how customer analytics & insights enrich multichannel ... › assets › gated › ibm ›...

A Practitioner’s Guide to Customer Engagement via

Multi-Channel Journey Design

How Customer Analytics & Insights Enrich Customer Journey Design

A Practitioner’s Guide to Customer Engagement via

Multi-Channel Journey Design

Licensed for distribution by IBM—

©2015-2016 Hypatia Research Group. All Rights Reserved. “How Customer Analytics & Insights Enrich Customer Journey Design: Benchmarks,

Best Practices and GalaxyTM Vendor Evaluations.” www.hypatiaresearch.com ∎ 781-862-5106 NOTICE: Information contained in this publication has been sourced in good faith from primary, secondary and end-user research and is believed to be reliable based upon our research methodology and analyst’s judgment. Ultimate responsibility for all decisions, use and interpretation of Hypatia Research Group reports or publications remains with the reader, subscriber or user thereof.

HYPATIA RESEARCH GROUP LLC. (HRG) hereby grants and assigns to IBM (NYSE) and all business units,

divisions and subsidiaries thereof, worldwide syndication rights to a report entitled How Customer Analytics

& Insights Enrich Journey Design Processes: GalaxyTM Vendor Evaluation. This sales agreement entitles

the purchaser, IBM Corporation (NYSE) to all distribution, quote, syndication, translation, and publication

rights. Hypatia Research Group, LLC must be credited with proper attribution [©2015-2016 Hypatia Research

Group, LLC] in each and every instance of content usage. IBM (NYSE) agrees to take good faith steps to

safeguard the Intellectual Property contained in this research study.

IBM Corporation (NYSE)and all business units, divisions and subsidiaries thereof understand that the full

research report may be made available as a download for the company’s customer, prospects or leads which

must exclude 1) Any industry analyst or market research competitor to Hypatia Research Group including, but

not limited to those cited below , 2) All other vendors or management consultancies that provide Voice of the

Customer, Multichannel or Omni-channel Customer Engagement, Customer Analytics, Customer Journey

Design, Journey Builder or Customer Journey Orchestration software tools, applications, solutions or services

named or not named in this research study; 3) Agencies, independent consultants or management

consultancies that offer consulting services or advisory services related to Voice of the Customer, Multichannel

or Omni-channel Customer Engagement, Customer Analytics, Customer Journey Design, Journey Builder or

Customer Journey Orchestration innovation, methodology and/or processes or 4) Any company or software

vendor cited or named in this research study.

Therefore, both parties agree that any part of this report may appear or be utilized in any IBM Corporation

(NYSE) communication vehicle such as quote, syndication, publication, promotion, business development

presentation, translation, or distribution, inclusive of verbal, online or print media, once full payment for

licensing & syndication rights are received by Hypatia Research Group, LLC. The trademarked Product

MatrixTM and/or GalaxyTM chart may be utilized solely for business development presentations and/or full

translations of this study and for report distribution to prospects and/or clients, but may NOT be utilized as

part of a press release, slide-share, or any type of public, digital, online or general distribution unless agreed to

in writing by HRG management.

Note: The naming convention for this primary research study also includes Operationalizing Customer

Analytics by Embedding Models within Customer Engagement Workflows ©2015-2016 Hypatia Research,

LLC. All rights reserved. No part of this research study may be repurposed, distributed, translated or published

in any format without the express written consent of the Hypatia Research Group, LLC and its management.

Our usage policies are is posted on our website at http://hypatiaresearch.com/shop-now-customer-intelligence-

research/policies-terms-conditions-of-sale/.

http://www.hypatiaresearch.com/

http://hypatiaresearch.com/product/how-customer-analytics-insights-enrich-journey-design-processes-galaxytm-vendor-evaluations/




http://hypatiaresearch.com/shop-now-customer-intelligence-research/policies-terms-conditions-of-sale/






Executive Summary

How Customer Analytics & Insights (CEA&JD) Enrich Customer Journey Design

In this age of digital engagement, interaction, and commerce, analyses of customers’ interactional and

transactional behaviors with the goal of creating

actionable business insights are essential in designing

effective multi-channel customer journeys. Business

intelligence applications and dashboards are useful for

reporting and providing historical or near-real time

guidance and trends. However, transforming massive

amounts of customer information (structured and

contextual) into actionable insights is a significant

challenge for organizations of all sizes, across all

industries and all geographies.1 (See “Delivering Big Data

Analytics Insights: Why Choose Between Accuracy, Agility or

Speed?”)

Why do organizations seek to design effective multi-

channel customer journeys? Customers demand it.

Technology has enabled consumers to use multiple

channels to interact at the time, place, and manner of

their preference. In order to defend or retain market

share and to potentially increase top line growth and

cost reductions, businesses are compelled to respond

to customer demands.

Leveraging multi-channel customer analytics & insights

to enrich customer journey design has the potential to:

Optimize omni-channel2 customer

interactions and engagement;

Enhance employee engagement via “guided

intelligenceTM “(e.g. a version of next best

offer);

Improve the customers’ purchase (commerce) experience;

1 See “Delivering Big Data Analytics Insights: Why Choose Between Accuracy, Agility or Speed?” 2 Omni-channel versus multi-channel: omni-channel is the use of all physical channels (offline) and digital channels (online) which offers a seamless, innovative and unified customer experience. Multi-channel is the use of three or more channels of engagement.

MARKET Research Approach

Hypatia Research Group applies quantitative &

qualitative methodologies to evaluates Market-

drivers, Actions, Responses, Knowledge,

Expertise, and Technology enablers (MARKET)

that influence corporate behavior in specific

business environments. These terms are defined

as follows:

Market Pressures — external forces that

impact an organization’s market

position, competitiveness, or business

operations;

Actions — the strategic approaches that

an organization plans in response to

industry pressures;

Responses—how organizations address

business challenges;

Knowledge & Expertise—competencies,

skills and processes required to execute

corporate strategy;

Enabling Technology— key functionality

of technology solutions required to

support an organization’s enabling

business practices.


http://hypatiaresearch.com/product/delivering-big-data-analytics-insights-why-choose-between-accuracy-agility-or-speed/







Segment, profile, predict and prescribe best practices for optimal types of customer

engagement;

Mitigate identity theft, fraud & risk, (See “Customer Identity Authentication: Best Practices in

Avoiding Identity Theft, Fraud & Risk.”);

Improve operational business processes through a customer-centric lens.

Customer Analytics and Insights

Insights gleaned from business intelligence reports and

dashboards are worthwhile for decision support, early

warning signals or identifying trends that warrant

further investigation before taking action. However,

advances in analytical technology (cognitive and

machine learning) for example—combined with the

proliferation of customer engagement channels has

created the potential to fuel omni-channel customer

journey design.

At present, there are five main types of advanced

analytics:

Descriptive-Identifies customer segments

using metrics such as frequency, lifetime

value, or behavior, in order to create

propensity models.

Diagnostic-Explores causal relationships like root cause analysis to better understand why

customers purchase or pass on offers.

Predictive-Uses customers’ past behavior with seasonal or lifestyle triggers to model and

predict future behavior.

Prescriptive-Optimizes knowledge from aforementioned three advanced analysis techniques

via synthesis, and “what if?” or Monte Carlo simulations to suggest best outcomes in the form of

guidance.

Cognitive-Bridges the gap among machine learning (automated self-learning from experience

and the ability to identify associations), the potential of Big Data and practical decision-making

in real time with confidence scores that reflect the accuracy of responses.3

It should come as no surprise that enterprise-level omni-channel customer analytics, similar to Big Data

Analytics (BDA), encompass numerous information sources, multiple technologies (software and

hardware), nimble business processes and specialized human expertise in advanced analytics. Not

3 In the consumer world, pieces of cognitive analytics form the core of artificial personal assistants such as Apple’s Siri® voice recognition software and the Google Now service, as well as the backbone for the Xbox® video game system’s verbal command interface in Kinect®.

“Everyone says that their solution is

the best for ‘next best action’ or ‘real-

time decisioning’ which involves

statistical modeling, ingesting data

in motion, streaming analytics.

Different products have strengths in

certain areas, but need to stretch to

accomplish all that is necessary. The

devil is in the details….build

requirements first and then look

around and see which products may

be appropriate for your exact goals.”

-- Associate Director, Verizon


http://hypatiaresearch.com/product/customer-identity-authentication-best-practices-in-avoiding-identity-theft-fraud-risk/

http://hypatiaresearch.com/product/customer-identity-authentication-best-practices-in-avoiding-identity-theft-fraud-risk/




surprisingly, this Hypatia Research Group study found that global organizations are successfully utilizing

various analytical techniques in the form of these types of engagement.

Figure 1: How Customer Analytics Will Improve Journey Design Processes?

Source: ©2015-2016 Hypatia Research Group, LLC. All Rights Reserved.

Through the lens of customer engagement, the practical applications of these advanced analytical

techniques should be viewed as:

Descriptive-Who is the customer?

Diagnostic-Why are they engaging with your brand?

Predictive-What are they likely to want?

Prescriptive-How can your brand best engagement with them?

Cognitive-When the customer engages with your brand, your brand knows why, what they

likely want, and how best to engage with them based on numerous previous experiences.

