IT0069

FUNDAMENTALS OF BUSINESS ANALYTICS

 Lesson #3:

CUSTOMER
ANALYTICS

Customer Analytics
• To introduce the concepts of customer analytics
• To discuss how to identify your target customers
• To understand the process of creating customer
personas
• To identify ways to improve customer experience
and engagement

Customer Analytics
 Customer satisfaction doesn’t just impact the business’
bottom line, it also impacts team morale and retention
rate

Customer Analytics
Businesses need money to
survive. To make money,
businesses need customers.
Ideally these customers are
happy, tell their friends about
you and keep coming back.

Customer Analytics
What is Customer Analytics?
Customer analytics is the use of data to understand the
composition, needs and satisfaction of the customer. Also,
the enabling technology used to segment buyers into
groupings based on behavior, to determine general trends, or
to develop targeted marketing and sales activities.

- Gartner

Customer Analytics
Gathering data: Pull together customer purchase records,
transactional data, surveys, and observational data at all phases
of a customer’s journey.

Using mathematical models to detect patterns: There are

many number crunching, statistical analysis, and advanced
modeling techniques that help turn raw data into more meaningful
chunks

Finding the insight: From the patterns of the data come insights
into causes of customer behavior.

Customer Analytics
Supporting decisions: Understanding past behavior helps
predict future customer behavior from data instead of relying on
intuition.

Optimizing the customer experience: Detect problems with

features, purchases, and the product or service experience.

Mapping the customer journey: From considering, purchasing,

and engaging with products and services, mapping the
touchpoints and pain points helps identify opportunities for
improvement

Customer Analytics
• 81% of satisfied customers
are more likely to do
business with you again if
they have a positive
experience.
• 95% of customers will “take
action” after a negative
experience – like sharing
concerns with friends and
family, or churning.
Customer Analytics
Streamlined campaigns: You can target your marketing
efforts, thus reduce costs.

Competitive pricing: You can price your products according

to demand and by what customers expect

Customization: Customers can select from a combination of

features or service that meets their needs.

Customer Analytics
Reduced waste: Manage your inventory better by
anticipating customer demands.

Faster delivery: Knowing what products will sell when and

where allows manufacturing efforts to anticipate demand and
prevent a loss of sales.

Customer Analytics
Higher profitability: More competitive prices, reduced costs,
and higher sales are results of targeted marketing efforts.

Loyal customers: Delivering the right features at the right

price increases customer satisfaction and leads to loyal
customers, which are essential for long-term growth

