Leslie Ament, SVP of Research, Principal Analyst Hypatia Research Group
Partners waltzing in triple time with four feet require grace and precision. Similarly, creating an effective Big Data Analytics ecosystem demands dexterity coupled with speed and accuracy. Instead of four feet dancing in triple time, enterprise-level Big Data Analytics (BDA) encompasses numerous information sources, multiple technologies (software and hardware), nimble business processes and specialized human expertise in advanced analytics.
“Do it big, do it right and do it with style.” --Fred Astaire
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Research approach
Our analysis of 436 Fortune 500 (defined as greater than $4.5 billion in revenues) executives that actually utilize, recommend, influence, hold budget or veto power over the purchase of BDA or business intelligence software provides contrarian insight into how and why large organizations:
Invest in BDA software solutions
Prioritize software selection criteria
Utilize a wide variety of informational sources
Measure productivity and effectiveness of BDA initiatives
Enhance accuracy and reliability of results
Realize downstream business benefits
Our assessment
At present, few organizations are waltzing with the precision and accuracy of Fred Astaire and Ginger Rogers; however, those that are successful realize significant downstream business benefits as well as operational cost take-outs.
Driven by the convergence of business at the speed of light (Business at the Speed of Thought, William H. Gates III, 1999) requirements — such as ever-increasing competition for market-share and share of customer, combined with proactive management of enterprise risk and optimization of spend intelligence — an inflection point will soon be reached. We estimate this will occur within the next three years at upper mid-market and large enterprise organizations.
Despite the aforementioned challenges faced in designing and deploying enterprise-level BDA programs, our research illustrates that effective usage of Big Data Analysis technologies may well provide a competitive advantage for adopters.
Leslie Ament,SVP of research & principal analyst at Hypatia Research Group, is a Customer Intelligence Management thought leader and analyst who focuses on how organizations capture, manage, analyze and apply actionable customer insight to improve customer management techniques, reduce operating expenses and accelerate corporate growth. Her coverage areas include CRM, Business Intelligence, Social Media Intelligence/Search/Text Analytics, Web Analytics, Marketing Automation & Customer Data Management/Data Quality. Ament has driven process requirements gathering implementation for both on-premises and SaaS CRM systems. Contact her atLAR@HypatiaResearch.com.
Companies are increasing their investments in social analytics to help them interpret the volumes of data coming in from social media platforms and monitoring tools, new research indicates.
It's no surprise that the volume of user-generated content in social media is valuable for companies. But early adopters of social analytics solutions need to be aware of their objectives and approaches to benefit from unstructured data.
"Knowledge transfer and training is a huge part of effective leverage of social analytics and intelligence," notes Leslie Ament, vice president and senior analyst at Hypatia and author of the report. "Metrics should match either operational business issues or corporate goals. Too many companies focus on tactical metrics that align with individual goals rather than with the needs of the enterprise."
Ament found that 53.2 percent of North American respondents use more than five sources of unstructured, social, and user-generated content for big data analysis, more than twice that for Asia and the Pacific Rim and Europe.
"Many organizations are in discovery mode, seeking important signals within the information tsunami of volume, velocity, and variety," Ament maintains.
But there are bottlenecks, including questions like, "Who is responsible for each business issue or is just one team responsible for analysis of big data on an enterprise level?" Others revolve around the processes, analytical models, and visualization techniques that will be used, accountability for interpreting and acting on big data results, and operationalizing any insights that surface, Ament concludes.
Deloitte: Global leader in Risk Consulting ranking
The report’s author Leslie Ament, Hypatia Vice President and Senior Analyst, included some key findings like the fact that Deloitte takes a top-down and bottom-up approach to enterprise governance, risk, compliance and security offerings. True to its matrix-based, multi-service delivery model, an estimated 20,000 resources from the organization’s robust enterprise risk, tax, and audit capabilities are part of this comprehensive offering.
As well, the report found that Deloitte, like many of the professional services organizations and consultancies assessed, is agnostic in working with software vendors. However, the Deloitte global network differentiates itself by tightly integrating its proprietary Risk Intelligence methodology framework with various GRC solutions.
I don’t know about you but I’ve been sensing a collision of corporate social media practices and disciplines stretching across sales, marketing, HR and customer service.
It starts to look daunting when you consider how the fast social media has become omnipresent in every corner of professional and private life – and the inevitable business opportunity that is trailing it. The usual suspects, Twitter, LinkedIn and Facebook, the voluminous and verbose comments alongside every review site, product support thread, news story, blog and forum, they are all fodder for the unstructured mining revolution.
And while we’re mining for sentiment and behavior, we can add the corporate social networks of Yammer and the like, and why not collaborative platforms like SharePoint? Alex Bakker pointed out this connection in a blog posting that sounds like talent management’s new barometer of metrics, morale and retention. You could throw in Chatter, Zoho and many more.
