Customer insight
Encyclopedia
Customer Insight is the collection, deployment and interpretation of information
that allows a business to acquire, develop and retain their customer
s.
ed to fully understand the quality and opportunity within the database
. Once this is done, there are a number of different types of analysis that can be applied.
Impact Assessment will help a business to understand how actions taken by the business affected their customer behavior, and also allow for some predictions of customer reaction to proposed changes.
Customers as Assets measures the lifetime value of the customer base
and allows businesses to measure several factors such as the cost of acquisition and the rate of churn
.
Propensity Modelling predicts the future behaviour of customers based on previous actions and helps businesses understand how likely it is that a customer will behave in a given way.
Cross-Sell Analysis identifies product
and service relationships to better understand which are the most popular product combinations. Any identified relationships can then be used to cross-sell and up-sell in the future.
Critical Lag allows a business to deliver specific customer communications based on the individuals purchase patterns, helping to increase loyalty and improve customer retention
.
If a customer fell outside of this lag, M&S communicated with them via email
or over the phone to find out the reason for this behaviour and therefore reducing the number of lapsed customers.
Information
Information in its most restricted technical sense is a message or collection of messages that consists of an ordered sequence of symbols, or it is the meaning that can be interpreted from such a message or collection of messages. Information can be recorded or transmitted. It can be recorded as...
that allows a business to acquire, develop and retain their customer
Customer
A customer is usually used to refer to a current or potential buyer or user of the products of an individual or organization, called the supplier, seller, or vendor. This is typically through purchasing or renting goods or services...
s.
Analysis
Firstly, the collected data must be auditAudit
The general definition of an audit is an evaluation of a person, organization, system, process, enterprise, project or product. The term most commonly refers to audits in accounting, but similar concepts also exist in project management, quality management, and energy conservation.- Accounting...
ed to fully understand the quality and opportunity within the database
Database
A database is an organized collection of data for one or more purposes, usually in digital form. The data are typically organized to model relevant aspects of reality , in a way that supports processes requiring this information...
. Once this is done, there are a number of different types of analysis that can be applied.
Impact Assessment will help a business to understand how actions taken by the business affected their customer behavior, and also allow for some predictions of customer reaction to proposed changes.
Customers as Assets measures the lifetime value of the customer base
Customer base
The customer base is the group of customers and/or consumers that a business serves. In the most situations, a large part of this group is made up of repeat customers with a high ratio of purchase over time. These customers are the main source of consumer spending...
and allows businesses to measure several factors such as the cost of acquisition and the rate of churn
Churn rate
Churn rate , in its broadest sense, is a measure of the number of individuals or items moving into or out of a collective over a specific period of time...
.
Propensity Modelling predicts the future behaviour of customers based on previous actions and helps businesses understand how likely it is that a customer will behave in a given way.
Cross-Sell Analysis identifies product
Product (business)
In general, the product is defined as a "thing produced by labor or effort" or the "result of an act or a process", and stems from the verb produce, from the Latin prōdūce ' lead or bring forth'. Since 1575, the word "product" has referred to anything produced...
and service relationships to better understand which are the most popular product combinations. Any identified relationships can then be used to cross-sell and up-sell in the future.
Critical Lag allows a business to deliver specific customer communications based on the individuals purchase patterns, helping to increase loyalty and improve customer retention
Customer retention
Customer Retention is the activity that a selling organization undertakes in order to reduce customer defections. Successful customer retention starts with the first contact an organisation has with a customer and continues throughout the entire lifetime of a relationship...
.
Customer Insight in Practice
Customer Insight provided the basis for success for the Marks and Spencer lunchtogo service. Using the Critical Lag strategy (outlined above), the company analysed the each customers ordering behaviour, mainly focusing on the frequency and time lapse between each lunchtogo purchase. Through statistical reasoning, EWA (the company hired by Marks and Spencer to handle their Customer Insight) developed a critical lag formula, which helped M&S to judge when a customer’s current lag since they placed their last order, fell outside of their statistically expected behaviour and heightened their risk of lapsing.If a customer fell outside of this lag, M&S communicated with them via email
Email
Electronic mail, commonly known as email or e-mail, is a method of exchanging digital messages from an author to one or more recipients. Modern email operates across the Internet or other computer networks. Some early email systems required that the author and the recipient both be online at the...
or over the phone to find out the reason for this behaviour and therefore reducing the number of lapsed customers.