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Accelerating Big Profits from Big Data
Jeff Tanner, Ph.D.Baylor University’s Business
Collaboratory & The Tanner Group
Learning for Competitive Advantage
• “The only sustainable competitive advantage is to (be able to) learn faster than your competition.”
Peter Senge, MIT
Agenda
• Introduction to Dynamic Customer Strategy• Accelerating Learning• Application & Case Studies• Breaking Organizational Barriers
Learning for Competitive Advantage
+40%
-35% -25%
+20%
+2%
Revenue
Cost to Sell
Sales Cycle
Time
Customer S
atisfacti
on
Margin Incre
ase
Source: Data cited from CBP Research “The Case for a New CRM Solution”
Dynamic Customer Strategy
Big Data Strategy
Organizational Learning & Absorptive Capacity
Traditional Insight to Action Model
©The Tanner Group
Traditional Insight is Too Slow
Value in Learning Faster• Occurs after the fact – have to
observe the trend
• Fails to anticipate change
Reaction to Competitor’s Major Launch #1
TimeSource: Tanner, Analytics & Dynamic Customer Strategy: Big Profits from Big Data
Value at the Individual/Market Level
Time
Value Event
Lost to Competitor
Data
Action
BEFORE
Time
Event
Close Sale
Analysis
Action
AFTER
Data
Analysis
Dynamic Customer Strategy
Big Data Strategy
Organizational Learning & Absorptive Capacity
How to Accelerate Learning?
• Start with a Conceptual Map
Satisfaction Loyalty CLV
How to Accelerate Learning?Add Operational Definitions
Satisfaction Loyalty CLV
Net Promoter
Loyalty Level
RFM
How to Accelerate Learning?
Add Why
Satisfaction Loyalty CLV
Net Promoter
Loyalty Level
RFM
Beware the Data Trap
The Illusion of Knowing because you have a lot of data
No matter how many pictures of an elephant’s butt you take, you still don’t know there’s a trunk on the other end.
Who are big buyers of washing machines?
• Laundromats
• Hotels
• Prisons
• Universities
• Military
Blessed are the cheese makers.Monty Python’s Life of Brian
Why Hypotheses Aren’t Enough
• Fail to account for “counterfactual.”
• If we don’t understand why, we may just be lucky. We test & learn – red
sells! But then our competition does this!
Why Loyal Shoppers Have Greater CLV
• Loyal customers are multi-channel customers
• Loyal customers are willing to pay more
• Loyal customers are cheaper to keep
• Loyal customers make more referrals
©The Tanner Group
High Value Multi-Channel Segments
• Are likely to be Variety Seekers• Buy more Hedonic products than Utilitarian
products• More likely to make Impulse purchases
Implications?
Tarun Kushwaha & Venkatesh Shanker, Journal of Marketing, (July 2013), 67-85
©The Tanner Group
What to do Next?
• Observe
• Hypothesize
• Historical Data Analysis
©The Tanner Group
Case Study: Cabela’s
DISCOVERY
• Business Question: How to accelerate browse/purchase cycle?
• Hypotheses:– Are there higher value products likely to
trigger purchase?– Are there buyers more prone to accelerated
cycles?
Conceptual Map
©The Tanner Group
Conceptual Map
No Sale
Is value signaled by order?
Experiment: Hot Buys vs. Basket Starters
Increased transaction penetration.Increase in product level sales.Increased margin.Transactions including only ad items decreased.Increased traffic, increased conversion.Increased shopping across channels.
Back to Discovery
• Where can we extend the learning? (In-store merchandising strategies?)
• Why some customers and not others?
• What are longer-term effects?
• How do basket starters change?– Within customer life cycles– Across seasons
ActionNot all “best-offer” models are customer
specific – but NO MINDLESS DISCOUNTS!
Another Example• Canadian city transit system
• Frequent rider program
• Push special offers based on actual journeys
End Mindless Discounting!Cabela’s
• Full Margin Offer• Revenue Increase• Margin Increase• CLV Increase
Canadian Transit Co.
• Dollar off!• How is that different
from…
Organizational Barriers
• The Belief that Business Results Trumps Learning
• Business Managers’ Fear of Math
• From Data Ownership to New Turf Battles
• Executive Sponsorship & Project Management
• Lack of Organizational Learning Strategies
Accelerating Organizational Learning
• Start with “Math” they already know• Co-Mingle to Break Turf
– Networking– Rites of Passage: Cabela’s & Amgen
• Go From Project Management to Change Management
• Apply Dynamic Strategy Elements– Conceptual Maps, Operational Definitions
©The Tanner Group
Accelerating Organizational Learning
• Organizational Learning is a commitment with processes– After-action reviews– Dissemination strategies– Effective community-building
• Building Absorptive Capacity
©The Tanner Group
Dynamic Customer Strategy
“The only sustainable competitive advantage is to (be able to) learn faster than your competition.”And to act on that learning!
Thanks!www.baylor.edu/business/collaboratorywww.dynamiccustomerstrategy.comFollow me! [email protected] @DrJeffTannerblog tannerismsontuesdays.blogspot