Alongside the big data excitement and despite some presumptions from the IT community that these information streams can be managed from a central point, the breadth of this information is not something that can flow into an office or department tasked with social media. The work of brand building and customer retention and product launches and reputation management falls to different and often many owners.
We reported on an interesting study from Leslie Amentat Hypatia Research this week that companies movinginto social media encounter a very piecemeal and fragmented progression of learning, captive investment and outsourcing. (complimentary downloadof executive summary available)
Though Ament concluded that tools are presently ahead of organizational skills, investment also calls for accountability. Specific resources are needed to make all this actionable.
But where? It can’t just be delivering tools for IT to roll out. Marketing is one obvious place to manage social media but it’s trickier than that.
For an example, Kim Celestre at Forrester put out a report this week telling marketers at business technology vendors selling products, software and services about the value of direct social engagement and reporting. Forrester sees more than half of these business technology vendors boosting social media spending this year and the study cites a success story at Dell.
I have yet to reach Kim directly but a graph in her report shows that business technology buyers (prospects) are much more influenced by the support and discussion forums for products than by blogs or twitter or virtual events. So you’ve got to ask more broadly, are those support forums where the proper marketing folks are listening and hanging out? Who is and who should be there?
It gets back to Ament’s point about accountability, that somebody has to take on the project management and put together solutions and that it’s “too hard right now” in her words.
Organizations all need to get started somewhere and will discover opportunities they had never been aware of through social tools and services. But we also need to try to get our plans ahead of the technology to the mission and the executors of the mission. Otherwise we are shaping our organization to a service or product on a quadrant rather than the other way around.
I’m not sure the analysts I named here would agree with all that and I am not speaking for them. But I was struck by something Leslie Ament told me about getting serious about the opportunities before us. From an executive view, she said, “creating charts and graphs that show positive sentiment on a product launch is great. But if you are several levels up and looking at that, you’re thinking, what do I report to my shareholders and board about the $100K we just invested in social business initiatives?”
August 7, 2012 – Social media analytic programs may be driven by high volumes of content, but execution depends on internal competencies as much as service and product providers according to a new report from Hypatia Research Group.
Founder Leslie Ament calls social analytics an “exploding category” of software and service vendors that touch on categories including sentiment analysis, twitter and content analytics and speech analytics. The products are functional, replete with dashboards, drill downs and visualizations for metrics as well as proactive workflow and complex filtering.
Nonetheless, customers find themselves learning in a hype-filled market against a backdrop of new and evolving technologies where early documented users of social media analytics are often “first movers willing to make a leap of faith,” Ament says.
“We found that [qualified respondents] who took the survey were all over the place in terms of maturity,” she adds. About 30 percent are in an early stage of using social analytics and intelligence and with more than 100 social analytics vendors to choose from, many are looking for the proper selection criteria.
This is no easy process since appropriate metric and predictive analytics capability initially requires organizational understanding more than specific products. While a service-based industry for social analytics may be in the offing, companies will first have a learning process to assimilate internal competency in social analytics.
Measured ROI is elusive among companies adopting Social Analytics & Intelligence (Hypatia’s term for the category), where two-thirds of large companies could not effectively track return on investment after two years. Conversely, 23 percent reported a 2 to 3 percent return on marketing budgets based on metrics that capture customer feedback on design or merchandising, their propensity to recommend a brand and their brand’s sentiment.
Uncertainty aside, more than 50 percent of companies will spend 3 to 5 percent of their annual marketing budget on the category next year, and close to 40 percent will spend more than 5 percent. Along the way, Ament says, these organizations will need to build expertise in which business applications best fit social analytics, the social processes involved, the metrics to measure, who will be responsible and the kinds of actions that will be taken as a result.
Jim Ericson is editorial director of Information Management, a SourceMedia publication. You can reach him at Jim.Ericson@sourcemedia.com. Follow him on Twitter at @jimericson.
The 2012 CRM Market Leaders
August 6, 2012-By the Editors of CRM magazine
Consultancies
As the CRM market grows with additional solutions, so, too, does its complexity, which is fueling impressive growth in the CRM consulting industry as well. While the largest consulting houses continue to dominate the market, a crop of new players has been emerging to help clients assess where, when, and how to take advantage of new cloud-based alternatives. Another crop specializes in social media monitoring.
In addition to specializations, many consulting firms have expanded beyond very basic services this year to include implementation strategies, training, release management, customizations, product upgrades and migrations, system testing, business intelligence and analytics, data integration, and product support and maintenance. Some have even aligned themselves with specific solutions vendors to ensure a steady stream of business.
The Leaders:
All four of this year's leaders have been around for a while, and while some of them have changed their focus slightly, most have stayed true to what has placed them at or near the top in the category since CRM magazine began presenting its Market Leader Awards more than 10 years ago.
