Using Data and Analytics to help understand your customers’ needs
28 July 2016
The ability to respond with agility to technological change is key to remaining competitive. Such change offers an opportunity for organisations to grow, as it both requires and facilitates commercial innovation. As new technologies emerge, businesses find themselves increasingly under pressure to stay abreast of changes in their market.
Consider the example of online retail. Once regarded as an emerging, disruptive technology, this has become a key channel to market for many businesses. Last year three quarters of men and women shopped online.* At the same time, the need to adapt has driven organisations to innovate, resulting in new ideas: mobile payments and the ‘freemium’ model, for example.
In parallel with wider access to services, technological development has also given customers a louder voice through the growth of social media channels. Social media sentiment analysis shows that a huge volume of customers articulate their experiences, whether positive or negative, online. Managing both the customer base and customer experience effectively is more important than ever.
In some ways this role of technology in managing customer relationships seems paradoxical. People are individual, self-defining and unpredictable, but they are increasingly being represented and understood through the medium of data, which is binary, structured and defined.
In fact, this is a natural result of technological evolution. As services become increasingly reliant on technology, they generate greater volumes of data – a useful by-product of engaging with the services. Large customer bases are difficult to manage at a micro level, and the data collected offer organisations a lens through which to analyse and understand customers in aggregate.
Greater quantities of data afford wider and more in-depth analyses. When businesses leverage this effectively, they gain a more holistic perspective of customer behaviour and performance, and are, in turn, empowered to plan more effectively for future opportunities.
For an investor, understanding the customer base of a target business can be key to making an investment decision. In our experience, investors and their analysts are increasingly keen to process more granular, transactional cuts of the target’s data during a deal. Working at this level of detail can elicit key commercial messages. Continuing the example of online retail, such factors as the customer’s propensity to stick or churn, or their lifetime value, can support or challenge a commercial narrative. Does the value generated by a customer cover the costs of acquisition, and where is the breakeven point? Such information can play a pivotal role in a deal.
Either way, whether in a deal environment or the ordinary course of business, it is well worth keeping the customer at the heart of what you do, and technology can be the key to achieving this.
*Office for National Statistics