Defining the Value of Big Data

Customer Analytics
A Guide to Building a Business Case
and Alignment
Datameer D E F I N I N G T H E VA L U E O F B I G D ATA C U S T O M E R A N A LY T I C S EBOOK

For many companies, customer relationships are the

new competitive front line. Increased wallet share,
better customer experiences and higher loyalty are
all revenue gains for your organization and losses for
your competitors.

Customer analytics driven by big data can transform

the buyer-seller relationship. It’s not simply about
gaining deeper insights about customers, but
using that data to drive more effective personalized
marketing, increasing sales productivity and retaining
customers for a higher lifetime value.

PA G E 2
Datameer D E F I N I N G T H E VA L U E O F B I G D ATA C U S T O M E R A N A LY T I C S EBOOK

Introduction

Now more than ever, building expertise in deep, diagnostic customer analytics translates
directly to business value. The combination of modern BI platforms and big data helps you
achieve this value. Here are some prime examples:

• A large credit card company increased conversion rates by 25 percent and lowered
customer acquisition costs by 30 percent.

• A leading financial services firm reduced churn by 50 percent, increasing the lifetime
value of their customers and regaining lost revenue.

• Surfdome, a leading European specialty retailer, boosted their customer acquisition

rates, raised the average purchase size and increased the average lifetime value of
customers.

Customer analytics encompasses a number of disciplines, impacting many different parts

of the organization. Successfully driving a big data customer analytics initiative requires
two key ingredients:

• Clear articulation of the business value that deeper customer insights will bring to the
entire organization and individual units

• Alignment with the business group stakeholders who use customer insights, and the
teams that will implement the analytics (analysts and IT)

This paper will explain how big data customer analytics adds business value to a range of
areas. In turn, it will provide the foundation to build your business case that will motivate
stakeholders from across the organization to create deeper customer analytics based on
big data.

PA G E 1
Datameer D E F I N I N G T H E VA L U E O F B I G D ATA C U S T O M E R A N A LY T I C S EBOOK

The Impact of Customer Analytics

Every day, customers generate 2.5 quintillion bytes of

data. This massive amount of data is generated in a large
number of areas: online ads, email campaigns, mobile apps,
transactions and numerous other sources.

While traditional descriptive analytics offer high-level answers about what happened, the
secret to building more profitable customer relationships lies in harnessing this data to create
deeper diagnostic analytics that provide insights into why and how customers took action.
This data can be used to define ways to build stronger relationships and impact behavior.

Gaining value from customer analytics requires deep insights driven by two key items: the
experience a customer encounters and the behavior customers exhibit in reaction to those
experiences. The complication comes from:

• the many different touchpoints

• the multiple types of behavior
• the multitude of characteristics that can describe customers.

It’s easy to underestimate the breadth and depth of customer analytics. It contains a
number of disciplines that span different departments — sales, marketing, service and
operations. Here’s an overview of the different groups, and how a comprehensive set of
customer analytics using big data can help them create excellence within their disciplines.

Marketing
Marketing teams require a deep understanding of customers, their activity and their
behavior. They need to ensure their outreach is valuable and relevant, as well as measure
their effectiveness.

Big data analytics will help marketing identify detailed segmentation and behavioral
attributes that in turn will drive additional analytics with actionable insights, including:

• The ability to create and measure personalized marketing offers that generate new sales
revenue

• Insights into the impact and success of marketing campaigns across different channels
to acquire more customers at the most effective cost

• A comprehensive view into the overall omni-channel customer journey to optimize the
journey and guide customers down the most effective paths to purchase
PA G E 2
Datameer D E F I N I N G T H E VA L U E O F B I G D ATA C U S T O M E R A N A LY T I C S EBOOK

Sales
Sales teams and similar groups such as retail store operations, need detailed customer
analytics to achieve their revenue goals and do so in the most productive manner.

Sales teams use a set of analytics about how customers interact, purchase and behave
across various channels to drive business value such as:

• Creating compelling up-sell, cross-sell and next-best offers that incent customers to
accelerate purchases and increase wallet-share

• Crafting personalized experiences as part of persuasive sales journeys that increase

sales conversion rates

• Optimizing sales productivity through more effective targeting and actions that generate
sales revenue

Services
Services teams need more comprehensive customer analytics to rapidly and effectively
help customers with their problems to increase loyalty and retention.