Accenture, for example, ably produces in its ability to execute, earning a score of 3.9. However, Leslie Ament, vice president and senior analyst at Hypatia Research Group, says the company's accomplishments will go far beyond. "Accenture has certainly made inroads into the customer management arena with its digital marketing offerings," she says. But that comes with a caveat: "Customers should carefully evaluate whether they require the full portfolio of resources that a management consulting firm brings to the table or whether a digital marketing agency or marketing services provider would serve as well," Ament says.
Deloitte continues to demonstrate its ability to execute, where it scored a 3.9. While the company's main focus has been on compensation management, it has "been busy developing intellectual property around social risk and reputation management," Ament says. "Coupled with its comprehensive portfolio of risk intelligence services, Deloitte is well-differentiated from its competition."
IBM, a powerhouse in the areas of analytics and compensation management, garnered a respectable score of 4.0, and its ability to execute (3.9). Ament attributes its leadership position to a much broader reason. "While navigating global services is often challenging, IBM's portfolio of CRM-related consulting and software offerings is unmatched," she says.
The Winner:
Cognizant, a newcomer to the leaderboard, shared the top mark in ability to execute, with a 3.9, but where it really impressed analysts was its company direction (4.3) and cost (4.0). Ament is enthusiastic. "Cognizant's rapid growth in the B2C sector after carving out impressive wins in the manufacturing sector and supply chain operations make this consultancy one to watch in the customer management service line," she says.
The 2012 CRM Market Leaders
August 6, 2012 - By the Editors of CRM magazine
Data Quality
Current estimates put the waste associated with poor data quality—blamed for duplicate mailings, lost contacts, and missed sales opportunities—at about one sixth of the company budget at many organizations. That unacceptable loss has prompted an uptick in the data quality market.
The Leaders:
DataFlux, a part of SAS Institute, maintains its leadership position mostly on the strength of its customer satisfaction, for which it received an industry-leading score of 4.4. The company also scored an impressive 4.3 in depth of functionality. Leslie Ament, senior analyst and vice president at Hypatia Research Group, calls its flexibility an asset. "DataFlux enables its brand-name retail apparel clients that sell direct via multiple channels…to consolidate customer records via multiple channels," she says. Moreover, its data management platform supports any domain, any data source type, in any time frame—real, batch, or virtual."
Trillium Software, a division of Harte-Hanks, sits proudly among the industry elite for the ninth straight year. Its depth of functionality score of 4.3 was among the highest in the industry, but it also attracted attention for making its solutions cloud-ready (with support for the Amazon and Microsoft Azure clouds), and offering on-premises and hosted offerings. Its partnership with Microsoft, which positions it as the first and only choice for data quality profiling and cleansing within the Microsoft Dynamics CRM environment, will only expand its reach. Beyond that, "Trillium has amassed an impressive quantity of clients," Ament says, noting that the company "is now engaging directly with customers by offering ROI value propositions that attract both upstream and downstream decision-makers."
The editors of CRM magazine would like to extend their deepest appreciation to those who took part, in degrees large and small, in evaluating this year's CRM Market Awards. This issue, and the Market Awards themselves, would not have been possible without the contributions of these judges, assessors, commenters, and raters. Thank you to: Leslie Ament, vice president, customer intelligence research and client advisory service, Hypatia Research Group;...
Enterprise CRM:One to Watch
KANA came in as our One to Watch, and while the company didn't make it to the leaderboard this year, Leslie Ament, senior analyst and vice president of Hypatia Research Group, says she is "favorably impressed" by the company's spring launch of the Service Experience Management platform, which is targeted for the enterprise. "Ease of use is provided via a single sign-on with one interface for agents, so that CRM data is available to them for history and decision support without having to access multiple screens," Ament says.
Mid Market Suite CRM: One to Watch
Being snapped up by Oracle last year for $1.5 billion did not hurt RightNow Technologies' position as a strength player, as it scored a 4.0 in customer satisfaction and retained its title as One to Watch. "This vendor has a significant offering with a good reputation for customer satisfaction, depth of functionality, and company direction," says Leslie Ament, senior analyst and vice president of Hypatia Research Group. "After being acquired by Oracle, along with ATG, Endeca, and other front-office vendors, it will be interesting to see if RightNow will be able to maintain the level of customer satisfaction built up over many years."
Small Market Suite CRM: The Winner
Zoho stepped up its game and stole top spot as our winner with a 4.5 for cost and a 4.0 for functionality. Analysts had plenty of positive things to say about this vendor. "Zoho CRM is cost-effective, easy to use, and continues to add on attractive functionality priced like an a la carte menu, which enables smaller businesses to scale as necessary," says Leslie Ament, senior analyst and vice president of Hypatia Research Group. This year, Zoho gave its user interface a full facelift, added a plethora of features like Pulse for internal collaboration, came out with myriad mobile integrations, and integrated Zoho Support with Facebook and Twitter.