Perception Versus Reality

It has never been a better time for organizations that seek to enhance their customer-centric interactions

and business processes via multiple channels and preferred touch-points. Performance improvements, cost

efficiencies and cloud delivery mean that enabling software and services have never been more accessible...

Conversely, it has never been a more challenging time to select optimal software-based technologies,

services and/or solutions. Why?

Currently there are more than 500 software tools, applications, systems and solutions on the market. Each

value proposition claimed is a theme or variation on supporting “customer experience management”, or on

improving the “customer experience”. Confusing is that these options encompass multiple software





categories--everything from customer relationship management, contact center, voice of the customer,

digital marketing, business process management and workflow, text analytics and social media intelligence

to workforce optimization, scheduling and contact center solutions.

Figure 2: Perception: Customer Experience vs. Customer Engagement?


Research Approach

Hypatia Research Group surveyed more than 1000 global executives directly involved with extrapolating

and applying customer insights with goals such as growth acceleration, service and support enhancement,

customer acquisition and retention improvements.

Input from 566 respondents that actually use, recommend,

influence, hold budget or veto power over the purchase of

enterprise customer analytics, customer insights, customer

engagement and journey design process software were

included in our analysis of how, why or when organizations:

Invest in customer analytics and journey design

software solutions—and how much is budgeted

through 2018?

Measure productivity and effectiveness of

customer analytics and journey design initiatives

and how often?

63.3%

acknowledge a

difference.

“We are pioneers in this space

and required a solution that is

highly flexible, configurable

and customizable.”

--Prakash Muthukrishnan CIO,

PurchasingPower.com

63.3%

acknowledge a

difference.





Prioritize specific customer analytics and journey design initiatives against software selection

criteria?

Commit a percentage of company revenues to customer analytics and journey design program

investment?

Realize a return on investment (ROI)?

Evaluate and ultimately select specific customer analytics and journey design vendors or

consulting firms?

Our Assessment: Galaxy Vendor Evaluations

Hypatia Research Group has benchmarked the current state of vendors who offer customer analytics and

journey design solutions for its 2015-2016 Galaxy rankings. We believe that enterprises will be best served

by applications, solutions and tools that demonstrated the

following features and capabilities:

Multi-channel digital marketing;

Multi-channel customer engagement & commerce;

Real-time interaction management;

Customer analytics and insights dashboards with

visualization;

Multi-channel business process visualization;

Operationalizing analytics by embedding them

within customer engagement workflows; and

Highly adaptable business process workflow configuration;

Our research and analysis reveals that the types of customer analytics utilized are just as important as the

business processes developed when combined with the ability to execute on these insights. In other words,

customer analytics and insights deliver the “Who”, “What”, “Why”, “How “and “When”, however, the

decision to act on this insight in a manual, semi-automated or fully automated fashion is often a key catalyst

for innovation, organizational and cultural change.

Customer engagement analytics and journey design solutions range in price from $50,000 to more than

$1M for an enterprise deployment. On average, most large enterprises (greater than $2B in revenues) cited

investments ranging from $250,000 up to $2M. Mid-market ($100M to $2B in revenues) and small

enterprises (less than $100M) most often reported investments ranging from $25,000 up to $250,000. Our

analysis finds that enterprises have plans for steady investments in these solutions from 2016 throughout

2018. Organizations should carefully evaluate how investment in these solutions will enable them to either

maintain market-share and steady growth over the next decade.

About Hypatia Research Group

Hypatia Research Group takes an end-user approach to business and technology research. Similar to

Consumer Reports, our industry experts provide end-user organizations with objective independent

primary research assessments as decision-support in evaluating various enabling technologies, service

providers and consulting firms. To maintain its independence and impartiality, Hypatia Research Group

“We are pioneers in this space

and required a solution that is

highly flexible, configurable

and customizable.”

--Prakash Muthukrishnan CIO,

PurchasingPower.com


http://hypatiaresearch.com/customer-intelligence-research-advisory-services/

http://hypatiaresearch.com/customer-intelligence-research-advisory-services/

http://www.consumerreports.org/cro/about-us/our-mission/index.htm




does not engage in syndicated research sponsorships4, accepts no outside advertising, provides no free

samples, and utilizes proprietary research techniques to evaluate vendors.

Why this focus on actionable insight? Knowledge for the sake of knowledge without a purpose is outside

our mission.

Since 2001, Hypatia Research Group has defined Customer Intelligence Research by how businesses use

software technology and/or service providers to capture, manage, analyze and apply customer insights to

enhance performance and to accelerate growth. We believe our comprehensive primary research approach

to guiding end-users on their investments in software and services qualifies us to provide practitioners

with expert independent and objective analysis, best practice guidance and benchmarks.

Founded in 2001, Hypatia’s motto has been calculating results. Our research methodology, a hybrid

approach that combines qualitative and quantitative input from end-users, benchmarks the business return

on investment realized by organizations of all sizes. http://www.HypatiaResearch.com

4 Vendors may license distribution rights to Hypatia Research Group studies after completion, or engage in semi-custom research projects, but may

not commission syndicated studies.






Table of Contents

Executive Summary ................................................................................................................................................................................ 3

How Customer Analytics & Insights (CEA&JD) Enrich Customer Journey Design ................................................... 3

Customer Analytics and Insights .............................................................................................................................................. 4

Perception Versus Reality ........................................................................................................................................................... 5

Research Approach ........................................................................................................................................................................ 6

Our Assessment: Galaxy Vendor Evaluations .......................................................................................................................... 7

About Hypatia Research Group ................................................................................................................................................ 7

Introduction: Customer Analytics & Journey Design .............................................................................................................. 12

Why Customer Analytics AND Journey Design? ................................................................................................................... 12

Research Methodology, Approach & Vendor Rankings..................................................................................................... 14

Survey Respondent Profiles ..................................................................................................................................................... 14

Chapter One: Business Realities ...................................................................................................................................................... 19

Perception and Reality .................................................................................................................................................................... 19

Performance Metrics ................................................................................................................................................................... 19

Current Environments ................................................................................................................................................................ 21

Reality Meets Ability ........................................................................................................................................................................ 24

Chapter Two: Change Happens........................................................................................................................................................ 25

Prioritizing and Implementing Real Change .......................................................................................................................... 25

Budget Holders and Direct Accountability ......................................................................................................................... 27

Chapter Three: Vendor Landscape Evaluations ....................................................................................................................... 30

Hypatia Research Group 2015-2016 Customer Analytics and Journey Design Evaluation Methodology ... 30

Galaxy Leaders ............................................................................................................................................................................... 31

Satellite Competitors: ................................................................................................................................................................. 32

Nebulae Contenders: ................................................................................................................................................................... 33

Chapter Four: Show Me the Data-Driven Results .................................................................................................................... 36

Business ROI Evaluations .............................................................................................................................................................. 36

Verizon Reduces Customer Effort and Costs with Journey Analytics ..................................................................... 37

Mattel, Inc. Builds Toys and Customer Journeys ............................................................................................................. 40





Numbers Reveal Tangible Results ......................................................................................................................................... 41

Chapter Five: Future Considerations ............................................................................................................................................ 43

Reasons for Investment .................................................................................................................................................................. 43

Customer Information Lives Throughout and Beyond the Enterprise .................................................................. 44

Investment Varies Greatly ........................................................................................................................................................ 45

Finding Competitive Advantage ............................................................................................................................................. 46

Checklist for Consideration ........................................................................................................................................................... 49

Conclusion ............................................................................................................................................................................................ 51

About the Author ................................................................................................................................................................................... 52





Table of Figures

Figure 1: How Customer Analytics Will Improve Journey Design Processes? ............................................................... 5

Figure 2: Perception: Customer Experience vs. Customer Engagement? ........................................................................ 6

Figure 3: Perception: Type of Customer Analytics Utilized for Journey Design?*...................................................... 13

Figure 4: Respondents by Geography ........................................................................................................................................... 15

Figure 5: Respondents by Role ........................................................................................................................................................ 15

Figure 6: Respondents by Company Size ..................................................................................................................................... 16

Figure 7: Timeframe of Usage .......................................................................................................................................................... 16

Figure 8: Respondents by Industry / Sector .............................................................................................................................. 17

Figure 9: Respondents by Function ............................................................................................................................................... 18

Figure 10: Perception: Customer Experience vs. Customer Engagement? ................................................................... 20

Figure 11: Perception: Importance of Software Usage to Business Results ................................................................. 21

Figure 12: Importance of Multi-Channel Information Sources .......................................................................................... 22

Figure 13: Ability to Map Multi-Channel Customer Journeys ............................................................................................. 23

Figure 14: Four-Pronged Approach to Prioritizing Real Change ....................................................................................... 25

Figure 15: Prioritized Business Challenges for Investment & Deployment .................................................................. 26

Figure 16: Accountability for Business Benefits & Return on Investment .................................................................... 28

Figure 17: Ability to Transform Customer Insights into Multi-channel Journey Processes? ................................ 29

Table 1: Vendors Evaluated 2015-2016 ...................................................................................................................................... 31

Figure 18: Hypatia’s 2015-2016 Galaxy of Customer Analytics & Journey Design Software Vendors .............. 32

Table 2: Example of IBM Predictive Customer Intelligence with IBM Commerce ..................................................... 34

Figure 19: Marketing Function: Ability to Measure Return on Investment .................................................................. 36

Figure 20: Benefits of Leveraging Customer Analytics to Improve Journey Design .................................................. 41

Figure 21: Why Invest in Customer Analytics & Journey Design Software ................................................................... 44

Figure 22: Investments Planned 2016-2018 ............................................................................................................................. 45

Figure 23: Comparison of Information Sources: Big Data, VOC and Customer Analytics ....................................... 46

Figure 24: Current Delivery Environments ................................................................................................................................ 47

Figure 25: Maturity Models: Using Customer Insight to Enrich Journey Design Processes ................................... 48





Introduction: Customer Analytics & Journey Design

Why Customer Analytics AND Journey Design?

