Customer Experience Optimization Delivers Happy & Profitable Customers –The Virtuous Circle Of Customer Analytics Tools Moving Data To Information And Applies Behavioral Models To Identify Next Best Action (NBA) And Drive Improved Customer Results And Business Outcomes

So I am sitting in the lounge at Boston’s Logan Airport last week (home of the Red Sox, Bruins and of course Harvard) when I mention that some of the folks I met with were at the General Catalyst Partners venture conference this year and had seen Jessica Alba present on her new www.honest.com venture  http://articles.boston.com/2012-05-01/business/31519602_1_actress-jessica-alba-venture-capital-entrepreneurs-and-investors.

Turns out the guy next to me is with a major retailer and also “big in the baby business”. He says his company finds it increasingly difficult to manage all the data that they are collecting about their customers across all their channels to drive measurable and predictable customer experience improvement.  Currently he is struggling with ever more complexity than ever before with the acceleration of social business models.  We also discussed the Forbes “pregnant teenager Target case study”  for how difficult it can be to get this right and the public risks for a commercial brand http://www.forbes.com/sites/kashmirhill/2012/02/16/how-target-figured-out-a-teen-girl-was-pregnant-before-her-father-did/

The summary of the conversation is that he (like so many) needs to institute a formal Customer Experience Optimization program. What is that you ask ?

“take the data from their increasingly complicated Digital Experience (eCommerce, Social and Mobile) and Offline Experience (store and field and radio and TV and print), combine it with third party data and prior information and knowledge about that customer, apply scenario based behavioral models to predict what the ‘next best action’ is for that customer, offer that action in the right way  through the right channel and drive improved business results which allows them to modify the experience for all customers that fit a similar profile”

Preferably at an ever decreasing relative cost (which is a whole separate discussion we won’t get into here).”

A continuous improvement focused Customer Experience Optimization process will deliver increasingly happy and profitable customers. You may want to think about how this applies to you.

What is my fellow traveler experiencing and trying to get his head and hands around:

1. They are increasing massive volumes of data available about their customers activities and product preferences online and offline from their websites, their call centers, self service IVR’s, store point of sales systems, email, their business partners (they sell through other online and offline retailers) and now through child oriented  social media sites. This is getting increasingly overwhelming.
2. Recently they have been experimenting with some trials to work with third party companies providing location and other behavioral information through mobile phones and online capabilities to track where a customer is through services like Foursquare, PlaceIq and when and if a customer visits or is near one of their stores.
3. They are at the earliest stages of understanding how their customer activities can allow them to predict what the best next action is that they should recommend to an individual customer and how they should deliver that to their customer across their channels including am online website offer, mobile phone SMS text message offer, Facebook/Twitter offer, online or printed coupon, customer service or sales agent call, community offer or associate notification next time they are in a store.
4. Additionally they are at the earliest stages of understanding how the media and channels they use affect the appropriate next best action and influence the results and outcomes by individual customer (or even better by customer grouping around a defined profile)
5. And they are trying to determine both the legal exposures they have and the reputational and ethical impacts of doing this to balance against the incredible returns they think are available.
6. They have lots of software tools and applications in the business and have looked at the market with tools like Ominture, Unica, Oracle CRM related tools (and Saleforce.com because they are considering a CRM Migration), Pega for contact center centric predictive analytics and their Point Of Sales Systems for store transactions but have no holistic and comprehensive systems plan or optimization plan to deliver results.

A quick summary of some of the other key conversation elements in case it sparks any useful thoughts in your initiatives:

1. They have data retention policies and guidelines which avoid retaining large volumes of data because of the storage costs and potential confidentiality risks and liabilities but that is evolving. He is trying to figure out how they cannot afford not to keep all data forever.
2. They are overwhelmed by the volume of third party data that is becoming available, the increasing number of technology centric companies that are offering this, what of these offers they need to be using to succeed in an increasingly competitive market and what the costs are versus the returns.
3. They have quickly realized that they don’t know their customers as well as they thought they did, specifically segmented behavioral models in the new and evolving community based social media and mobile online worlds and the increasing importance of cultural segments (the growth in high income Asian and Hispanic mothers being the specific topic of conversation).
4. None of the tools from their existing “technology vendors” span the channels and internal and external data required to be effective but the companies they have talked to including IBM, SAS, Oracle and others all have strong technology solutions and they are not sure that they are getting the appropriate technology recommendations especially in light of a strategic technology architecture that needs evolving.
5. They are having huge difficulty finding talent in the market to help them, specifically people who understand the concept of Customer Experience  Analytics and how it can drive improved business results and are more than technology vendor sales people. One area of concern is to find people who can teach their current employees to move to this new world by supplementing their marketing, sales, service and IT personnel with external providers and knowledge transfer.
6. The concept of “Behavioral Analysis” and “Next Best Action” needs to increasingly underpin most of their customer experience centric improvement programs but it is a new and foreign concept to most of their customer facing leaders specifically:
7. Behavioral Analysis revolves around understanding things about a person that allow you to predict their behaviors.
8.  “Next Best Action” means the most likely thing that they would like to perform given what you know about their prior actions and behaviors.
9. “Next Best Action based Customer Experience Optimization programs” involve determining how and where best to present customers with the right options. Three specific examples that seemed to resonate:
   1. An online automobile sales advertising site may have hundreds of thousands of people visit each day across the country but the people who are on their 4^th visit within a month, have selected the “click to calculate your payment” button ten times in the last two visits and have made an online loan enquiry through a loan offers website are 45% more likely to click on a button that asks for “a representative to contact me” and 60% more likely to make a purchase within 60 days.
   2. A member of the Neil Diamond Facebook Page (https://www.facebook.com/neildiamond if you need it) who is also a highly interactive Facebook  “friend” of a person who just bought tickets to Neil’s upcoming show in Atlanta and is also an American Express Platinum card older has a 62% likelihood of buying tickets if presented with an offer by the Amex Premier Program to buy tickets on their Amex card through their Facebook friend that just bought tickets in the past couple of days (there are all kinds of permissions and Social Network Analysis – SNA’s – required for this one !)
   3. A customer who spent $3000 on Kate Spade merchandise last year, last month purchased a handbag and a swimsuit from “Brad’s Pool Party Picks” from the Kate Spade website accessed through the new Fifth & Pacific website (http://fifthandpacific.com/ is the new name for Liz Claiborne in case you didn’t know), lives in Brooklyn, New York but completed a credit card transaction to buy an airline ticket to Tampa, Fl would be an ideal target for a coupon to her mobile phone or email to receive a discount on beach shoes at the Kate Spade store in Tampa, Fl or in Naples, Fl if she visits in the next 30 days.

Over to you to fill in your own scenario’s