Greg thanks Astrid Bohe and Dr. Michael Paetsch for contributing to this month's column.
At a time when analytic methods demonstrate the value of using a continuous loop of fact-based insights that can help drive high performance, many businesses have lost sight of what their customers want now and what they are looking for in the immediate future.
Accenture's High Performance IT studies show, for example, that only 28 percent of IT application investments at large enterprises are customer-focused. Additionally, customer-facing systems are among the IT portfolio's poorest-performing applications in terms of technical and business adequacy.
Even companies that have added offerings to match their deep knowledge of customer demographics find themselves unsure of what to do next. For the most part, they remain stuck with a product-centric view and are hard-pressed to craft truly customer-centric business models, let alone to build organizations that revolve around the customer.
Who really understands the next-generation customer?
Companies are coming to grips with the new customer behavior - more specifically, the "next-generation customer," whom the Internet has granted unprecedented power and choice - and gauging how to respond accordingly. Many large retailers would now be at a disadvantage if they did not offer mechanisms that let customers tailor their own product comparisons online, create information in the form of user reviews, and share it with others using social networks such as Facebook. Participation, sharing, creating and personalization are no longer theoretical concepts; they are becoming integral to the overall offerings that the customer expects.
Three factors are combining to force change:
The Internet is ubiquitous. The Internet is rapidly becoming the world's pre-eminent broadcasting platform - not only for conventional broadcasting, but for one-to-one content delivery. Since the early Web 1.0 days of browsing, the Internet has added increasingly valuable search and e-commerce capabilities, richly layered social networking functions, and, soon, an entire layer of geographic and location-specific mobile services.
Customer behavior is changing dramatically. New search tools are making searches faster, more accurate and more contextual than ever. At the same time, consumers now expect to be informed by everything from Facebook feeds to Twitter messages conveying gossip as well as breaking news. Consumers also expect to be able to compare products and services they are interested in, and they have the power to shop products that are personalized precisely to their tastes.
Leading-edge providers are responding. Consider the example of MyMuesli.com. The German company allows consumers to mix and order their perfect breakfast cereal out of more than 100 ingredients. That's more than 566 trillion possible variations - making traditional mass-market approaches seem very outdated.
The Role of Analytics
Companies that truly understand the next-generation customer are marrying information management to a commitment to achieve consistent, comprehensive and varied levels of direct interactions with their end customers. They understand that decision-making has to be sharper and better-informed - which calls for superior analytics and deeper insights into customer behaviors.
At the heart of their efforts is their application of sophisticated analytics tools. Our studies show that true high-performance businesses - those that consistently outperform their industry peers through multiple economic cycles - are 50 percent more likely to use analytics strategically compared with the overall sample.
A few companies are using analytics as a foundation for business strategies. Netflix, the movie rental company, employs a movie recommendation engine based on proprietary software. Cinematch, as the tool is called, analyzes customers' choices and feedback on the movies they have rented and recommends movies in ways that optimize both the customer's taste and the Netflix inventory.
Analytics are also at work in the world of sports. AC Milan, one of Europe's top soccer teams, uses a proprietary biomedical research center for gauging players' performance and injury potential. The lab tracks 60,000 data points on a player and analyzes the stats to ensure his health and fitness.
We recently found that while more than 57 percent of CIOs want to position business intelligence as a core component for competitive differentiation in three years, 60 percent of survey respondents admit that they do not use BI for competitive differentiation today. However, 76 percent say they are targeting enterprise-wide integration of their analytics in three years.
Richly Detailed Views of Customers
High performers are starting to build richly detailed views of their customers. For example, a mobile phone carrier's analytics engine might learn, based on a customer's playing of a game on the handset, that the customer has a fondness for numerical puzzles so it initiates a text to the customer's phone with a 20 percent discount voucher for a soon-to-be-released numbers game.
But analytics tools are just that: tools. They cannot engender the necessary "outside-in" customer-centric thinking, the significant business benefit and competitive advantage that it can deliver to create bonding competence for companies. To help foster that kind of mindset, it is helpful to view the connections between provider and end customer in terms of a scale of increasing value delivered to the customer. Think of it in terms of the difference between an arrive-late, leave-early, one-night stay in a no-name, budget motel and regular stays, including private executive meetings, at the Four Seasons hotel chain.
Analytics at Work
So how could analytics help companies achieve consistently high levels of bonding competence? Here are some examples of analytics at work:
Help customers focus: Imagine a mobile phone service provider that tracks all incoming Internet traffic, allowing the carrier to understand how its customers engage with its Web site and which products they look at before they buy. Knowing that most customers visit a site several times before they place an order, the carrier ensures that they can find previously viewed products easily without further navigation. And, it can automatically measure the correlation between the new customer's clickstream patterns and the usability of the site.
Offer relevant products: Employing analytical algorithms, the mobile phone company sends its new customer an e-newsletter that features the top ringtones, wallpaper and software of all the customers that have the same handset. The analytic tools track what interests the customer and help predict the next-best content to sell to him based on customers with similar tastes.
Support customers by making intelligent predictions about them: A customer logs on to the carrier's site two weeks after signing up. The site's analytics engine recognizes that the customer is very unlikely to be interested so soon in handsets, so it connects him directly to information about content offerings for his phone. Now imagine that the customer's contract is up for renewal; the system will automatically give him information on the top handset picks that other customers with his profile have been choosing; he can also see community feedback on the phone's quality and style.
The insights created with sophisticated analytics can help companies achieve high performance by not only selling the right products and services, but by creating the bonding competence that will master the customer agenda.
Astrid Bohe is Executive Director, Accenture Information Management Services-Communications & High Tech, Global. She can be reached at email@example.com.
Professor Dr. Michael Paetsch has held academic tenure for International Marketing at the University of Pforzheim, Germany, since 2004. Prior to this role, he spent 15 years in senior executive positions at leading global communications and high-tech companies.
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