Oracle Acquires Collective Intellect
Software giant builds out deeper cloud social offerings
Just days after Oracle announced its purchase of social media marketing company Vitrue for $300 million, the software giant has acquired cloud social intelligence solutions company Collective Intellect for an undisclosed amount.
According to Leslie Ament, vice president of research at Hypatia Research Group, Oracle's acquisition of Collective Intellect shows that "companies plan to invest in social analytics as a method of measuring if not justifying growing expenditures in social business initiatives."
NetBase Launches Social Engagement Solutions
Enterprise Social Intelligence Platform Enables Customer Service at the Speed of Social
May 15, 2012 (MARKETWIRE via COMTEX) -- NetBase, the Enterprise Social Intelligence Platform company, announced today that is has added a new set of social engagement solutions to its existing platform to help businesses stay one step ahead of the game and assure that they can quickly respond to customers that voice their feedback via social channels. NetBase's open API can now integrate with social engagement platforms and tools offered by SAP Social On Demand and MediaFunnel, with more to come, providing an intelligent approach to proactively monitor social conversations, quickly identify posts to respond to and assign those posts to the right community managers or customer service representatives. SAPPHIRE NOW attendees can see live demos at the SAP Cloud Campus from May 14 -16.
"Creating social intelligence out of the social media analysis tools takes a village," said Leslie Ament, Senior Analyst and Vice President, Research and Client Advisory, Hypatia Research Group, LLC. "Ideally, social analytics tools should empower organizations to use customer intelligence for guidance, decision-support or corrective action deemed most advantageous in meeting business objectives. Combining SAP's strong capabilities in business workflow and routing with the NetBase Enterprise Social Intelligence platform, may simplify deployment of social engagement processes for many organizations."
May 21, 2012
Recent Survey Reveals ROI for Companies Using Social Intelligence Tools
In a survey involving 526 organizations, the industry and research firm, Hypatia Research Group found that a return on investment of more than 5 percent was realized by 17.8 percent of the customer service and support executives using social intelligence tools. Another 20 percent of the respondents reported a 3-5 percent return on investment. The study dubbed, “Leveraging Social Channels for Customer Service & Support” looks at the current trends and organizational challenges of firms and how these organizations are utilizing, recommending, influencing and budgeting the use of social analytics and intelligence software.
According to the VP, who is also a senior analyst at Hypatia Research Group, Leslie Ament, “Organizations that adopt social intelligence tools, combined with best practices for rules-based business process workflows are empowered to utilize the social channels as decision support and customer engagement for value creation.” Ament pointed out that the research revealed customer experience to be an intangible metric and that the use of social intelligence technologies by early adopters will create a differentiation in tangible outcomes.
The respondents involved in the survey had direct accountability for the selection and use of the various social analytics tools. The respondents are responsible for choosing the social analytics tools that will best serve their organizations from a list of over 100 social analytics vendors. Understanding which selection criteria that will offer the best investment is also critical. These tools need to be able to assess trends, metrics and key performance indicators from user generated content, either from services like Twitter (News - Alert) and Facebook, or from other media outlets like RSS feeds.
The report also mentioned that the highest reason why 44.4 percent of customer service and support executives invested in social intelligence tools is their ability to respond to customer support requests and ability to offer services or information to customers promptly. As organizations try to understand their customers and most importantly, what influences them to purchase, we can expect investment in social intelligence tools to only increase.
May 16, 2012
Hypatia Publishes 'Leveraging Social Channels for Customer Service and Support' Report
Due to the high volumes of online user generated content, social analytics has been an exploding category. Various software and service vendors provide sentiment analysis, twitter analytics, content analytics, and speech analytics tools. Every one provides dashboards, drill-downs, graphs or other types of visualization that illustrate metrics for online sentiment analysis (positive, neutral, mixed or negative).
Recently, Hypatia Research Group published a primary research study entitled “Leveraging Social Channels for Customer Service & Support,” which focused on current trends, organizational challenges, and business case justification.
The company surveyed 526 firms, each respondent uses, recommends, influences, holds budget or veto power over the purchase of social analytics and intelligence software. In its survey, the company discovered that the return on investment from customer service and support initiatives is more than other business use cases.
According to the survey, 17.8 percent of customer service and support executives get more than a 5 percent return on investment. This return is defined as a percentage of total annual marketing spend. The research showed that another 20 percent get anywhere between 3 percent-5 percent return on investment.
Leslie Ament, vice president and senior analyst at Hypatia Research Group, stated, “Organizations that adopt social intelligence tools, combined with best practices for rules-based business process workflows are empowered to utilize their social channels as decision support and customer engagement for value creation.” Ament continued, “Our analysis reveals that "customer experience" is an intangible metric. True customer engagement has a higher probability of tangible outcome.”
