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© 2011 Forrester Research, Inc. Reproduction Prohibited1 © 2009 Forrester Research, Inc. Reproduction Prohibited
Evolving To Strategic Customer Intelligence
Dave Frankland, VP & Research Director
@dfrankland
DMA Strategic SummitOctober 1, 2011
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Beware those that would predict and prognosticate!
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What’s driving the interest in customer intelligence?
How do leading firms apply customer intelligence?
How can you evolve your CI maturity?
Agenda
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Macro trends facing marketers
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1 Post-recession Austerity.
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2 Spend is shifting.
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3 Experience is king.
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4 Technology is core.
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5 Mobile.
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6 The Splinternet.
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7 Data explosion.
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8Empowered consumers.
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We have entered the “Age of the customer”
June 2011 “Competitive Strategy In The Age Of The Customer”
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Customer obsession
Focusing strategy, energy, and budget on: – Processes that enhance knowledge of and
engagement with customers
– And prioritize these over maintaining traditional
competitive barriers
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The role of Customer intelligence
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What is Customer Intelligence?
The management and analysis of customer data from all sources, used to drive marketingperformance and business strategy.
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A rose by any other name would smell as sweet
Consumer insights
1:1 marketing
CRM
Customer knowledgeRelationship marketing
Customer analytics
Data driven marketing
Customer experience
Database marketing
Direct marketing
Customer-centric marketing
Left brain marketing
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The Customer Intelligence Cycle
Customer
knowledge
Capture
Manage
Analyze
Apply
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Multiple stumbling blocks keep firms from turning data into insight
Organizational silos
Data disparity
Technology gaps
Measurement skills
Splinternet
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As a result…
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Source:ForresterResearch,Inc.59034
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Replacetext withmeta id number >>
MR DBM
Barrier 2Remain inantiquatedchannels
Barrier 3Neglecttheenterprise
Barrier 1Ignorecustomermotivation
Barrier 3Lack
visibilityinto
businessdecisions
Shared barrierLack executivechampions
Barrier 2Struggleto
turninsights
into action
Barrier 1Resist new
data-gatheringmethods
Customer truth• Single view ofcustomer
• Drive strategy•Informingbusiness decisions
Barrier 4Sink into
costcenterstatus
Barrier 4Suffer fromgeekyimage
Source:ForresterResearch,Inc.59034
1/3 page
1/2 page
2/3 page
Replacetext withmeta id number >>
MR DBM
Barrier 2Remain inantiquatedchannels
Barrier 3Neglecttheenterprise
Barrier 1Ignorecustomermotivation
Barrier 3Lack
visibilityinto
businessdecisions
Shared barrierLack executivechampions
Barrier 2Struggleto
turninsights
into action
Barrier 1Resist new
data-gatheringmethods
Customer truth• Single view ofcustomer
• Drive strategy•Informingbusiness decisions
Barrier 4Sink into
costcenterstatus
Barrier 4Suffer fromgeekyimage
Source:ForresterResearch,Inc.59034
1/3 page
1/2 page
2/3 page
Replacetext withmeta id number >>
MR DBM
Barrier 2Remain inantiquatedchannels
Barrier 3Neglecttheenterprise
Barrier 1Ignorecustomermotivation
Barrier 3Lack
visibilityinto
businessdecisions
Shared barrierLack executivechampions
Barrier 2Struggleto
turninsights
into action
Barrier 1Resist new
data-gatheringmethods
Customer truth• Single view ofcustomer
• Drive strategy•Informingbusiness decisions
Barrier 4Sink into
costcenterstatus
Barrier 4Suffer fromgeekyimage
Source:ForresterResearch,Inc.59034
1/3 page
1/2 page
2/3 page
Replacetext withmeta id number >>
MR DBM
Barrier 2Remain inantiquatedchannels
Barrier 3Neglecttheenterprise
Barrier 1Ignorecustomermotivation
Barrier 3Lack
visibilityinto
businessdecisions
Shared barrierLack executivechampions
Barrier 2Struggleto
turninsights
into action
Barrier 1Resist new
data-gatheringmethods
Customer truth• Single view ofcustomer
• Drive strategy•Informingbusiness decisions
Barrier 4Sink into
costcenterstatus
Barrier 4Suffer fromgeekyimage
Current decision support models miss the mark
© 2011 Forrester Research, Inc. Reproduction Prohibited27
Source:ForresterResearch,Inc.59034
1/3 page
1/2 page
2/3 page
Replacetext withmeta id number >>
MR DBM
Barrier 2Remain inantiquatedchannels
Barrier 3Neglecttheenterprise
Barrier 1Ignorecustomermotivation
Barrier 3Lack
visibilityinto
businessdecisions
Shared barrierLack executivechampions
Barrier 2Struggleto
turninsights
into action
Barrier 1Resist new
data-gatheringmethods
Customer truth• Single view ofcustomer
• Drive strategy•Informingbusiness decisions
Barrier 4Sink into
costcenterstatus
Barrier 4Suffer fromgeekyimage
© 2011 Forrester Research, Inc. Reproduction Prohibited28 © 2011 Forrester Research, Inc. Reproduction Prohibited
Few firms operate at a strategic level of intelligence
Strategic Intelligence
Marketing Intelligence
Functional Intelligence
54%
34%
12%
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Customer intelligence in action
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Fan Relationship Marketing
FRM’s mission:
– To know fans well enough — at any point in time or place — to serve them better.