Service teams will use customer analytics and data around experience, behavior and
outcomes to drive business value by:

• Creating superior service experiences that rapidly solve customer issues and increase
loyalty

• Identifying the patterns that lead to customer churn and drive proactive outreach that
increases customer retention

• Optimizing how services are delivered for faster time to resolution and a reduction in
customer service spend

Operations
Operations teams will use customer analytics specific to customer purchasing behavior to
place inventory in the right locations, and optimize product delivery to customers.

PA G E 3
Datameer D E F I N I N G T H E VA L U E O F B I G D ATA C U S T O M E R A N A LY T I C S EBOOK

Marketing

Personalized Offers
Customer Acquisition
Customer Journey

Cross and Up-Sell Service Experience

Personalized Experience Customer Retention
Sales Sales Productivity Service Optimization Service

Logistics
Product Placement

Operations

PA G E 4
Datameer D E F I N I N G T H E VA L U E O F B I G D ATA C U S T O M E R A N A LY T I C S EBOOK

Big Data Customer Analytics, Powered

by Modern BI Platforms

Modern BI platforms like Datameer are designed to help you

understand your customers and their journey more precisely.
By adding more data to your analysis and using more
sophisticated techniques to analyze it, modern BI gives you a
more diagnostic examination of customer attributes and behavior
so you can better align your actions to customer needs.

Datameer’s self-service platform allows your organization to dig deeper into your
customers and what makes them tick, with three important benefits:

• Answer new questions — Datameer helps you integrate and use more data, whether
structured or unstructured, and makes it easy to apply advanced analytics to find
undiscovered patterns and trends. Through this, Datameer allows your team to answer
the deeper diagnostic questions that lead to highly actionable customer insights.

• Deliver more results — Customer analytics is a deep discipline, covering many

different departments and areas of the business. Datameer dramatically increases the
productivity of your business analysts so they can deliver results for the many customer
analytics use cases.

• Put your insights to work — Insights aren’t valuable to the business unless they reach
the business teams that need them on a regular basis. Datameer makes it easy to
operationalize your analytics, execute them regularly, deliver results to the business
teams and continuously improve the processes.

Datameer takes your customer analytics to an entirely different level. The analytical results
can reveal totally new patterns and insights you never knew existed — and aren’t even
conceivable with traditional analytics. The possibilities are endless.

PA G E 5
Datameer D E F I N I N G T H E VA L U E O F B I G D ATA C U S T O M E R A N A LY T I C S EBOOK

Business Value Drivers of Customer

Analytics

Big data customer analytics can deliver tangible results for

any company, and essentially every department within a
company. When properly operationalized into a company’s
customer-facing processes, big data customer analytics
provides a wide range of measurable benefits that lead to
increased performance.

Based on the earlier examination of the ways customer analytics add value in different
departments, here’s a list of value metrics where big data customer analytics can deliver
tangible results:

Marketing:

• Higher customer conversion rates

• Increased customer acquisition rates
• Lower cost per customer acquisition

Sales:

• Higher sales conversion rates

• Increased order sizes and wallet-share
• Lower cost per sale

Services:

• Higher customer retention/Reduced customer churn

• Increased service productivity and faster problem resolution time
• Reduced customer service costs

Operations:

• Reduced inventory costs

• Reduced shipping costs

PA G E 6
Datameer D E F I N I N G T H E VA L U E O F B I G D ATA C U S T O M E R A N A LY T I C S EBOOK

What Questions Do I Need to Ask My

Company?
Almost certainly, your company is collecting large volumes of customer data. The next
questions are:

• What analytic use cases can our data drive?

• What is the priority of these use cases?
• How can the business use the analytic results?
• What barriers are there to implementing the use cases?
• What technical, data or process impediments are there, and what are they?

When considering the impact of big data customer analytics on your company and how
to sell it to your company’s c-level management team, it’s important to understand your
company’s situation and to examine how big data customer analytics can improve it.

Use Case Questions

• What key indicators is our company focusing on right now?

• What is our current customer conversion rate, and what impact would a one-point
increase in the conversion rate have on revenue?

• What is our current new customer acquisition rate and what impact would a one-point
increase in the acquisition rate have on revenue?

• What is the current cost to acquire each new customer?

• How many orders are lost with customers abandoning products in their shopping cart?

• How many orders fail that could be completed?

• What would be the impact of a 10, 20 or 30 percent increase in sales conversion on

revenue?

• What do our current upsell and cross-sell efforts look like? What is our current average
order size?

