To file taxes last year, I used a popular online tax service. The tax software walked me through all the required tax questions and prompted me with explanations and helpful hints. The process was intuitive and the overall experience was good. Once I had completed the tax forms and was ready to file, the application offered to show me how my stats compared to the averages filed in my demographic. As I reviewed the list of comparisons, something jumped out at me. For one particular deduction, I had claimed $0, and the national average was a little over $7,000. How could there be such a vast difference in this one particular deduction? I obviously needed to understand more about this deduction, and the tax software I was using was nice enough to provide me with this information. I discovered that I had misinterpreted what was allowable for the deduction. It turned out that I was able deduct a significant amount, resulting in a $400 drop in taxes I owed. I saved $400 because I was able to see a statistical comparison of my taxes with that of the national average. My good experience with the tax software turned into a fantastic experience!

The company that produced this tax software understands something that most service providers do not. In order to compete in a service industry, you have to offer your customers value-added analytics and reporting for the service being provided. It is no longer enough to compete on price and quality. To differentiate yourself from the competition, you have to offer information that is timely, accurate, relevant and adds value. This is especially true in the business-to-business (B2B) service industries, where the volume of transactions a customer has with a service provider is unmanageable without some type of reporting. The focus on providing your customers with the tools and information they need to make better decisions faster is a discipline I refer to as customer-facing analytics (CFA). This is not to be confused with customer-oriented analytics (COA), which is a focus on analyzing a company's customers with the intention of gaining a better understanding of its customer base and identifying good versus bad, at risk or loyal customers. A lot has been written about COA and how BI and data mining tools can be used to improve a company's relationship with its customers. While COA is customer-oriented, it is, however, still internally facing. CFA uses the same toolset and processes, but it is externally facing and is used by the customer for the customer's benefit.

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