We've all heard the old adage, "Your analysis is only as good as your data." While this is absolutely true, I think we have to start earlier in the process. We can add value to any analytic project by putting on our business hats and asking "What is your objective? What is the business problem you are trying to solve?"
The answers to these questions often determine which technique to use as well as what data will needed. I've outlined some "How do I?" objectives below.
Attract new customers? Targeted response modeling on new customer acquisition campaigns will bring in more customers for the same marketing cost.
Avoid high-risk customers? Risk or approval models will identify customers or prospects that have a high likelihood of creating a loss for the company. In financial services, a typical loss comes from nonpayment on a loan. Insurance losses result from claims filed by the insured. Losses due to fraud are increasing exponentially as more people engage in electronic transactions using various forms of payment.
Understand the characteristics of current customers? This involves segmenting the customer base through profile analysis. It is a valuable exercise for many reasons. It allows you to see the characteristics of your most profitable customers. Once you've defined the segments, you can match those characteristics to members of outside lists and build targeting models to attract more profitable customers. Another benefit of segmenting the most and least profitable customers is to offer varying levels of customer service.
Make our unprofitable customers more profitable? You can use cross-sell and up-sell targeting models to increase profits from current customers.
Retain our profitable customers? Retention or churn models identify customers with a high likelihood of lowering or ceasing their current levels of activity. By identifying these customers before they leave, you can take action to retain them. It is often less expensive to retain them than it is to win them back.
Win back your lost customers? Win-back models are built to target former customers. They can target response or lifetime value depending on the objective.
Improve customer satisfaction? In today's competitive market, customer satisfaction is key to success. Combining market research with customer profiling is an effective method of measuring customer satisfaction.
Increase overall sales? You can accomplish increased sales in several ways. A new customer acquisition model will grow the customer base, leading to increased sales. You also can use cross-sell and up-sell models to increase sales.
Reduce expenses? Better targeting through the use of models for new customer acquisition and customer relationship management will reduce expenses by improving the efficiency of your marketing efforts.
As an analyst, you can really add value by understanding your business. This gives you the ability to determine the best approach to the requested analysis as well as look for opportunities for new analysis. Before you know it, you might be indispensable!
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Olivia is an internationally known expert in Business Intelligence and Organizational Alignment. Her passion for finding successful solutions for her clients and partners has inspired her research in systems thinking and integrated business practices. She works with clients in communication, change management, team building and leadership development. Get free resources: http://www.OLIVIAGroup.com
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