Insights gleaned from business intelligence reports and dashboards are worthwhile for decision support,

early warning signals or identifying trends that warrant further investigation before taking action.

However, advances in analytical technology (cognitive and machine learning) for example—combined with

the proliferation of customer engagement channels has the power to fuel omni-channel customer journeys.

In fact, our research validates that enterprise-level omni-channel customer analytics, similar to Big Data

Analytics (BDA), encompass numerous information sources, multiple technologies (software and

hardware), nimble business processes and specialized human expertise in advanced analytics.

At present, there are five main types of advanced analytics:

Descriptive-Identifies customer segments using metrics such as frequency, lifetime value, or

behavior, in order to create propensity models.

Diagnostic-Explores causal relationships like root cause analysis to better understand why

customers purchase or pass on offers.

Predictive-Uses customers’ past behavior with seasonal or lifestyle triggers to model and

predict future behavior.

Prescriptive-Optimizes knowledge from three previous advanced analysis techniques via

synthesis, and “what if?” or Monte Carlo simulations to suggest best outcomes in the form of

guidance;

Cognitive-Bridges the gap between machine learning (automated self-learning from experience

and the ability to identify associations), the potential of big data and practical decision-making

in real time with confidence scores that reflect the accuracy of responses.5

5 5 In the consumer world, pieces of cognitive analytics form the core of artificial personal assistants such as Apple’s Siri® voice recognition software and the Google Now service, as well as the backbone for the Xbox® video game system’s verbal command interface in Kinect®.

Key

Fin

din

gs

Analytical advances in technology combined with the proliferation of

customer engagement channels have created the potential to fuel omni-

channel customer journey design.

High levels of market fragmentation exist due to lack of “blended” customer

engagement—competitive advantage is seized by savvy businesses with a

fully integrated enterprise-level customer strategy.

Omni-channel customer analytics encompass numerous information sources,

multiple technologies (software and hardware), nimble business processes

and specialized human expertise in advanced analytics





Through the lens of customer engagement, the practical applications of these techniques should be viewed

as:

Descriptive-Who is the customer?

Diagnostic-Why are they engaging with your brand?

Predictive-What are they likely to want?

Prescriptive-How can your brand best engagement with them?

Cognitive-When the customer engages with your brand, your brand knows why, what they

likely want, and how best to engage with them based on numerous previous experiences.

Figure 3: Perception: Type of Customer Analytics Utilized for Journey Design?*


*Multiple responses possible. Will not =100%

Some software vendors offer solutions with templates and features that facilitate creating specific types of

algorithmic models6 such as customer retention for retail and telecommunications, or identity fraud for

banking and medical claims management. Not surprisingly, our research found that global organizations

are successfully applying various analytical techniques (based on the five detailed above) in these types of

engagement.

6 Inclusive of cognitive and machine self-learning models





Operationalizing analytics by embedding models within customer engagement workflows facilitates brand

consistency and optimizes personalization through automation. Evaluate how, and if this might shorten

time to value when implementing customer analytics, customer journey design and customer engagement

programs. (See Chapter Three: Galaxy Vendor Evaluations)

Our research and analysis reveals that the types of customer analytics utilized are just as important as the

business processes developed when combined with the ability to execute on these insights. In other words,

customer analytics and insights deliver the “Who”, “What”, “Why”, “How “and “When”, however, the

decision to act on this insight in a manual, semi-automated or fully automated fashion is often a key catalyst

for innovation, organizational and cultural change.

Research Methodology, Approach & Vendor Rankings

Why this focus on actionable insight? Knowledge for the sake of knowledge without a purpose is outside

our mission. Since 2001, Hypatia’s Research Group’s motto has been calculating results. Our research

methodology, a hybrid approach that combines qualitative and quantitative input from end-users,

benchmarks the business return on investment7 realized by organizations of all sizes.

Hypatia Research Group takes an end-user approach to business and technology research. Similar to

Consumer Reports our industry experts provide end-user organizations with objective independent

primary research assessments as decision-support in evaluating various enabling technologies, service

providers and consulting firms. To maintain its independence and impartiality, Hypatia Research Group

does not engage in syndicated research sponsorships8, accepts no outside advertising, provides no free

samples, and utilizes proprietary research techniques to evaluate vendors.

Along with our trademarked Hypatia9 Research Group GalaxyTM evaluation rankings of vendors that offer

enterprise level CEA&JD software solutions, this study provides end-user organizations with an analysis of

why companies invest in CEA&JD, what tangible benefits are possible, and what metrics can be used to

measure the ROI of these initiatives.

Survey Respondent Profiles

More than 566 global respondents with functions primarily in merchandising, marketing, customer service

and support, operations, business analysts and IT completed our survey.

Company size encompassed: large enterprise with revenues greater than $2B (54%), mid-market (44.6%)

and small enterprises with less than $100M in revenues (1.4%). Geographic breakdown: (47%) North

America, (33.9%) EMEA, (18.7%) Asia Pacific and (0.4%) South America.

7 From enabling technologies and services providers

8 Vendors may license distribution rights to Hypatia Research Group studies after completion, or engage in semi-custom research projects, but may

not commission syndicated studies.

9 Hypatia of Alexandria, (c.370-415 AD) a professor of astronomy, mathematics and philosophy, invented several scientific devices--the astrolabe, plane-sphere, and hydro-scope (hydrometer).


http://www.consumerreports.org/cro/about-us/our-mission/index.htm




Figure 4: Respondents by Geography

Figure 5: Respondents by Role





Figure 6: Respondents by Company Size

Figure 7: Timeframe of Usage


*Summed by timeframe, not software category.





Industry breakouts: Retail/CPG (22.3%) financial services (14.1%) manufacturing (11.7%) and consumer

good & electronics (10.2%) comprised the largest industry sectors representation followed by

telecommunications and media (7.4%).

Figure 8: Respondents by Industry / Sector





Figure 9: Respondents by Function





Chapter One: Business Realities

Perception and Reality

In 2015, more than 500 software companies consider themselves providers of “customer experience

solutions. Fewer than 100 self-identify as providers

of “customer engagement solutions”. Is there really

a difference between the two and how does one

know which will benefit the brand as well as

consumers of the brand’s products or services?

Which approach will reduce customer churn,

enhance customer acquisition and retention and

ultimately enable a brand to grow?

Our analysis illustrates that while vendors are

keeping their options open as to whether they

provide customer experience or customer

engagement solutions, the majority of actual

business users see a difference between the

two. More importantly, customer engagement

offerings are gaining traction because they are

seen as a more tangible—and measurable.

(Figure 10)

Performance Metrics

While customer experience management is an

important concept—one that emphasizes

customer-centricity as an overall enterprise

goal—customer engagement is where theory

meets practice in terms of quantifiable

business results. Critical considerations include:

Key

Fin

din

gs

More than 500 software companies consider themselves providers of

“customer experience solutions. Fewer than 100 self-identify as providers of

“customer engagement solutions”;

The tide is shifting in favor of customer engagement which is seen as a more

tangible—and straightforward performance to measure;

The ability to effectively map and engage with customers during multi-

channel journeys is dependent on real-time analysis of numerous

information sources.

“At NICE, we consider both

experience and engagement as

interconnected. While there might be

nuances between the two, ultimately

the point of goal of each is to improve

the overall customer interaction.”

--Spokesperson, Nice Systems

“Customer experiences are summations

of recent experiences with the brand,

and can be either direct interactions (e.g.,

website, call center, or through actual

usage of the product/services) and they

can also be indirect (e.g., social

mentions, community websites, or any

3rd party mentions).”

--Director, SAP

“At NICE, we consider both

experience and engagement as

interconnected. While there might be

nuances between the two, ultimately

the point of goal of each is to improve

the overall customer interaction.”

--Spokesperson, NICE Systems

“Customer experiences are summations

of recent experiences with the brand,

and can be either direct interactions (for

example, website, call center, or through

actual usage of the product/services)

and they can also be indirect social

mentions, community websites, or any

third party mentions).”

--Director, SAP





How does one measure the overall customer experience with a brand?

Over what duration or timeframe? Which channels will be measured?

Do the key performance metrics correlate to actual changes in retention, acquisition, market-

basket size, customer lifetime value, top-line or bottom-line results?

Are cost reductions and/or agent productivity part of the business benefits realized?

Do customer loyalty and satisfaction performance metrics directly correlate to top or bottom-

line results, market share or customer value?

Figure 10: Perception: Customer Experience vs. Customer Engagement?