• What is the current cost per sale – sales costs/sales revenue?

• What is our current customer retention rate and what is the annual revenue impact for
every point increase in this rate?

• What is the current customer churn rate and what is the annual revenue impact for each
point decrease in churn?

PA G E 7
Datameer D E F I N I N G T H E VA L U E O F B I G D ATA C U S T O M E R A N A LY T I C S EBOOK

• How much time is spent on the average customer service call or conversation? What do
the 25th and 75th percentiles look like?

• What is the average cost per service call and what are the cost components? Truck
rolls? Service agents? Other?

• What is the current cost of inventory?

Potential Barrier Questions

• Where is our customer data coming from right now? What state is it in? Where is it
stored? What format is it in?

• What touch-points or areas of the customer experience does the data cover? Can the
results be used in those touch-points?

• Do we have enough demographic data and attributes on our customers?

• Can we create a more detailed model of customer behavior and actions?

• How long does the average analytic cycle take today? Why does it take this amount of
time? Can self-service big data analytics reduce this cycle time?

• If outfitted with self-service big data analytic tools, could analysts access the data they
need?

• How can the results be sent to the business teams to use it? What form do the results
need to take so it is usable by the business teams?

PA G E 8 PA G E 8
Datameer D E F I N I N G T H E VA L U E O F B I G D ATA C U S T O M E R A N A LY T I C S EBOOK

Steps to Produce and Operationalize

Customer Analytics Using Big Data

Use Case Discovery

Conduct a use case discovery workshop that will uncover the attributes of key use cases
(data sources, potential business value and ROI, barriers to implementation) and help
prioritize the the implementation of the use cases.

Proof of Value
Use data discovery for the top priority use case to find new patterns, unexpected
outcomes, and opportunities hidden within the data. Use this to demonstrate the fit and
value of the analytics and build a projected ROI model.

Identify the Business Plan

Working with the business teams that will use the analytics and resulting data, formulate
an action plan to use the data to improve the performance indicators.

Gather the Data

Identify all the various data sources, where the data is currently being generated, the
format of the datasets, and how much data there is.

Produce the Analytics

Bring the data from all sources into the modern BI platform and conduct the complete
analysis, in the process defining the exact format of the results.

Show the Results to the Business

Compile the findings, build a presentation, and deliver the findings to business teams.
Work with the business teams to finalize processes and personnel that will use the data.

Operationalize the Process and Results

Define and implement the attributes of the repeated process to that will produce the
results. This will include job execution, data retention policies, security models, and
integration with downstream applications or tools used by the business users.

PA G E 9
Datameer D E F I N I N G T H E VA L U E O F B I G D ATA C U S T O M E R A N A LY T I C S EBOOK

Continuously Improve
As the analytics and business plan is implemented, you should continuously measure
progress in well-defined time frames. In addition, new data will be generated creating the
need to re-visit the analytics to determine if additional data, results or views are required.

Repeat
Perform the same process for new, related use cases. The new use cases should be able
to leverage the data and models used in the initial use case.

PA G E 10
Datameer D E F I N I N G T H E VA L U E O F B I G D ATA C U S T O M E R A N A LY T I C S EBOOK

Building Your Value Calculations

The business value calculations are one of the most

important measurements you can compile for your customer
analytics use cases. They are used in the Proof-Of-Value
stage of implementing the customer analytics use case,
and will determine if there will be enough resulting business
impact to continue the process.

All business value calculations will produce answers in terms of revenue (gained or
retained), costs (lowered) or both. For example, customer acquisition optimization can
produce both incremental revenue from an increase in new customers and lower costs
from more efficient marketing campaign spending.

Depending upon the type of business you are, revenue gains (or retention) may be
calculated differently:

• If you are a transactional company – industries such as retail – your gains will be defined
by the average sale amount.

• If you are services company – industries such as banking or telecommunications – your

gains will be defined by the lifetime value of a customer.

By way of example, here is how the business value of two use cases with potential revenue
gains would be calculated differently based on the type of business.