– And, to drive direct and indirect revenue.
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ESPN began by centralizing customer data
Research Output
Market trends
Segmentation
Service Encounters
Click Stream Activity
Transactions
Marketing Touch Points
CustomerDatabase
Registrations
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At first glance, fans look very similar
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ESPN turns data into intelligence
Created a Fan Value Model
– Ranks ESPN fans from high to low based on value they deliver to ESPN.com
– Included variables such as time spent on ESPN.com and premium product
revenue.
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ESPN turns data into intelligence
Created a Fan Value Model
– Ranks ESPN fans from high to low based on value they deliver to ESPN.com
– Included variables such as time spent on ESPN.com and premium product
revenue.
– Uncovered a classic 80/20
– Marketing today focuses on maximizing fan value – e.g. by migrating fans to
higher value deciles.
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ESPN uses Intelligence to adapt and evolve
Product strategists prioritize new product development based on
appeal to high value fans.
Interactive marketing and sales teams created ESPN Select to
allow advertisers to target based on fan knowledge - turning
marketing into a revenue center.
The customer experience team leveraged knowledge of cross
product penetration in its website redesign.
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Insights & Innovation
Insights & Innovation charter:
– Develop and seed analytically driven innovation at Farmers.
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Evangelizing Customer Lifetime Value
I&I team is focused on developing and evangelizing a Customer Lifetime
Value (CLTV) approach to customers.
Predicting CLTV based on:
– Value of present relationships.
– Expected stickiness of relationships.
– Expectation of future business.
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Farmers turns data into Intelligence
Customer Lifetime Value Segments
Top 5% of customers deliver 25x revenue than the bottom 5%
The top 5% drive 90-93% of profits!
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Farmers uses Intelligence to adapt and evolve
Marketers test creative copy on high value customers.
The sales team can understand why certain storefronts deliver
higher quality customers. And, the differences between top
performing and less successful agents.
Customer experience teams understand the incremental impact
of a superior claims experience on CLTV .
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Fresh Direct turns data into Intelligence
140 customer surveys per year.
– Satisfaction surveys, testing promotions, advertising, product, honing in on
problem areas.
Customer database tracks every customer order.
– Average order is 30+ SKUs and $120.
Operations data.
– Orders per truck, out of stock items, damages, late deliveries, complaints.
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Fresh Direct uses Intelligence to adapt and evolve
CEO uses Intelligence to drive the business every day.
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Fresh Direct uses Intelligence to adapt and evolve
Verbatim comments in surveys drive decisions.– Reducing packaging.
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Fresh Direct side effect
“Really, you have no idea how irritating it is to get one package of crackers in a huge box
“I just received my order and was really disturbed by the fact that one large box contained only one ½ gallon of milk, and another small box only contained a bag of rice.
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Fresh Direct adapted its supply chain
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Fresh Direct uses Intelligence to adapt and evolve
Verbatim comments in surveys drive decisions.– Reducing packaging.
– Product ratings.
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Fresh Direct uses Intelligence to adapt and evolve
Marketers leverage verbatim comments in surveys
drive decisions.– Reducing packaging.
– Product ratings.
Changing how people shop.
Customer history increases average order size.
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Evolving your CI maturity
© 2011 Forrester Research, Inc. Reproduction Prohibited51October 2009 “The Intelligent Approach To Customer Intelligence”
Create a customer intelligence command center
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Play the role of the customer strategist
Source: April 29, 2011, “Preparing For The Intelligent Enterprise: A Blueprint For Customer Intelligence Professionals”
© 2011 Forrester Research, Inc. Reproduction Prohibited53April 2009 “Campaign Management Needs A Reboot”
Put the customer at the center of technology decisions
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Evolve your culture to win in the age of the customer
To drive success, CI must be:– Relevant
– Collaborative
– Customer obsessed
– Timely
– Ubiquitous
© 2009 Forrester Research, Inc. Reproduction Prohibited
Thank you
Dave FranklandTwitter: @dfrankland
http://blogs.forrester.com/dave_frankland
www.forrester.com
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