to drive marketingperformance and business strategy.

A rose by any other name would smell as sweet

Consumer insights

1:1 marketing

Customer knowledgeRelationship marketing

Customer analytics

Data driven marketing

Customer experience

Database marketing

Direct marketing

Customer-centric marketing

Left brain marketing

The Customer Intelligence Cycle

Customer

knowledge

Capture

Manage

Analyze

Multiple stumbling blocks keep firms from turning data into insight

Organizational silos

Data disparity

Technology gaps

Measurement skills

Splinternet

As a result…

Source:ForresterResearch,Inc.59034

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MR DBM

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Barrier 1Ignorecustomermotivation

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Barrier 1Resist new

data-gatheringmethods

Customer truth• Single view ofcustomer

• Drive strategy•Informingbusiness decisions

Barrier 4Sink into

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MR DBM

Barrier 3Lack

visibilityinto

businessdecisions

Barrier 2Struggleto

turninsights

into action

Barrier 1Resist new

Barrier 4Sink into

costcenterstatus

1/3 page

1/2 page

2/3 page

MR DBM

Barrier 3Lack

visibilityinto

businessdecisions

Barrier 2Struggleto

turninsights

into action

Barrier 1Resist new

Barrier 4Sink into

costcenterstatus

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1/2 page

2/3 page

MR DBM

Barrier 3Lack

visibilityinto

businessdecisions

Barrier 2Struggleto

turninsights

into action

Barrier 1Resist new

Barrier 4Sink into

costcenterstatus

Current decision support models miss the mark

1/3 page

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MR DBM

Barrier 3Lack

visibilityinto

businessdecisions

Barrier 2Struggleto

turninsights

into action

Barrier 1Resist new

Barrier 4Sink into

costcenterstatus

Few firms operate at a strategic level of intelligence

Strategic Intelligence

Marketing Intelligence

Functional Intelligence

Customer intelligence in action

Fan Relationship Marketing

FRM’s mission:

– To know fans well enough — at any point in time or place — to serve them better.

– And, to drive direct and indirect revenue.

ESPN began by centralizing customer data

Research Output

Market trends

Segmentation

Service Encounters

Click Stream Activity

Transactions

Marketing Touch Points

CustomerDatabase

Registrations

At first glance, fans look very similar

ESPN turns data into intelligence

Created a Fan Value Model

– Ranks ESPN fans from high to low based on value they deliver to ESPN.com

– Included variables such as time spent on ESPN.com and premium product

revenue.

ESPN turns data into intelligence

Created a Fan Value Model

– Ranks ESPN fans from high to low based on value they deliver to ESPN.com

– Included variables such as time spent on ESPN.com and premium product

revenue.

– Uncovered a classic 80/20

– Marketing today focuses on maximizing fan value – e.g. by migrating fans to

higher value deciles.

ESPN uses Intelligence to adapt and evolve

Product strategists prioritize new product development based on

appeal to high value fans.

Interactive marketing and sales teams created ESPN Select to

allow advertisers to target based on fan knowledge - turning

marketing into a revenue center.

The customer experience team leveraged knowledge of cross

product penetration in its website redesign.

Insights & Innovation

Insights & Innovation charter:

– Develop and seed analytically driven innovation at Farmers.

Evangelizing Customer Lifetime Value

I&I team is focused on developing and evangelizing a Customer Lifetime

Value (CLTV) approach to customers.

Predicting CLTV based on:

– Value of present relationships.

– Expected stickiness of relationships.

– Expectation of future business.

Farmers turns data into Intelligence

Customer Lifetime Value Segments

Top 5% of customers deliver 25x revenue than the bottom 5%

The top 5% drive 90-93% of profits!

Farmers uses Intelligence to adapt and evolve

Marketers test creative copy on high value customers.

The sales team can understand why certain storefronts deliver

higher quality customers. And, the differences between top

performing and less successful agents.

Customer experience teams understand the incremental impact

of a superior claims experience on CLTV .

Fresh Direct turns data into Intelligence

140 customer surveys per year.

– Satisfaction surveys, testing promotions, advertising, product, honing in on

problem areas.

Customer database tracks every customer order.

– Average order is 30+ SKUs and $120.

Operations data.

– Orders per truck, out of stock items, damages, late deliveries, complaints.

Fresh Direct uses Intelligence to adapt and evolve

CEO uses Intelligence to drive the business every day.

Verbatim comments in surveys drive decisions.– Reducing packaging.

Fresh Direct side effect

“Really, you have no idea how irritating it is to get one package of crackers in a huge box

“I just received my order and was really disturbed by the fact that one large box contained only one ½ gallon of milk, and another small box only contained a bag of rice.

Fresh Direct adapted its supply chain

Verbatim comments in surveys drive decisions.– Reducing packaging.

– Product ratings.

Marketers leverage verbatim comments in surveys

drive decisions.– Reducing packaging.

– Product ratings.

Changing how people shop.

Customer history increases average order size.

Evolving your CI maturity

Create a customer intelligence command center

Play the role of the customer strategist

Source: April 29, 2011, “Preparing For The Intelligent Enterprise: A Blueprint For Customer Intelligence Professionals”

Put the customer at the center of technology decisions

Evolve your culture to win in the age of the customer

To drive success, CI must be:– Relevant

– Collaborative

– Customer obsessed

– Timely

– Ubiquitous

Thank you

Dave FranklandTwitter: @dfrankland

http://blogs.forrester.com/dave_frankland

www.forrester.com

forrester spotlight session

customer order

role of customer intelligence

customer intelligence

customer database

customer history

analysis of customer

fresh direct uses intelligence

customer experience

Business

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