Some companies have adopted Net Promoter Scores (NPS) as a means of measuring customer experience

during customer interactions. However, our assessment is that this NPS is really a measurement of

customer interaction and engagement at a single point in time and most often is used for professional

development to coach contact center agents and customer support professions. Moreover, our assessment

is that NPS does not directly correlate to larger corporate goals such as top or bottom-line results. In fact,

popular methods used to quantify the corporate benefits of NPS scores are often based on soft qualitative

benefits or with the assistance of “fuzzy logic”10.

10 Fuzzy logic has been extended to handle the concept of partial truth, where the truth value may range between completely true and completely false.

63.3%

acknowledge a

difference.

63.3%

acknowledge a

difference.





Current Environments

At least 90% of respondents cited the software categories illustrated below as important or critical to their

businesses. Obviously understanding the customer is central to these organizations, however not everyone

surveyed showed evidence of maturity in utilizing these enabling technologies. Given the recent emergence

of customer journey mapping and design processes, it is not surprising that only 37.9% consider this

software category critical while nearly 50% reported customer engagement and interaction software as

critical. Most surprising is that 5% of respondents do not utilize any of these technologies at all.

Figure 11: Perception: Importance of Software Usage to Business Results


Businesses are slowly moving from a fragmented organizational and software environment to one that has

visibility across customer channels of interaction. Several drivers for this change include:

Customer expectations for a seamless, frictionless interaction regardless of the channel they

select;

Ubiquitous use of smart phones and other mobile devices;

Advances in customer data integration techniques and proliferation of open application

program interfaces (APIs);

Enhancements to dashboards and the ability to configure them by role, function or industry;





Redesign of workflows and use of business process automation to configure and/or automate

repeatable processes;

Realization that customer engagement intelligence doesn't reside only in a CRM application: It

lives throughout & beyond the enterprise11

Organizations acknowledge that customer information, whether from consumers, clients, partners,

suppliers or third-party data providers and aggregators, has high importance to business operations and

customer engagement. That these specific information sources align quite closely with information sources

cited as important for Big Data Analytics12 as well as for operationalizing voice of the customer analytics is

significant.13 Whether historical, behavioral or in the moment, customer information converted into

operationalized customer intelligence through the use of rules-based algorithms, models, and/or advanced

analytical techniques—such as predictive, prescriptive or machine learning—supports personalized

customer engagement.

Figure 12: Importance of Multi-Channel Information Sources


11 See Next Generation CRM; All About Business Process Excellence ©Hypatia Research Group. 12 See Delivering Big Data Insights: Why Chose Among Accuracy, Agility or Speed? ©Hypatia Research Group. 13 See Operationalizing Voice of the Customer ©Hypatia Research Group.



http://hypatiaresearch.com/product/operationalizing-voice-of-the-customer-2014-galaxytm-vendor-evaluations-best-practices-maturity-models/

http://hypatiaresearch.com/wp-admin/post.php?post=1420&action=edit





Hypatia Research Group believes that all investment in customer engagement solutions should reduce the

customer's effort, be seamless, and encourage interaction via all preferred channels while providing

stakeholders analysis and multichannel visibility into customer preferences, behaviors and purchases.

Moreover, we would encourage organizations to use this customer analysis and insight to:

Improve enterprise level operational business processes (from communications, pricing, and

marketing to billing to services);

Proactively guide marketers, sales professionals and contact center agents on the next best

action for customer engagement and/or offer management;

Transform into a truly anticipatory customer-centric enterprise by replacing inside-out

(resource optimization) business processes with purpose-built business processes designed

from the outside-in (customer centric).

Hypatia Research Group defines a business as customer-centric when its corporate environment organizes

its offerings, operational processes, pricing models, and customer engagements and interactions around

the requirements, preferences and future desires of its customers. Our assessment is that getting from

point A to Z still challenges many of the businesses surveyed. The chart below illustrates why. Visibility

across all channels of engagement is lacking for nearly fifty percent of organizations.

Figure 13: Ability to Map Multi-Channel Customer Journeys






Reality Meets Ability

It has never been a better time for organizations that seek to enhance their customer-centric interactions

and business processes via multiple channels and preferred touch-points. Performance improvements,

cost-efficiencies and cloud delivery mean that enabling software and services have never been more

accessible. Conversely, it has never been a more challenging time to select optimal software-based

technologies, services and/or solutions. Why?

A year ago, we found that 70% of organizations were able to interact with customers across more than 10

channels14—however less than 20% of these businesses did so in a “blended” or seamless manner. For

example, customers could call a 1-800 number but if online ordering or a store purchase was made, each

interaction was distinct15 from the others. In short, each interaction was tracked and/or stored in a

separate data base without being linked to a customer account.

Currently 50% of respondents reported having visibility across all channels of engagement—quite an

improvement in twelve months. However, in the pursuit of a competitive advantage and enterprise level

customer centricity, further advancement needs to occur. The challenges associated with these

advancements will be detailed in the following chapter entitle “Change Happens”.

14 See Operationalizing Voice of the Customer: 2014-2015 GalaxyTM Vendor Evaluations. ©Hypatia Research Group 15 Customer information is stored in distinct or siloed data repositories or legacy systems and not integrated or ‘blended’ for a 3600 view of the customer’s information.






Chapter Two: Change Happens

Prioritizing and Implementing Real Change

Anyone who has ever sat in a cross functional business meeting attended by line of business functions

(sales, marketing, customer service, finance, and/or merchandising), members of the IT department and

business analysts, data scientists and data engineers knows that Peter Drucker was right. "Culture eats

strategy for breakfast". Identifying, defining and meeting business requirements for improving customer

journey workflows with a goal of increasing revenues AND reducing customer effort that involve multiple

enabling software applications may require a four-pronged approach.

Figure 14: Four-Pronged Approach to Prioritizing Real Change

Organization

Business Process Innovation

Technology

Business Transformation

Key

Fin

din

gs

Customer expectations for a seamless, frictionless interaction regardless of

the channel they select;

Ubiquitous use of smartphones and other mobile devices;

Advances in customer data integration techniques and proliferation of

application program interfaces (APIs);

Transforming into a truly proactive customer-centric enterprise requires

process design that is outside-in (customer focused), rather than inside-out

(employee focused).





All respondents indicated that building a business case to justify investment in additional software to

upper management is the top challenge they face (24.5%). This was followed by lacking budget or

appropriate tools to analyze customer information and to create or enhance existing journey design

(18.5%). Creating or applying the most appropriate performance metrics came in third at 16.8%.

Shifting a corporate culture from the inside-out (resource optimization) to the outside-in (customer-

centric) requires changing a cultural mindset long defined by major business objectives (MBO) aligned with

functions, roles, teams, and/or departments. Global organizations confirmed that revamping organizational

structures and cultural change are high priorities when seeking to engage with customers more effectively.

16.7% cited transformation of a siloed organizational business structure and cultural mindset

as priority one;

11.1% cited determination of how to organize internally cited as priority one.

Figure 15: Prioritized Business Challenges for Investment & Deployment


Moreover, Hypatia Research Group would encourage organizations to use this customer analysis and

insight to transform into a truly proactive customer centric enterprise. This requires rethinking and

innovating business processes design from the perspective of the customer (outside-in) taking into account

their preferences first, rather than the organizational or employee focus (inside-out)—which emphasizes

optimization of resources from the corporate perspective solely.





Hypatia Research Group defines a business as customer-centric when its corporate environment organizes

its offerings, operational processes, pricing models, and customer engagements and interactions around

the requirements, preferences and future desires of its customers. Our assessment is that getting from

point A to Z still challenges many organizations.

Figure 16: Prioritized Business Initiatives


Acquiring functional expertise in customer analytics and journey design via external resources is the top

priority for a majority businesses (52.5%). Investment in software as a service—both managed programs

as well as subscription based delivery—in addition to engagement with a consultancy, marketing services

provider or agency as the top means by which they seek to address business challenges delineated in

Figure 16.

Budget Holders and Direct Accountability

In several previous large scale studies, our analysis showed that the budget holders were not always

accountable or responsible for the business results derived from investment in software. This was

delegated to direct reports or cross-functional teams tasked with accomplishing certain goals—with or

without direct management involvement.





Seeking to improve customers retention rates, loyalty levels combined with a desire to increase cross-sell,

up-sell, favorable reviews and referrals are now an appealing reason for senior and executive management

involvement in all customer engagement initiatives. Contrasting sharply with other studies, executive

management often holds budgetary discretion as well as responsibility for business benefits which bodes

well for the success of these initiatives.

Primarily accountable:

CEO / COO / CFO

CMO / CCO

Division head / Business Unit Manager

Figure 16: Accountability for Business Benefits & Return on Investment


Surprisingly, a large percentage of organizations (34.9% to 47.1%) report that they are able to transform

customer insights into multi-channel journey processes for specific business use cases nearly 100% of the

time. (Figure 16). However, these are accomplished through retrospective reports and dashboards rather

than in near-real time. One telecommunications company cited significant improvements in reducing

customer effort through changing business processes such as onboarding, sales, billing, scheduling and

communications without the use of advanced analytical techniques, although consultants were engaged for

more than 6 months to analyze and recommend changes to customer facing business process workflows

relating to interaction, engagement, service and post-sales support.