Recently, Ektron announced that Hypatia Research & Advisory ranked Ektron as the top performer among 24 Customer Content Management (CCM (News - Alert)) vendors in its 2012 Galaxy Vendor Evaluations. In the report "Leveraging Content to Enhance Customer Engagement: Best Practices, Benchmarks & Galaxy Vendor Evaluations," the company stated that Hypatia ranked Ektron No. 1 using a data-driven methodology with weighted dimensions, the company stated.
Ektron Ranks as Top Performer in Hypatia Research Annual CCM Vendor Evaluations
Feb 24, 2012 (Close-Up Media via COMTEX) -- Ektron, a company that enables organizations to fully realize their websites' marketing and revenue-generating potential, announced that Hypatia Research & Advisory ranked Ektron as the top performer among 24 Customer Content Management (CCM) vendors in its 2012 Galaxy Vendor Evaluations.
"Ektron's software solutions support enterprises that seek to effectively leverage content to increase customer engagement with sophisticated reporting and analysis that is used for dynamic personalization of content delivered to both known customers as well as to unknown prospects," said co-authors Leslie Ament, senior analyst and vice president of research, and Sue Hildreth, senior analyst, at Hypatia Research.
http://store.hypatiaresearch.com
Tips for using analytical tools to take action on customer data
SearchCRM.com
In this installment of the customer data and analytics guide, Leslie Ament of Hypatia
Research, LLC provides tips for optimizing analytics to take advantage of customer data. Read
expert advice on using analytics effectively and hear about real-world examples from companies like
GMAC Insurance and Bell Canada.
Don't miss the other installments in this customer data and analytics guide:
In most organizations, customer information resides in multiple data marts, is utilized by
multiple departments and is captured through multiple channels. Across numerous industries and in
B2C and B2B companies, customer data is analyzed and action is applied primarily for operational
and/or strategic decision support. In short, it is all about revenues and customers.
Taking action to support strategic or operational decisions
Previous quantitative research by Hypatia Research, LLC revealed that use of timely, complete and
accurate information leads to improved customer service levels, reduced operational costs,
increased revenues, and higher customer satisfaction and retention rates. In short, it's all about
revenues and customers -- how do we increase market share growth and customer profitability, reduce
customer migration or credit card fraud, and enhance retention rates?
Figure 1: Why take action on customer data?
Source: Copyright 2010 Hypatia Research, LLC
For many organizations, gaining customer visibility across all channels, trading partners,
distributors, suppliers, end users and stakeholders is a top priority, with the goal being to glean
customer insight. In B2C industries such as telecommunications, retail and financial services,
companies often struggle to understand and respond to their best customers within a multi-channel
environment. Not surprisingly, leveraging customer information requires that companies have
visibility across purchasing channels, products, and customer value metrics as well as demographic
information, transactional history and lifestyle stages.
Hypatia Research found that a majority of organizations take action on customer information for
the following five reasons:
Source: Copyright 2010 Hypatia Research, LLC
In fact, leading companies such as American Express, Wal-Mart, Harrah's Casino and Staples
consistently create actionable insight out of discernible patterns in customer behavior. These
patterns are tracked through various methodologies, such as:
Traditional direct marketing practices, such as response rates per customer segment or profile
based on discrete or diverse dimensions such as demographic or transactional information. Catalog
retailers, consumer goods and manufacturers of electronic equipment paved the way for this
approach.
Sophisticated predictive models (mathematically based algorithms and/or probability models)
designed to forecast or influence the customer's next likely online or in-store purchase. This type
of one-to-one relationship (1:1) is often referred to as mass customization or extreme
personalization.
Semantic and text analytics tools are used to glean actionable insights from blogs, online chat
rooms, customer call centers and feedback forms, and even online surveys. An early example of using
unstructured online information includes the product genesis behind the creation of the wildly
successful "Swiffer Mop" owned and distributed by Procter & Gamble.
Rules-based trigger communications or offers that are based upon recent customer events,
actions and online or mobile behavior. Retail banks were early adopters of this type of analytics
to target customers with products based on lifecycle events such as applications for mortgages,
opening IRSs, or 529 college saving plans.
Diverse enabling technologies and analytical tools can facilitate planning and execution of
both inbound and outbound customer interactions. Commonly used analytical tools are offered via
various delivery models, including enterprise licenses, Software as a Service (SaaS), and managed
services, and on a project basis. Often these analytical capabilities are defined by the following
categories:
"Trigger data such as life events, birth of a child, death in the
family, household move, or bankruptcies create an opportunity to influence customer
responses."
MyCustomer.com looks back at some of the major developments of
the last 12 months and outlines what the CRM industry has learned in
2009.
Phew. It has been a tough year.
Still, there have been some major lessons learned this year --and if we
really are seeing the green shoots of recovery then these lessons are
sure to stand us in good stead for the year to come. So let's take the
time to deliberate over some of the main talking points and emerging
trends and digest their implications for the future.