Customer Analytics
Facebook Analytics is a free
tool that helps businesses
understand how people are
using their desktop and mobile
websites, apps or Bots for
Messenger by analyzing
demographic data and
audience insights.
Creating User Personas
Personas are fictional
customers based on real data
obtained from customer
segmentation analyses,
ethnographic research, surveys,
and interviews.
The purpose of a persona is to
better focus product
development and marketing
efforts on real customer needs
and goals rather than just
abstract demographics.
When you understand your
customers’ motivations,
expectations, and abilities, you
have a more accurate picture
that helps to design better
products for them and how to
make them choose your product
over your competitors’ offerings.
• They allow you to concentrate on designing for a
manageable target who represents a larger group
• They give a common and consistent goal to the design
and marketing teams.
• Prioritizing design elements and resolving design
disagreements can be done in an economical way
• Identifying opportunities and product gaps to drive strategy
becomes easier.
Evaluating each Persona
1. Collecting the appropriate
data
2. Dividing data
3. Identifying and refining
personas
Customer Segmentation
A customer segment is a grouping of customers that share
certain characteristics. Understanding your customers —
their similarities and differences — is one of the most
fundamental and essential steps in quantifying the customers’
relationship with your product and company.
• Identify the most and least profitable customers.
• Improve marketing focus
• Predict future purchase patterns
• Build loyal relationships
• Price products differently
• Develop better products and customize products or
service features.
• Create personas
Who
At the most basic level, you should know the demographics
of your customers. Characterizing customers based on
demographics is the simplest and easiest way to start
segmenting. Demographic questions are not subjective: They
give you real, verifiable information about your customers.
Where
Knowing where customers live isn’t just an exercise in
placing pins on a map. Instead, it’s about understanding the
geographic diversity or concentration of your customers. It
helps with locating better business locations, decreasing
delivery time/distance, and so forth.
What
In thinking about the “what,” you should think about past,
present, and future. What have customers done, what are
they doing, what are they thinking, and what are they likely to
do?
When
There are often significant differences in the types of
customers you have, based on when you measure.
Why
The “why” is pretty obvious, isn’t it? The customer wants or
needs what you have to offer!
1. Tabulate your data
2. Cross-Tabbing
3. Cluster Analysis
4. Estimate the
value of each
segment
• Get signatures
If the data deals with sensitive information (financial data or
other personal data), consider having them sign an informed
consent document stating that they understand the purpose of
the test, what their participation means, and what their
remuneration (if any) is.
• Offer verbal explanation.
Whether or not you provide a formal document for
participants to sign, always explain what participants will be
asked to do (at least in high-level terms) and ask if participants
understand or have questions.
• Be clear as possible.
A lot of user research happens well beyond the confines of
a laboratory. No matter what environment you conduct your
experiments in, always make it clear what users are volunteering
for. New technology and methods can lead to a blurring of ethical
lines.
• Include how you are using their data.
Everyone always wants to know how his or her data is
being used. Reassure participants that their data will remain
private.
Ten Methods to Improve
Customer Experience
For companies with a strong web presence, a True Intent Study
with a web intercept or conspicuous link and survey allows willing
customers to let you know who they are (age, gender,
occupation, salary) and what they are trying to do (goals, tasks,
and interests). This becomes vital information for subsequent
customer metrics and methods.
All customers are not created equal. With data from a True
Intent Study, Voice of Customer Survey, and other data
sources, you can begin to understand what differentiates
your customers based on demographics, behaviors, and
profitability. Not only does segmenting customers tell you
how to better serve current customer demographics, but it
also allows you to discover any unmet needs and deliver
better products and services in the future.
Rarely do customers follow a simple linear path from prospect to
customer. A customer journey map helps identify problem areas
customers encounter while engaging a product or service and
can locate opportunities for improvement. It can also help unify
often disparate and competing efforts within the same
organization by providing different departments with a single
document that maps the customer’s entire experience with a
product, service, or company.
A top-task analysis helps separate the critical few tasks from
the trivial many by having customers pick their most essential
tasks. Targeting your efforts on significant tasks and
delivering a solid experience where it has the biggest impact
means more satisfied customers and customers who are
more willing to repeat purchase, return, and recommend to
friends.
Observing just a few customers who use the product can
uncover most of the common problems with an interface. Use
data from a top-tasks analysis to understand what users want
to accomplish and find users who match your customer
segments. The most important concept to understand in a
usability study is that it is not what customers think or want
that matters, but to observe them using the product.
One of the biggest pain points on the web and with software
is just trying to find where features are buried. A findability
study is a specialized usability study that focuses on the
taxonomy (labels and hierarchy) and ignores distractions
such as the design, layout, and search capabilities. It’s used
for testing everything from cable TV interfaces and the
Settings screen on an iPhone to product categories on a
large e-commerce website.
 A conjoint analysis is typically used in the product
development stages to understand which features to build or
how changing price or options affects customers’ future
behavior. The conjoint analysis is one of a number of
prioritization techniques used to help get the biggest bang for
the development buck.
A key driver analysis identifies which features contribute the most
to customer satisfaction, customer loyalty, or any other key
variable of interest. Have customers rate their satisfaction with
the most important features or functional areas of an experience.
Include items on quality, features, value, service, and usability
where appropriate. A key driver analysis provides the relative
weight of each of these ratings using multiple regression analysis.
Conjoint analyses and key driver analyses usually require
advanced software and some statistical sophistication to conduct
and interpret. Another prioritization technique, called a gap
analysis, can be performed more easily by asking customers to
first rate or rank the most important features and aspects of a
product or service. Then, have the same customers rate or rank
how satisfied they are with each of the features. For each feature,
find the “gap” by subtracting the average satisfaction rating from
the average importance rating.
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Course Orientation