Figure 17: Ability to Transform Customer Insights into Multi-channel Journey Processes?


Bottom-line: Leveraging customer analytics and insights to enhance journey design can be accomplished

without specialized software, nonetheless, customer expectations for a seamless, frictionless interaction

regardless of the channel they select often serves as a catalyst for software investment. Moreover,

operationalizing analytics by embedding these models within customer engagement workflows facilitates

brand consistency and optimizes personalization through automation. Evaluate how, and if this might

shorten time to value before investing in customer analytics, customer journey design and customer

engagement software or services.





Chapter Three: Vendor Landscape Evaluations

Hypatia Research Group 2015-2016 Customer Analytics and Journey Design Evaluation

Methodology

Hypatia Research Group has benchmarked the current state of vendors who offer customer analytics and

journey design solutions for its 2015-2016 Galaxy chart. We believe that enterprises will be best served by

applications and solutions that demonstrated the following features and capabilities:

Advanced analytical techniques;

Multi-channel customer engagement & commerce;

Real-time interaction management;

Customer analytics and insights dashboards with visualization;

Multi-channel business process visualization;

Operationalizing analytics by embedding them within customer engagement workflows; and

Highly adaptable business process workflow configuration;

As a result, we have reserved our highest scores for the vendors that clearly understand the value of these

clear capabilities:

Supporting the ability to visualize and analyze drivers or best practices for single customer

journeys across multiple channels of engagement;

Supporting the ability to visualize and analyze drivers or best practices for segments or clusters

of customer journeys across multiple channels of engagement;

Providing a technical foundation for configuring, modifying, or orchestrating business process

workflows based on customer insights or customer analysis, purchase history, customer

journey analysis and tracking across time scale, i.e. the duration of a customer’s journey;

Support near-real time or in-the-moment customer engagement based upon various embedded

analytical techniques such as, but not limited to; adaptive interaction, predictive next best

Key

Fin

din

gs

An integrated approach responds to the clear understanding that the days of

siloed information are dead and gone;

High levels of fragmentation still exist among users’ perception and

understanding about how to apply insights across multiple journeys and

within business processes;

Operationalizing analytics within customer engagement workflows

facilitates in-the-moment customer engagement;

Galaxy Leaders evidenced the most comprehensive offerings and clear

roadmap vision for multi-channel customer engagement and journey design

processes.





action, contextually aware interaction, automated behavioral targeting, or prescriptive

guidance.

These capabilities are important because they serve two inexorable trends in enterprise computing. First,

an integrated approach responds to the clear understanding that the days of siloed information are dead

and buried. Enterprises have begun to understand that in order to comprehend interdependent activities of

their organization; they must create a holistic view of their data. This holistic 3600 view compiles

information from multiple departments to create the single version of the truth. The alternative is to have

varying departments applying analysis to their own data – reflecting each one’s focus and expertise, rather

than that of the whole – and insisting that their individual truth translates to the enterprise’s truth. This is

no longer a viable approach.

Table 1: Vendors Evaluated 2015-2016

Galaxy Leaders

Twelve dimensional criteria comprised the scoring for Hypatia‘s GalaxyTM rankings and our overall

assessment of these software providers. Each vendor was evaluated by range of offering and corporate

product/service roadmap and vision charted on the vertical

axis and maturity, execution strength, global reach and

number of customers charted on the horizontal axis. Weighted

modeling ensured that only 15% of top scoring vendors would

land within the Galaxy Leadership orbit.

Planet size illustrates estimated company revenues for

customer analytics and journey design offerings from a

relational perspective. Large software vendors such as IBM, Oracle, SAP and SAS have multiple offerings—

some of which are packaged synergistically with customer analytics and journey design software while

others are licensed separately. For example, Salesforce.com has many software solutions and booked an

estimated $5.37b in 2015. However, only software revenues aligned with our categorization of customer

engagement and journey design were used in creating this chart.

Other aspects of the companies and their products were derived from end-user interviews, product

demonstrations and vendor briefings. There are a handful of vendor suites/platforms that scored high in

key areas such as customer base, range of functions, stability, and long term product vision.

“This investment is one of the

expenses that is controllable.”

--CFO, Verizon



--CFO, Verizon



--CFO, Verizon





Top vendors have the most comprehensive offerings, exhibited a roadmap with frequent new product or

feature releases, a clearly-defined product methodology and vision for multi-channel customer engagement

and journey design processes. Services are an important component of a top provider, and that translates

into several types of services, not just tech support or implementation but enterprise level innovation,

consulting and operationalization of business process mapping as well.

Figure 18: Hypatia’s 2015-2016 Galaxy of Customer Analytics & Journey Design Software Vendors


Satellite Competitors: Vendors in this orbit have reliable solutions for customer analytics but scored

slightly lower on quantitative criteria such as installed customer base, category maturity, geographic reach,

and robustness of functionality, ease of use or industries served. In fact, large companies with significant

revenues that did not place in the Galaxy Leadership orbit this time around are Pega Systems and Teradata.

Only five percentage points separated the highest scoring vendors from the lowest in this grouping with

Adobe, SAS and SDL vying for top position in the Nebulae. More importantly, just 2.5% in scores separated

this competitor group from the Galaxy vendors. However, without a purpose-built, enterprise level





solution for customer analytics and customer journey process optimization, combined with significant best

practices, knowledge transfer and consultancy partnerships, placement in the Galaxy Leader orbit eluded

these competitors in our 2015-2016 Galaxy rankings. Bottom-line: Each has commendable solutions that

should be evaluated prior to making a final selection.

Nebulae Contenders: These vendors offer either customer analytics or customer journey mapping tools—

with scores that reflect a smaller, less integrated product strategy roadmap and vision than vendors in

either of the two previous categories. Other criteria impacting scores may have included a focus on only

three or fewer industry sectors, less than 20 current customers, or a limited global reach. With the

exception of Infor and Oracle (premium pricing in place), companies should consider these vendors if

complimentary to other legacy tools currently in place, or if constrained by budgets. For example, cloud-

based solutions such as ClickFox, Customer Matrix and Thunderhead all offer pricing and functionality that

small to mid-sized businesses are likely to find feasible for their budgets.

IBM–Galaxy Leader

Formally launched in 2014, Predictive Customer Intelligence, IBM’s offering for customer analytics brings

in-depth analytic capabilities to IBM Commerce, a core offering within IBM Global Business Services’ (GBS)

‘Next Best Action’ signature solution. Solutions and modules evaluated for this study encompassed:

IBM Predictive Customer Intelligence—gathers customer information—both contextual and

historical—from numerous internal and external sources and models customer behavior in

real-time for “next best action” recommendations for execution via the customer’s preferred

channel of engagement. Automated

recommendations are “scored” and deployed

through appropriate channels of engagement.

Key capabilities of the solution include:

o Predictive analytics that anticipate the

behavior of individual customers based

on an all-inclusive profile;

o Decision management and optimization

engines that convert predictive model

scoring into an appropriate action;

o Real-time scoring to generate real-time

predictions in-the-moment of

interaction;

o Customer lifetime value optimization

based upon interactional and

transaction engagement.

o IBM Predictive Analytics (powered by IBM SPSS portfolio)—provides the fundamental

predictive software products that are available integrated within Predictive Customer

Intelligence or as a stand-alone tool.

“We see “customer engagement”

as the organizations tactical,

informed and often proactive

interface with a customer at any

given touchpoint…“customer

experience” is the customer’s

holistic view of all “customer

engagements” and will be

affected positively or negatively

with each engagement.”

--IBM Spokesperson


http://www.openpages.com/

http://www-01.ibm.com/software/marketing-solutions/experienceone/




IBM Commerce— is comprised of software assets from across the IBM Commerce Marketing,

Customer Analytics, eCommerce and Merchandising portfolios including Customer Experience

Analytics.

o IBM Customer Experience Analytics—quantifies and visualizes omni-channel customer

journeys with intuitive visualization and drill down capabilities for exploring journeys

at both the individual and aggregate level.

Few vendors evaluated for our GalaxyTM demonstrated the ability to ingest omni-channel customer

information, transform it into actionable insight, and to automate the execution of a customized

engagement based upon the customer’s preferred channel of interaction while aligned with overall

corporate goals. This portfolio of solutions illustrate an adaptive interaction type of customer engagement

that is both dynamically and context-aware, allowing the customer’s preferences—as determined by a

model—to guide the customer journey. (See Figure 3: Perception: Type of Customer Analytics Utilized for

Journey Design) A model repository includes prebuilt algorithms for:

Acquisition Models

Campaign Response Models

Churn Models

Customer Lifetime Value Maximizer (GBS)

Market Basket Analysis

Price Sensitivity

Product Affinity Models

Segmentation Models

Sentiment Models

Up-sell/Cross-sell Models

Table 2: Example of IBM Predictive Customer Intelligence with IBM Commerce

©2015 IBM, used with permission.





Pricing for an enterprise scale customer analytics and journey design solution will likely be on the higher

side—inclusive of consulting, software licensing, integration and deployment. However, organizations

should evaluate this vendor against their list of business requirements and certainly request value-based or

shared-risk pricing from any vendor short-listed.16

Partners: In addition to collaboration with major systems integrators and management consulting firms,

IBM collaborates closely with these partners for business analytics strategy and implementation programs.