1. Analytics is at the top of the agenda
Business intelligence and analytics moved to the top of the agenda
for CIOs in 2009 as they looked to gain competitive advantage and
improve decision-making. A study by IBM, The New Voice of the CIO, revealed
that four out of five (83%) respondents identified business
intelligence and analytics as the best way to enhance organisational
competitiveness. This shift was reflected by the growth in the
analytics sector. According to IDC research
the sector grew 10% this year, while sales in the business analytics
space are predicted to rise at a compound annual growth rate of 7.2%.
Organisations hoping to glean priceless customer insight from
their analytics efforts need to be wary, however. And Leslie Ament,
co-founder of Hypatia Research LLC, warned of the fundamental barriers that businesses must overcome
if they are to have insight success as we move into 2010. As well as
the aforementioned volume of data, Ament also warned that many larger
retailers can have upwards of 10 different databases, each with
different scheme for collecting customer data; that despite
the importance of data quality, less than 40% of organisations had
deployed data quality tools enterprise-wide; and that often firms lack
a set of goals of objectives determined upfront to underpin their
analytics efforts.
"Companies are generally moving along the maturity grid, from mass
customisation to true customer intimacy but they have yet to reach that
visionary level in which they are effectively using this insight," she
explained.
BI BULLETIN
Trends & Tips for Using Business Intelligence & Analytics in Retail Leslie Ament, SearchDataManagement.com Contributor. 10.29.2009
A majority of multichannel retail environments are structured as
separate profit-and-loss centers -- online store; physical retail store;
catalog sales; and not-for-profit, business or government-only sales.
In fact, each typically has a separate revenue target, IT
infrastructure and business unit leader. Moreover, those business
leaders usually have incentive plans based on the revenue targets set
for their individual units.
Compounding this conundrum, other departments within a retail
environment -- such as merchandising, marketing, corporate planning and
supply chain operations -- are typically shared services.
What's more, compared to other industries, retail
is highly focused on inventory replenishment. Multiple sales channels
require that retailers fastidiously avoid "stock-outs" -- or as commonly
viewed in online shopping carts, "out-of-stock" (OOS) situations -- in
order to maintain brand primacy and customer loyalty and steer clear of
lost sales. For example, if a customer prefers Band-Aid brand adhesive
bandages but a drugstore has in stock only NexCare, a 3M brand, the
probability of the customer driving to another store is slim -- especially when gasoline costs nearly $3 per gallon, or more.
Finding success with business intelligence in retail
The diversity of stock-keeping units (SKUs) makes retail
merchandising a rich lode for business intelligence (BI) utilization.
Retailers routinely parse sales data in an effort to better determine
what will sell in the future. For instance, does a particular color or
size sell more than another does? Do different colors sell better in
one season or region than others? Does one store in a particular region
do better than the others there?
When looking at sales, retailers frequently adjust the prism through
which they measure success. As the consumer goods and retail sectors
continue to expand their original business model from that of a single
brand and/or brick-and-mortar store to include catalog and online
channels, other challenges surface. Retailers as well as consumer goods
brands have found that measuring success effectively requires tracking
performance metrics for each discrete product or SKU through each
distribution channel -- in addition to a corporate level roll-up.
Finding outliers of success (or disappointment) can help identify
best practices and highlight flaws. Always, the question of
profitability looms, whether by customer or by product or by marketing
campaign. For example, how much profit margin is realized per SKU for a
certain in-store promotion? Are particular customers more profitable
than others? Among other things, using BI allows retailers to improve
existing affinity programs. They also can get answers to questions such
as whether rebates or trade promotions on a particular item prompt
customers to spend more during a particular shopping trip, or at a
specific time of year.
Using advanced analytics gives retailers an edge
Retailers strive to track and analyze "market baskets" and/or "attachment rates." Knowing the frequency of customer purchases and the
store location, total dollar value and assortment of products bought in
each store trip or online visit is of great interest for obvious
reasons, including the following:
Merchandising executives consider market-basket analysis --
looking for relationships between the products that a customer buys at
the same time -- to be a key performance metric and use it extensively
in planning store layouts, advertising and trade promotion campaigns.
Attachment rates, which measure purchases of accessories and other
supporting goods , are tracked in order to understand customer buying
patterns by lead products.
Research examples of attachment-analysis hypotheses used by retailers include the following:
Customers who buy high-definition television sets also order
installation services and/or longer warranties than those purchasing
standard TVs.
Women always purchase matching shoes when they buy dresses priced at more than $250.
More often than not, customers who buy computer equipment also
select peripheral items such as a mouse, storage devices and printer
ink at the same time.
Conclusion
Companies contemplating investments in BI and analytical
technologies that will be used to leverage multichannel information
should carefully consider the following recommendations:
Define and standardize performance metrics on a corporate level.
Corporate-wide agreement on how metrics are defined and calculated is
as necessary as enterprise standardization of data dimensions across
data marts. Failure to achieve this renders any analysis and insight
derived from BI applications and reports not credible.
