The Istobe eCommerce Analytics Blog

I was reading up on analytics technology today and ran across an interesting article at TDWI (The Data Warehousing Institute) which surprised me.  It was surprising due to the fact that it was a year old but was reporting the same results as today:  predicitve analytics solutions are still novel to many companies and unknown to even more.  Even after dozens, if not hundreds, of successful case studies show how predictive analytics are a low-effort, high ROI solution to help a company achieve strategic goals:

[P]redictive analytics can yield a substantial ROI. Predictive analytics can help companies optimize existing processes, better understand customer behavior, identify unexpected opportunities, and anticipate problems before they happen,” Eckerson writes. For six years running, he points out, a majority of TDWI’s annual Leadership Award winners have used predictive analytic solutions to achieve noteworthy business results.

Before we created our predictive analytics solution for email marketing we knew the benefits of predictive analytics solutions and we realized that marketing has many metrics and data points as well as a very strong set of historical data which we can and do use to build solid, accurate models of customer behavior and desire.   Why are users of predictive analytics still considered Early Adopters?

Read Predictive Analytics Provide Big Payouts For Early Adopters »

I wanted to briefly build upon Doug’s posts about customer analytics over the past few days (see Customer Analytics: A Guide To Getting Started). I try to keep abreast of the latest research about customer analytics that gets published and, just this week, came across the new Aberdeen Group’s report on the subject (Customer Analytics: Segmentation Beyond Demographics). While I encourage you to read the whole report, I wanted to point out some of the info and metrics in the article that I found most compelling.

First, and most impressive, companies with full customer analytics implementations saw incredible gains across the board, including:

• 43% year over year increase in annual revenue
• 42% year over year increase in customer profitability
• 35% year over year increase in average order value
• 25% year over year increase in market share growth

And lest you think that only those companies that completely overhauled their systems saw improvements, companies that have started down the customer analytics path saw, on average, a 7% year over year increase in annual revenue and a 3% year over year increase in customer profitability. While these might seem like modest gains, companies without a customer analytics system in place actually saw a decrease in customer profitability year over year.

Second, best in class organizations are using a wider range of data in more ways than other organizations. What do I mean by this? Well, to begin with, they’re collecting more data about their customers -demographic and behavioral information from web analytics, crm, email marketing, and customer feedback tools, all of it stored in one easily accessible place. And, they’re making better use of this data through the creation of enhanced segmentation (meaning segmentation that uses more than just behavioral or demographic info to assign customer to groups) and more relevant indicator metrics (i.e. CLV) that better inform sales and marketing staff about their customers.

Lastly, the report highlights how important it is to invest in customer analytics now. With over half of all the companies the Aberdeen Group talked to for this report planning on increasing their spending budget for customer analytics in the next year (that number goes up to 60% for companies that are considered best in class), if you haven’t made an investment in a customer analytics yet, you simply can’t wait any longer or you’ll soon find yourself far behind competitors.

Luckily, Doug’s posts can walk you through the basics on getting started, but I wanted to make sure to point out some of the most recent information on how important it is to get up and running now.