Aviana

Ironside

Presidion

QueBIT

Revelwood

Rosetta

Customers: Numerous industries such as financial services, consumer products, retail and

telecommunications have deployed IBM’s customer analytics portfolio of products as represented by C-

Spire Wireless, Ufone Verizon, and XO Communications.

Geography: Worldwide

Website: http://www.ibm.com/analytics/us/en/business/predictive-customer-intelligence/

16 Pricing models include: Fixed Price, Time and Material (T&M) and Risk-Reward.


http://www.ibm.com/analytics/us/en/business/predictive-customer-intelligence/




Chapter Four: Show Me the Data-Driven Results

Business ROI Evaluations

With (24.5%) of global respondents indicating that building a business case to justify investment in

additional software to senior management is the top challenge they face, followed by lacking budget or

appropriate tools to analyze customer information and to create or enhance existing journey design at

(18.5%), Hypatia Research Group acknowledges the nascent nature of applying customer analytics to

multi-channel customer journey enrichment.

Noteworthy is that global businesses are doing a better job at measuring return on investment and benefits

realized from customer engagement programs. More than fifty-three percent (53.4%) are consistently able

to achieve this goal, while another twenty-one percent (21.2%) accomplish this at least fifty percent (50%)

of the time. Lack of consensus on which performance metrics to use and lack of processes in place on how

or when to measure are just some of the reasons businesses are unable to calculate ROI consistently.

Figure 19: Marketing Function: Ability to Measure Return on Investment


Key

Fin

din

gs

Innovations in technology such as cloud, mobile devices and advanced analytics affect business processes and multi-channel data integration—key elements of customer engagement efforts.

Complexity in customer engagement and ecommerce has increased due to channel expansion combined with customer expectations for a seamless experience.

High levels of fragmentation exist due to lack of “blended” customer engagement—Competitive advantage is granted to savvy businesses with a fully integrated enterprise-level customer strategy.





Verizon Reduces Customer Effort and Costs with Journey Analytics

Verizon Wireless is a wireless communications company that connects people and businesses with

advanced wireless technology and service available. The company launched one of the first 3G wireless

broadband network in North America and the first tier-one wireless provider to build and operate a 4G LTE

network. Serving more than 135 million subscribers and operating in more than 1,700 retail locations in

the United States, while offering global voice and data services in more than 200 destinations, Verizon is

the nation’s largest wireless company. Verizon Wireless is wholly owned by Verizon Communications Inc.

and is headquartered in Basking Ridge, N.J.

Verizon Communications Inc. (NYSE:VZ) is a global leader in delivering broadband and other wireless and

wireline communications services to consumer, business, government and wholesale customers.

Business Driver for Investment

Verizon’s wireline services17, FIOS18 fiber optic service and its

wireless subscription services for mobile phones and devices

were all part of a self-service solutions business unit that

provides support to customers via interactive voice response

(IVR), mobile, and online channels.

Call volumes from the company’s FIOS subscribers were growing so fast the call center struggled to handle

all of them efficiently, cost-effectively and with the right level of customer satisfaction. In 2008, with 1.9

million wireline customers, the volume of calls continued to grow until it reached 60% of all customer

service calls per month. In 2008, with 1.9 million wireline customers, the volume of calls continued to grow

until it reached 60% of all customer service calls per month while the cost of servicing calls had risen to

$15 each. This triggered the business need to

reduce customer service and support calls without

negatively impacting service levels.

Consider that for telecommunications companies,

an 18 month contract for smart phone service

averages about $110 per month. In every

customer service and support interaction,

whether online, phone, or email, there is potential

to retain or gain approximately $2,000USD

annually. For Verizon Wireless, with 135 million

17 Between 2005–2010, Verizon divested wireline operations in several states in order to focus on its wireless, FiOS internet and FiOS TV businesses.

18 Verizon FiOS is a bundled Internet access, telephone, and television service that operates over a fiber-optic communications network to more than 6 million people in 13 states. (2014 statistics)



--CFO, Verizon

“The devil is in the details….build

requirements first and then look

around… which is the best fit for your

organization as it is painful and

expensive to make the wrong selection.”






subscribers, just a one-half of one percent (0.005%)

increase in customer churn or retention is worth an

estimated $1.3B in revenues.

Vendor Selection

Verizon considered a variety of software vendors—

those with advanced analytical tools or turn-key

solutions for the customer service and support functions

such as NICE Systems, Pegasystems and The SAS

Institute. Overall, this telecommunications provider

wanted a solution that would resolve their current call

center issues and then expand to an enterprise level

with big data analytics. Ultimately, IBM was selected for

several reasons:

Telecommunications sector expertise

Big data and advanced analytics domain knowledge

Attractive engagement model bundled with tools and professional guidance

While several executives from the IT department were involved in building the business requirements and

vetting the various options, the final decision to invest was made by the president of operations and the

chief financial officer. You read correctly—the CMO did NOT hold the budget for customer analytics and

journey design software or participate in the selection process.

Bottom-line: IBM offered a single provider, modular solutions

approach whereby Verizon could pick and choose from a

portfolio of software along with consulting advisory while

others offered a bundled approach. A la carte pricing benefits

the buyer and packaged or bundled deals give the advantage to

the seller. In this instance, IBM chose to offer pricing that

benefited the customer and the project was implemented within

four months in late 2014. An on premise deployment situated in

various primary data centers was installed for differing regions

of service with standby data centers ready for recovery or other

types of requirements.

Operating Environment

Verizon determined that it would be more cost effect and

increase customer satisfaction levels if they could address

customer service issues in a more proactive manner. Reducing customer effort by improving customer

interaction experiences required they analyze all of the network system data, identify connectivity issues

and assess what the customer has already done to remedy issues online via IVR, chat, email, self-service or

community forums prior to routing them to an agent. In fact, if the problem is connectivity, Verizon is able

“On average, each mobile

phone customer that is

retained or migrates

represents an estimated

$2,000 annually to telecom

providers. Proactive customer

support can be the difference

between capturing or

retaining consumers.”

--Hypatia Research Group.”

“Everyone says that their solution is

the best for “next best action” or

real-time decisioning” which

involves statistical modeling,

ingesting data in motion, streaming

analytics etc.… Different products

have strengths in certain areas, but

need to stretch to accomplish all

that is necessary.”






to perform customer journey analytics and determine what the probability is for a customer calling in for a

certain problem based on their online behavior.

Other process changes made include enterprise operational enhancements that positively impact customer

approval metrics—measured via metrics such as customer satisfaction index (CSAT) customer effort score

(CES), customer retention, and proactive intent identification —as well as realizing higher revenue figures.

Business Benefits

Measurement of performance metrics began in the second half of 2014 without an auditable baseline set

prior to deployment. Specific business benefits were tracked:

Time customers spent in the interactive voice response unit (IVR) decreased by 67% after

proactive customer intent identification analytics were installed within the customer journey

processes. Reducing customer effort has had a positive impact on Verizon’s customer (CSAT);

Continuous refinement of the “proactive intent identification” model when at least (60%) of

customers say yes to the first prompt offered to them on IVR or other self-service options. Sixty

percent accuracy is required to ensure that the model is precise and accurate enough to satisfy

customers and reduce call center costs;

Reduced call center volume by 30% saving approximately $15 per call without negatively

impacting service levels.

Continued Engagement

Verizon wireless continues to engage with IBM through

investment in analytics as a service. Data scientists are

harvesting customer journey data and identifying

correlations among marketing, online demonstration

registration, channel interactions, and geographic data along

with call center information in order to create micro-

segmentation for targeted marketing programs.

“Ultimately, some components

were provided by IBM, some

were custom-built and some

were already in place.”

---- Associate Director, Verizon





Mattel, Inc. Builds Toys and Customer Journeys

The Mattel family of companies (NASDAQ: MAT) is an American based multinational leader in the design,

manufacture and marketing of toys and family products. Mattel's portfolio of best-selling brands include

Barbie®, Hot Wheels®, Monster High®,

American Girl®, Thomas & Friends® and Fisher-

Price® brands; Little People®, Power Wheels®,

MEGA® Brands, and RoseArt®. Mattel's

companies employ approximately 31,000 people

in 40 countries and territories and sell products

in more than 150 nations. Worldwide

headquarters are located in El Segundo, Calif.

Business Challenge

With multiple global brands that appeal to

consumers at various life stages such as toddler

(0-3 years old), four to five year old (4-5), six to seven year old (6-7), and eight or more (8+), combined

with numerous types of toy products such as action figures, dolls, DVD’s, games and outdoor play, the

company determined that providing a seamless, connected customer experience at a global scale would be

the optimal way to stay in touch with their customers. To that end, Mattel embarked upon a massive

transformation with digital marketing and listening to the voice of the customer at the center of its

innovation. Technologically, the company was challenged by its global scale, multiple brands, products and

diverse channels—

indirect sales channels

such as retail stores or

catalogues in addition to

direct to consumer

marketing encompassing

multichannel

communications channels.