In a prime example taken from our research, activity-based costing
was the preferred methodology for calculating product category
profitability at one retailer. However, Hypatia found that one team
included the actual cost of both production and raw materials in its
calculation, while others added in an average cost of sales per product
SKU. Cross-functional dysfunction resulted.
In another case, an office supply retailer utilized specific
marketing metrics to calculate "uplift" from a trade promotion run on
printer ink cartridges and internally announced the promotion as a
rousing success. However, at the profitability level, the company
actually lost revenue on the promotion as subsequent market-basket
analysis revealed that the promotion didn't influence shoppers to buy
other products with higher profit margins. In short, the retailer paid
for expensive media advertising, store signage and direct marketing and
reduced the price of the printer ink below cost -- and realized both a
negative return on its investment in the promotion and a revenue
reduction.
Establish processes for updating, synchronizing, cleansing and normalizing all types of information.
That includes data about your customers, products and supply chain
partners. Gleaning market intelligence at a granular level, derived via
advanced analytics, data mining and operational reports, requires that
retailers have processes in place to track and store accurate, updated
and normalized data prior to analysis.
Ensure that your organization takes out the trash. Boosting
decision-support accuracy and credibility means ending the
dissemination of bad data throughout a multichannel environment.
Remember, it's not about data garbage in, data garbage out -- it's about
information garbage in, information garbage everywhere.
About the author
Leslie Ament, co-founder of Hypatia Research 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 accelerate corporate growth. Her research
coverage includes: business intelligence, media
intelligence/search/text analytics, CRM, Web analytics, marketing
automation and customer data management/data quality.
Scores of companies offer analytical tools, platforms and
services. For information on vendor selection criteria, research
products or scheduling an analyst briefing, contact Hypatia at ZGR@HypatiaResearch.com or Research@HypatiaResearch.com.
Executive Summary published on: www.mycustomer.com
Wal-mart, American Express, Coca-Cola, Staples, Best Buy, Harrah's
Entertainment, Proctor & Gamble, Toyota, Hilton International. AOL,
IBM, Oracle are among numerous blue-chip companies that believe
leveraging business and consumer data is necessary to compete in
today's economy. What used to provide a 'secret sauce' or competitive
advantage to companies savvy enough to exploit the value of customer
data within their own proprietary databases, has now become a rather
lucrative service business for vendors able to provide key components
including customer analysis; list and data enhancement; customer data
integration; and database marketing services.
Decision Science & Customer Analysis
Hypatia's Analytics Report, SMS for Voter Registration, Webcom and Tripwire, Vitrium's Documentrics Challenge
By David Sims
David at firstcoffee d*t biz
Hypatia
Research, LLC has released a report titled "Decision Science and
Customer Analytics: Competitive Advantage or Necessary to Compete"
which outlines "strategies, techniques, vendor products and services"
used by companies, according to Hypatia officials.
Wal-Mart,
American Express, Cocoa-Cola, Staples, Best Buy, Harrah's
Entertainment, Proctor & Gamble, Toyota, Hilton International. AOL,
IBM, and Oracle
are among numerous blue-chip companies using business and consumer data
today, report officials say. In fact it'd be hard to find a
significantly successful company who doesn't use analytics, First
Coffee thinks.
The
report finds that information is "a currency used for competitive
advantage since the earliest beginnings of barter negotiations and
commercial commerce." In today's global economy, knowledge of consumer
and business behavior, lifestyle and demographic information can be
transformed through information analysis, the report finds, in a form
known as "Decision Science, Marketing Science or Customer Analytics."
It
is this insight that is used in decision-making to help companies that
seek to enhance profitability or gain a competitive business advantage.
"In
order to create an effective decision analytics eco-system, companies
need to establish an operational foundation for customer data analysis
and decision-support," says Leslie Ament, Managing Partner at Hypatia.
If read off-site hit http://blog.tmcnet.com/telecom-crm/ for the
fully-linked version. First CoffeeSM accepts no sponsored content.
IBM
Global Business Services has strengthened its performance this
year, coming out of a two-year slump during which it was the lowest-rated in
customer satisfaction among our leaders. In fact, Gartner says the firm's
increasing its share of the CRM services market faster than the competition.
Leslie Ament, partner at Hypatia Research, says that IBM GBS has expanded its expertise
through new hires, and that customers can expect excellence in technological
knowledge. With a solid long-term partner in SAP and rapidly expanding
practices in India and elsewhere, IBM promises impressive strides going
forward.
THE
WINNER
Ever a standout in customer satisfaction, Deloitte shoulders out the competition this year,
making 2008 the first year we've crowned a new winner in nearly half a decade.
Deloitte's central differentiator is its focus on CRM, which, according to
Gartner, receives the majority of the firm's investments. "They've got the
business processes piece, and the implementation piece," Ament says. "You're
getting value there."
