Conference about Predictive Analytics, at EGADE Business School

Resource type
Buenas practicas

Notes from the Conference by Ramón Sánchez Bayton, General Director of GAIN Dynamics, at EGADE Business School Monterrey. The content is structured sequentially according to the talk. (Talk in spanish)

A client has a life beyond that of customer that is unknown to the company - you have to recompose the puzzle with external data.

Compare your own company to competitors and country economics (Oxford Economics).

The "new client" has access to more information more quickly, likes to share, often immediately; the lidership of the great anonymous; social networks;

The "new client" is hard to manipulate; impossible to control what people say about you; information about you comes from many sources; also a mutichanneled interaction with the clients is much more difficult to administer.

If you dont want to be obliged to compete on price you have to make your value proposition very clear to the client; your brand alone is no longer enough; studies show that the client seeks to optimize the quality / price ratio, but if he does not percieve the quality... the low cost offer wins.

A client who protests presents an opportunity; clients determined to leave, just leave without complaining. a client retained by attending his complaint and satisfying him will typically be more loyal and profitable in the future than the average client.

The "new client" is unforgiving; customer satisfaction is important since acquiring a new client costs 10 times more than keeping an existing happy; also giving a preferencial price to new customers may aggreviate existing customers, forcing them to be a "new customer" elsewhere ("subasteros"); internet is making it easy to find the best offer and where to go next.

Client profability = survival rate + quality of life (medicine metaphor). It is never profitable to retain a client that does not percieve value in our services; he may constantly be protesting, consuming our time while getting his price lowered, talking badly about us (study shows that unsatisfied clients "talk" 7 times more than satisfied) and finally leave anyway.

Who are the clients that are most attracted to our value proposition? We must indentify and understand them and tailor our offer to them. Being a specialist in understanding the client instead of focusing on the product.

  • Listen to the client: discover his needs.
  • Identify how my offer gives value to the client.
  • Know the current and future value of clients.
  • Establish a strategy for optimization of the relation with the client:
    • Adapt the offer.
    • Determine goals for each type of client.
    • Make the communications pertinent to each type of client.
    • Get client feedback and manage it consistently.
    • Use the data gathered to create new knowledge and optimize the strategy accordingly.

One of the primary dimensions of analytic segmentation is client profitability; you have to manage your relation with your clients accordingly.

Different companies have different opportunities for communicating directly with their clients; e.g. a bank where customers come into your office versus a more anonymous relation when consuming e.g. a coke.

The mayor cause of failure of customer knowledge / strategy projects has been a bad definition of objectives; they must be clear and you must:

  • Know the strategic plan of the company.
  • Know the precedents and culture of the company (conservative / fresh / old / young).
  • Understand the competition and (in some cases the international market).
  • Know the capacities; tecnological and personal.
  • Determine the needs for information that will enable you to act.
  • Establish a plan of action, define goals, phases, deliverables, people in charge of the execution.
  • Establish metrics for the measurement of results.

In marketing the measurement of results may be fundamental for funding. in times of crisis it is easy to cut down on marketing because the benefits (in short/middle/long term) are not clear as opposed to the direct savings.

Often information about the interaction with the clients is recorded but never used.

The need for and the relative economic effort involved in acquiring my product depends on the circumstances of the client, and these can be deduced aproximately from the socio-demographic context.

In most companies, the marketing director has a need for information far greater than any other departmental director — information from diverse sources, of great complexity. This information must be integrated and easily accesible (data mart with pre established queries). For this reason, the marketing director and the systems director are often not at good terms.

The usage of data warehouse (marts) have been highly promoted by the maturity of specialized software (e.g. qlick view, sas).

Analytic capacities: the marketing departments increasingly hire analytic people (computer science, mathematics, econometricians, ...).

Organizational alignment: the change from a focus on product to a focus on clients demands that all actions wrt. each client must be consistent. e.g. the commercial agents cannot be exclusively rewarded for acquisition of new customers if the companys strategy is to increase the loyality and consumption rate of existing clients.

Customer (after sales) service: different client types have different tangible and psychological needs and perceive value accordingly.

Project quick wins: fundamental to achieve organizational and personal buy-in. make a story board with a calendar of implementation. Implement first the most spectacular iniciatives.

Do the obvious: an insurance company with clients with expensive cars: do cross selling of highly profitable home insurances to these.

Commercial agents: indentify the agents open to change: use them to spearhead an iniciative, e.g. cross selling. The success of the initiative will automatically motivate the rest of the agents to back up the initiative (real case story).

Identify life cycle signs (single vs couples consumption patterns, young parents, senescence, etc.) and accelerators of opportunities (valentines day, school start).

The banks posess so much information about their clients that they can know quite a lot about their life cycle and likely tangible and psychological needs - Therefore they are now selling other products as well, primarily insurances and cars through partners. e.g. if a person has changed his job and now gains 30% more: offer him a car with specifications according to his segment; or if a person has a big mortgage, offer him other credit / retirement / inheritance plans. You should proyect the current image of the client into other contexts and into the future.

Pricing and a differenciated offer permits a larger range of actual and potential clients to be served. Their exploitation requires identifying the "types" of the clients, adopting the approach accordingly and thereby avoiding the gaps because of lack of purchase or at a price that could have been greater. Two types of radically different clients:

a) values the brand and is eager to buy the latest fashion (price is of secondary concern) and

b) only buys en sales and has very little interest in brands.

Important for client knowledge projects:

  • Sponsorship of the executive branch.
  • Involvement of the users.

To determine the exact needs and objectives, you have to work hard with the people asking for the system / solution and those that are going to use it (may be different people). People should know that we are integrating their knowledge into the solution and that at any time they are welcome to contribute. This will insure their use of the final solution.

  • Integrate the necessary information and data. the important thing is to deliver useful results, not to process and store everything.
  • Quick wins are paramount.
  • Software: is almost never a solution by itself. the solution should not be sponsored mainly be the it department.
  • The success should be measured in ROI, not in analytic prowess.

The marketing budget should be coupled to the ROI in the client relation. If it is fixed, absurd scenarios may occur. e.g. a succesful campaign with high ROI may be terminated when marketing runs out of fonds (absurd but actually occurs in many companies).

95% of the CEOs of insurance companies believe that their investments in client-knowledge has been profitable.

Mexico is ideal for analytic projects because of the volume of clients.

Book "good to be great", key success factors:

  1. How am i REALLY earning money (among all the things i do and my different products).
  2. In what do i want to be the BEST? (product quality, distribution, client service, etc.)
  3. PASSION. Competing on price is always a loosing game; downwards spiral of paying people poorly, loss of motivation, eventual loss of product / service quality.