Vendor Selection

One of the key

requirements in selecting

a vendor was the ability to

map, analyze, and engage

with the customer journey

across every channel and touchpoint. Only a handful of vendors offered all three capabilities. Ultimately,

Mattel selected Salesforce.com because it enabled everyone involved to work off of the same platform.

Brands are no longer siloed which means individual journeys, aggregated journeys, and journeys by

“The number one toymaker in the world

stays on top by simply listening to its

customers. Marketing Cloud and

Journey Builder allow Mattel to create a

lifelong, cradle-to-collector relationship

which sets customers on a magical,

multi-branded path of play.”

--Heather Nykolaychuck, Director of

Digital Marketing, Mattel





channels of engagement are visible to stakeholders. Along with Journey Builder, Mattel chose to implement

Marketing Cloud.

Results & Lessons Learned

Mattel is now able to glean insights from across products, customer journeys, campaign interactions and

numerous channels of engagement from social media, Instagram, SMS mobile message, and/or email and is

using these data points to inform their product development, marketing and advertising investments. The

company expects to deliver exceptional connected and relevant experiences to their customers on any

device or platform.

Numbers Reveal Tangible Results

Hundreds of respondents reported the highest return on investment in customer analytics and journey

design solutions & processes—at more than 5% of operational budgets—via these performance metrics:

Customer Service & Support Enhancements (32%)

Top Line Revenue Increase (31%)

Customer Retention (31%)

Customer Acquisitions (30%)

Customer Advocacy, Loyalty or Satisfaction Enhancements (30%)

Figure 20: Benefits of Leveraging Customer Analytics to Improve Journey Design






Consider that for telecommunications companies, every 18 month contract for smart phone service

averages about $110 per month. In every customer service and support interaction, whether online, phone,

or email, there is potential to retain or gain approximately $2,000US annually. For a telecommunications

company with more than 135 million subscribers, just a one-half of one percent (0.005%) increase in

customer churn or retention may be worth an estimated $1.3 billion in revenues. Benefits as illustrated

above are quite significant in supporting business case justification for investment





Chapter Five: Future Considerations

Reasons for Investment

CRM analytics is often acknowledged as a type of business intelligence that most often provides historical

reporting in the form of dashboards, operational reports, sales forecasts and/or account segmentation

among others. While historical reporting and data visualization are highly useful in illustrating what has

occurred and in certain instances can be used to perform "what if?" planning scenarios, it is not based on

advanced analytical techniques such as predictive modeling. In addition, CRM analytics is often based on

customer information residing in a system or multiple CRM systems of record, thus, financial information

and purchase history along with other relevant customer information may be lacking unless it is ported

into a customer information hub or business intelligence application for analysis. (Click here for more on

"Realizing the Downstream Benefits of Effective Customer Data Management")

In contrast, customer analytics is often utilized for near or real-time20 decision support for marketing,

merchandising, ecommerce, customer service and support and sales when multivariate dimensions are

required. For example, criteria or dimensions such as time-frame (duration), product/service purchase

history, purchase amount, customer lifetime value, and cross-sell or up-sell guidance are largely dependent

on advanced analytical techniques. Customer analytics combined with appropriate algorithmic models,

business process rules and workflows has the potential to enhance engagement by being contextually

relevant, in the moment and in the channel of customer preference.

19 See Next Generation CRM; All About Business Process Excellence ©2014-2015 Hypatia Research Group. 20 May also refer to in-the-moment

Key

Fin

din

gs

Enterprise customer analytics is dependent on numerous information

sources from multiple channels, legacy systems of record, mobile devices,

cloud, and streaming data--inclusive of interactional and transactional

information as well as externally purchased third-party data;

Operationalizing analytics by embedding them within customer engagement

workflow drives competitive advantage;

Expertise in advanced analytics combined with well-defined goals, an

operationally executable plan, and clear definitions for measurable

performance metrics and cross functional resources able to execute on this

plan are critical to success;

Realization that customer engagement intelligence doesn't reside only in a

CRM application: It lives throughout and beyond the enterprise19


http://hypatiaresearch.com/product/customer-data-management-vendor-galaxytm-evaluations/

http://hypatiaresearch.com/wp-admin/post.php?post=1420&action=edit




Customer Information Lives Throughout and Beyond the Enterprise

In today's omni-channel, customer-obsessed marketplace, businesses need to embrace the reality that

customer information does not only reside in a CRM system--it lives throughout and beyond the

enterprise. The proliferation of customer interaction channels serve as a catalyst for investment in multi-

channel software solutions. From mobile phones, tablets, computers, in store, catalog, SMS, social networks,

and online forums, customers are able to interact with businesses when they want, how they want and for a

variety of reason. Converting both unstructured (contextual) and structured (data) information into

actionable insight and responding to customers according to their preferences with customized

information is a challenge for most organizations. However, enabling technologies based upon advanced

analytics combined with customer engagement solutions such as digital marketing, contact center, sales

and ecommerce solutions may provide support for overcoming this challenge.

Not surprisingly, a majority of respondents (57.6%) plan to invest in customer analytics and journey design

software in order to proactively engagement with customers. Slightly more than half (50.5%) will invest in

order to create customer personas for personalized engagement and (44.5%) reported that enhancing

profits by optimizing customer journeys was reason enough to invest. Noteworthy is that enhancing a

customer’s experience was not a primary reason for investment. (Figure 10)

Figure 21: Why Invest in Customer Analytics & Journey Design Software







Investment Varies Greatly

Currently there are more than 500 software tools, applications, systems and solutions on the market. Each

value proposition claimed is a theme or variation on supporting “customer experience management”, or

improving the “customer experience”. These options encompass multiple software categories--everything

from customer relationship management, contact center, voice of the customer, digital marketing, business

process management and workflow, text analytics, social media intelligence to workforce optimization,

scheduling and customer service development tools.

Adding to this complexity, organizations need to determine what exactly they hope to accomplish on their

road towards operationalizing customer-centric21 focus. The reasons are simple—products and solutions

have become highly commoditized in our global eco-system. Elevating engagements with customers is a

proven strategy for acquiring and retaining customers, increasing share of wallet and maintaining loyalty.

Figure 22: Investments Planned 2016-2018


21 HRG defines a business as customer-centric when its corporate environment organizes its offerings, operational processes, pricing models, and

customer engagements & interactions around the requirements, preferences and future desires of its customers.





Customer engagement analytics and journey design solutions range in price from $50,000 to over $1M for

an enterprise deployment. On average, most large enterprises (greater than $2B) cited investments ranging

from $250,000 up to $2M. Mid-market ($100M to $2B in revenues) and small enterprises (less than

$100M) most often reported investments ranging from $25,000 up to $250,000. Illustrated in the chart

below are plans for steady investments in these solutions from 2016 throughout 2018.

Finding Competitive Advantage

From the line-of-business perspective, marketing has certainly become more data-driven, with marketers

and others relying on dashboards, lead scoring, and metrics such as customer annual value or lifetime value

to inform their marketing strategy and planning cycles. However, at the heart of any modern marketing

application, though, is the intelligent use of customer information. Multisource information gathering and

Big Data insights will have a positive impact on marketing. For example, more information often translates

into higher model accuracy and confidence levels when analyzing large amounts of information.

With a tolerance of approximately ~+5%/-5% among the various information sources utilized for each of

the three initiatives illustrated in Figure 23—namely customer engagement analytics, enterprise level voice

of the customer, and big data insights—it remains clear that analysis of multi or omni-channel customer

information is at the core of any effective customer-centric initiative.

Figure 23: Comparison of Information Sources: Big Data, VOC and Customer Analytics







Our research analysis shows that larger enterprises ($2B or more in revenue) use more than eight

information sources when analyzing enterprise data, and rely on this information for a variety of business

purposes—marketing among them.

This also points to a change in priorities for marketers, who

have shifted from tactical to strategic goals. In the recent past,

marketers often focused on personal major business

objectives, such as number of click-through rates, content

views and downloads, social community or webinar

registrations, or conference attendee numbers. Now that

budgets and resources are tighter, marketers have become

better at justifying their contributions to the organization at a more strategic level. Our research shows that

marketers are much better at tracking metrics that align with corporate or business unit goals, such as

customer retention, share of wallet, increase in profits, customer engagement and cost reductions.

In short, big data analysis techniques may very well improve personalization, accuracy, relevancy, and

results for marketers when effectively performed.

Figure 24: Current Delivery Environments



“Better Data Quality + Multiple

Types of Information Sources

May = Competitive Advantage”

--Hypatia Research Group



http://hypatiaresearch.com/product/leveraging-content-to-increase-customer-engagement/


http://hypatiaresearch.com/product/benchmarking-social-community-investments-best-practices-galaxy-vendor-evaluations-complete-50-page-study/






Organizations have shifted to the cloud for investment in customer facing software solutions. While some

take a hybrid approach—with some deployments on premise, some cloud based and differentiate by

geographic location, business unit or division, at fifty-one percent (51.1%) the shift is real. Only twenty-

eight percent (28.6%) use on premise delivery solely.22

Maturity Models

In this emerging business process supported by enabling software technologies, Hypatia Research Group

identified several significant differences among levels of maturity with corresponding benefits and return

on investment for each.