Half of the companies have actually deployed data quality tools or started Data Quality initiatives.
Of those who use data quality tools, less than one third has deployed these enterprise-wide.
The reason is that the information is siloed in different databases
collected from different sources, with no tools to connect them
together. Or as Leslie Ament, Managing Partner, Hypatia Research says:
"Many larger retailers have upwards of 10 different
databases with different schema for collecting customer data," Ament
said. "Standardizing and normalizing this information is akin to having
root canal surgery at the dentist."
I like analogies like that, hopefully we can make customers address
the challenges, even though it hurts. The good thing is that I think
we can see more business is becoming increasingly aware of these
challenges.
"The challenge for a multi-channel retailer is to understand which channel the customer prefers and which channel is most profitable per unique customer," says Leslie Ament, and that requires getting the data in order--no small feat."
"That could be a 12- to 18-month project for some companies, depending on how many legacy databases need to be integrated and cleansed. With mergers and acquisitions, many retail organizations end up with multiple databases," Ament says. "There could be 12 or 20 legacy database systems holding customer information at one company," she says. "Or large companies could have different brands and each brand might be in a separate business unit and each business unit has separate customer data."
"Retailers need to weed out redundant listings, bad addresses and other poor quality data. If they don't, subsequent analysis will result in the classic 'garbage in-garbage out.' Once data is consolidated, standardized and verified, the retailer can begin capturing crucial information about which channels a customer prefers, another daunting task," Ament says.
"Often a customer will access multiple channels before buying an item, making it difficult for the retailer to determine which channel played the key role in the customer's purchase decision. Ament notes that she often looks at an outfit in a catalog but will go to the store to try it on and then will buy it online because the color she prefers is only available at the web site. "If you're a marketer, how do you know what influenced my purchasing decision and to what extent I'm going to interact with you as a customer?" she says. "But technology is evolving that can help retailers analyze multi-channel data, including operational business intelligence and predictive analytics," according to Ament.
"Customer Intelligence Management (CIM) is a set of business intelligence tools and practices applied specifically to customer data. According to industry analyst Leslie Ament, CIM combines technology, people, process and data, but technology is a key enabler of successful initiatives. Top performing organizations are more likely to use customer data integration (CDI) tools prior to analysis, according to the study. These leaders are also more likely to use operational and predictive analytics to better understand their high-value customers."
"Siloed data and lack of effective CDI is the biggest CIM technology challenge for most companies and maintaining data quality is the second greatest challenge" revealed Ament. This is an area where the majority might be able to take a tip from the leaders. Ament found that selectively outsourcing CIM processes, which may include data management, and analysis and application of customer intelligence, was more prevalent in best-in-class companies than she had expected. Of the top performers, 50% used outsourcing for some part of their CIM process."
"I did expect companies to selectively outsource, but I didn't quite expect it to be at the range it came in at. It's a very healthy sign," Ament explained. "Companies recognize that they need to bring in experts and service providers with expertise." --"Best Practices in Customer Intelligence" by Hannah Smalltree, SearchDataManagement
"Before inviting the first BI vendor in to give a pitch, CIOs at a small- or mid-market company should ask themselves one question: How will my organization use the data that a BI application will provide? Organizations answer that question in one of two ways," says Leslie Ament.
"And the way you answer that question will direct you toward the type of BI investment you may want to make. Some organizations plan to use business intelligence to support strategic decisions, such as developing new products or corporate performance management initiatives. Others may want to use the data for operational decisions, such as for sales, marketing, customer service, procurement or production." According to Ament's research, little more than half of all organizations that use BI do so to support strategic decisions.--"Smart Tools and How to Pick Them" by Allan Holmes, CIO Magazine. .
"While virtually all on-demand CRM vendors provide features to support sales force automation, marketing campaign management and/or customer service, providing front-to-back office integration has become a clear differentiator in vendor selection according to Leslie Ament."
Hypatia Research Group http://www.HypatiaResearch.com delivers high impact market intelligence, industry benchmarking, best practice, and vendor selection research for how businesses use technology and service providers to capture, manage, analyze and apply customer intelligence to enhance performance and to accelerate growth. Coverage areas include: CRM, Business Intelligence, Customer Analytics, Marketing Automation, Database Marketing, and Customer Data Integration and Quality. Since its inception by co-founder Leslie Ament in 2001, clients have relied on Hypatia for industry insight, expertise and independent research for guidance in assessing various technology and service options. Like our namesake, Hypatia, we are committed to Calculating ResultsTM for our clients.
Hypatia of Alexandria (circa. 370-415 AD), invented several scientific devices--the astrolabe, planesphere, and hydroscope (hydrometer). These instruments were used to calculate the distance between planets, the position of visible stars at any time of the year, and the gravity of liquids respectively. Hypatia was the first woman to make substantial contributions to the development of mathematics, astronomy & philosophy.
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