Figure 25: Maturity Models: Using Customer Insight to Enrich Journey Design Processes


22 Multiple deployments within large enterprises account for the percentage total not adding up to 100%.





Top Performers: Are more likely to use one software solution to help us analyze and visualize customer

journeys and another to modify and configure customer journey processes.

Both software products are sourced from the same vendor.

Consider the use of all customer touch-point information for analysis as critical (67%)

More likely to prioritize goals as customer engagement improvements (58.9%)

Maturing: Use one software solution to help us analyze and visualize customer journeys and another to modify customer journey processes easily.

Software solutions are sourced from different vendors.

More likely to use all customer touch-point information for analysis (64%)


Average: Use software automation to facilitate analysis and visualization of customer journeys; however business analysts or IT resources actually configure or orchestrate customer journey design changes.



Likely to use all customer touch-point information for analysis (38%)

Nascent: Create customer journey maps manually after viewing dashboards or reports and have business analysts or IT configure or orchestrate customer journey design changes.


Likely to prioritize goals as customer engagement improvements (28.3%)

Likely to use all customer touch-point information for analysis (30%)

Checklist for Consideration

While every organization will have its unique requirements in regards to utilizing customer analytics to

enhance customer journeys, due diligence should include consideration of the following:

Why will enhancing or optimizing the customer journey benefit the business and should

customer analytics be employed to engage with customers in a more relevant, context-aware,

and proactive manner? Where and when will this be deployed in a customer journey process?

Understand how advanced analytical techniques will support the creation of actionable insights.

Know what is possible, what to expect, and which business benefits will be realized from the

use of customer analytics. For example, what type of customer analytics will optimally enhance

a customer’s journey? Will the interaction be ‘guided’, scripted, or dynamic via techniques as:

o Adaptive interaction?

o Contextually aware?

o Predictive next best action?

o Prescriptive guidance?

o Cognitive computing or machine learning?





What types of customer journeys should be automated and at the individual level or by

aggregated groupings (clusters or segments)?23 Examples include:

o Customer onboarding;

o Customer lifecycle journeys;

o Purchase journeys;

o Service and support;

o Account management;

o Etc.…

Cross functional planning and executive buy-in is critical for success and necessary in order to

secure budgets, build consensus and to drive accountability for the overall success of this

initiative. Identify the stakeholders for this initiative such as:

o Who is accountable for results?

o Who holds the budget?

o Who holds veto power, influence or sponsors the project?

Determine which and how many information sources are critical, important, secondary, tertiary

or non-essential. While using numerous information sources may yield higher accuracy or

confidence levels, ensure that all are actually relevant to the business goals at hand. Moreover,

evaluate the use of data at rest in addition to streaming data sources;

Integration of private/public cloud, hybrid cloud/on premise and/or online with offline

information sources will require standardization and quality remediation. Investigate cloud

based integration platform as a service (iPaaS) and integration as a service24 (IaaS) solutions as

well as web services, application program interfaces (API), and enterprise application

integration (EAI);

Industry domain experience and advanced analytics expertise are critical to success. Evaluate

whether in-house resources are sufficient or whether outsourcing this requirement to a

managed service provider or consultancy is optimal. Know that using external resources may

compromise proprietary insight and competitive advantage acquired without safeguards in

place;

There are software vendors that offer solutions with templates and features that facilitate creating specific

types of algorithmic models25 such as customer retention for retail and telecommunications, or identity

fraud for banking or medical claims management. Not surprisingly, our research found that global

organizations are successfully utilizing various analytical techniques in the form of these types of

engagement.

23 See Figure 3: Perception: Type of Customer Analytics Utilized for Journey Design.

24 Integration-as-a-Service delivers an integration solution that provides connectivity to backend systems, sources, files, and operational applications through the implementation of well-defined interfaces, web services, and calls between applications and data sources.

25 Inclusive of cognitive and machine self-learning models





Conclusion

Operationalizing analytics by embedding models within customer engagement workflows facilitates brand

consistency and optimizes personalization through automation. Evaluate how, and if this might shorten

time to value when implementing customer analytics, customer journey design and customer engagement

programs. (See Chapter Three: Galaxy Vendor Evaluations)

Our research and analysis reveals that the types of customer analytics implemented are just as important

as the business processes developed when combined with the ability to execute on these insights. In other

words, customer analytics and insights deliver the Who? What? Why? How? And When? However, the

decision to act on this insight in a manual, semi-automated or fully automated fashion is often a key

stimulus for innovation, organizational and cultural change.

Hypatia Research Group believes that all investment in customer engagement solutions should reduce the

customer's effort, be seamless, and encourage interaction via all preferred channels while providing

stakeholders analysis and multichannel visibility into customer preferences and behaviors. Moreover, we

would encourage organizations to use this customer analysis and insight to:

Improve enterprise level operational business processes (from communications, pricing,

marketing and billing to services);

Proactively guide marketers, sales professionals and call center agents on the next best action

for customer engagement and offer management;

Transform into a truly anticipatory customer-centric enterprise by replacing inside-out

(resource optimization) business processes with purpose-built business processes designed

from the outside-in (customer centric).





About the Author

Leslie Ament, Senior Vice President of Research and Principal Analyst at Hypatia Research Group, LLC, is a Customer

Intelligence Management thought-leader and industry analyst who focuses on how organizations capture, manage,

analyze and apply actionable customer insight to improve customer management techniques, reduce operating

expenses and to accelerate corporate growth. Her research coverage include: Business Intelligence, Media

Intelligence/Search/Text Analytics, CRM, Web Analytics, Marketing Automation and Customer Data

Integration/Management/Quality. Ament also serves on the Editorial Board of the Journal of Applied Marketing

Analytics, a practitioner focused publication.

She frequently shares expertise on webinars and at conferences such as: CRM Evolution, IBM Information on Demand,

SAP Sapphire, and the American Marketing Association, and is published on SandHill.com, destinationCRM, and hosts

the Customer Analytics & Insights Channel on the B-Eye-Network. Recent keynotes presented to the Marketing and

Technology Summit hosted by Direct Marketing News and to Product Camp, hosted by the Product Management

Association have included “How CRM, Big Data, and Multichannel Customer Engagement Enhances Profitability” and

“Marketing, Big Data, and the Customer Experience”.

Previously, Ament served on management teams and lead global marketing and market research groups at Demantra,

Inc. (acquired by Oracle), Arthur D. Little Management Consulting, Harte-Hanks, Banta Corporation, International

Thomson Publishing (Chapman & Hall, UK) and Carnegie Hall, Inc. She is a member of the American Marketing

Association, Society for Competitive Intelligence Professionals, Customer Relationship Management Association,

DataShaping Certified Analytic Professional, Arthur D. Little Alumni Association, and a Board Member of the Product

Management Association.

Ament has authored highly pragmatic yet forward thinking primary research studies, exemplified by “Social Analytics

& Intelligence: Converting Contextual to Actionable Insight GalaxyTM Vendor Evaluations,” “Operationalizing Voice of the

Customer”, “Benchmarking Social Community Investments & ROI,” “Decision Science & Customer Analysis: Competitive

Advantage or Necessary to Compete”, “The Precision Marketing Imperative”, “Customer Data Management: Attaining

Tangible ROI”, “CRM is Not Pantyhose: One Size Doesn’t Fit All”, “Sales Productivity Tools: Closing the CRM Gap” &

“Business Intelligence: Connectivity & Licensing Options for Software-as-a-Service.”

Other studies include:

Leveraging Content to Improve Return on Marketing Investment: Enhancing the Customer Experience

Exploiting Social Intelligence for Customer Service & Support Excellence: GalaxyTM Vendor Evaluations

Delivering Big Data Analytics Insights: Why Choose Between Accuracy, Agility OR Speed?

A hands-on practitioner, Ament has overseen business requirements gathering and implementation of various SaaS

and on premise CRM solutions and managed customer data migration projects prior to becoming an industry analyst.

Ament completed her doctorate Phi Kappa Phi at the University of Illinois, Urbana Champaign and her Master's and

Bachelor's degrees at Indiana University-Bloomington. Her passions are international travel, spicy food, classical

music, jazz, and Chicago-style rhythm & blues. Contact her at [email protected].


http://www.hypatiaresearch.com/expertise/team.html

http://www.hypatiaresearch.coml/

http://hypatiaresearch.com/socialanalyticsandintelligenceconvertingcontexttoactionableinsights.aspx

http://hypatiaresearch.com/socialanalyticsandintelligenceconvertingcontexttoactionableinsights.aspx



http://store.hypatiaresearch.com/enteprisesocialmediainvestmentsbenchmarkingroiandbestpractices.aspx

http://hypatiaresearch.com/product/decision-science-customer-analytics-competitive-advantage/

http://hypatiaresearch.com/product/decision-science-customer-analytics-competitive-advantage/

http://www.hypatiaresearch.com/productspricing/research.html





http://hypatiaresearch.com/product/business-intelligence-connectivity-options-evaluation-criteria-for-saas/



http://hypatiaresearch.com/product/exploiting-social-intelligence-for-customer-service-support-excellence/

http://hypatiaresearch.com/product/exploiting-social-intelligence-for-customer-service-support-excellence/



mailto:[email protected]

how customer analytics & insights enrich multichannel ... › assets › gated › ibm ›...

Documents