PA G E 11
Datameer D E F I N I N G T H E VA L U E O F B I G D ATA C U S T O M E R A N A LY T I C S EBOOK

Customer Acquisition Customer Offer Optimization

Optimization (up-sell/cross-sell)

Transactional (Percent Conversion Rate Increase Percent Offer Conversion Rate

Company x Increase
No. of Transactions x
x No. of Transactions
Average Transaction Amt.) x
+ Increase in Average Transaction
Marketing Spend Decrease Amt. Amount

Services (Percent Conversion Rate Increase Percent Offer Conversion Rate

Company x Increase
Annual New Customers Acquired x
x No. of Customers
Average Customer Lifetime Value) x
+ Increase in Average Customer Lifetime
Marketing Spend Decrease Amt. Value

PA G E 12
Datameer D E F I N I N G T H E VA L U E O F B I G D ATA C U S T O M E R A N A LY T I C S EBOOK

Case Studies

Optimizing Customer Acquisition

A financial services firm was facing rapidly increasing customer acquisition costs.
Previously, it relied primarily on basic demographic data (age, gender, etc.) gleaned from
sales transactions. The company wanted to delve deeper by looking at a wider range of
interactions, such as social media posts, profile information and past purchases.

Using Datameer, the financial firm found interesting insights into their high-value customers’
preferences. For example, high-value customers tended to like the Food Channel and were
more likely to shop at Whole Foods. Armed with this information, the financial firm shifted its
marketing strategies to target people who shared these interests and habits.

Results:
Conversion rates increased by 25 percent and customer acquisition costs decreased by 30
percent.

Reducing Customer Churn to Retain Revenue

A leading financial services retirement planning firm wanted to reduce customer churn,
particularly among clients who were approaching retirement age. In order to do so, the firm
wanted to better understand their customers’ behavior to identify warning signs so they
could then launch customer retention programs.

The company had a lot of data, but it was fragmented and spread across their CRM
platform, website, call center, customer profiles, and other places. Using Datameer, the
firm compiled all of this data and then identified behaviors that indicated which particular
customers were more likely to leave. The firm found that clients who called in with a financial
advisor or other party on the line, changed their addresses, changed employment, or
browsed the company website looking for forms were more likely to leave.

Results:
The firm reduced churn by 50 percent, increasing the lifetime value of their customers and
regaining lost revenue.

PA G E 13
Datameer D E F I N I N G T H E VA L U E O F B I G D ATA C U S T O M E R A N A LY T I C S EBOOK

Increasing the Lifetime Value of Customers

Surfdome, a leading European specialty retailer, needed to fuel growth through targeted
marketing, customer cross-selling and higher repeat purchases. They had a large volume
of data about their products, customers, transactions and purchases in different silos, and
needed to bring this data together to gain deeper insights.

The company used Datameer to integrate their data, and then analyze it to identify deeper
customer segmentation and customer behavior. Surfdome used the analytic results to
drive highly targeted marketing to acquire new customers, offer cross-sell offers in the
purchase funnel, and use customer marketing offers to spur additional purchases.

Results:
Surfdome boosted their customer acquisition rates by targeting the most valuable
segments, raised the average purchase size through better cross-sell offers, and increased
the average lifetime value of customers through greater customer loyalty and repeat
purchases.

PA G E 14
Datameer D E F I N I N G T H E VA L U E O F B I G D ATA C U S T O M E R A N A LY T I C S EBOOK

Conclusion

Customer analytics using big data can help drive business

value to many parts of your organization, helping improve
existing processes and drive new strategies. Big data
analytics can discover key insights and opportunities, as well
as opportunities you might not fully be tapping.

Getting your big data customer analytics initiative off the ground requires buy-in
from many parts of the organization and alignment from the four key stakeholders —
management, the business teams, analysts and IT. Each needs to accurately understand
what’s at stake, the value the new analytics will bring and what barriers exist to creating
and using the new analytics.

To learn more about creating value with big data customer analytics, and how modern BI and
Datameer can help you achieve this goal, please visit our website at www.datameer.com.

PA G E 15
Datameer D E F I N I N G T H E VA L U E O F B I G D ATA C U S T O M E R A N A LY T I C S EBOOK

Worksheet: Metrics and Questions to Ask the

Organization

Metrics
¨¨ Marketing:
¨¨ Higher customer conversion rates
¨¨ Increased customer acquisition rates
¨¨ Lower cost per customer acquisition

¨¨ Sales:
¨¨ Higher sales conversion rates
¨¨ Increased order sizes and wallet-share
¨¨ Lower cost per sale

¨¨ Services:
¨¨ Higher customer retention/Reduced customer churn
¨¨ Increased service productivity and faster problem resolution time
¨¨ Reduced customer service costs

¨¨ Operations:
¨¨ Reduced inventory costs
¨¨ Reduced shipping costs

PA G E 16
Datameer D E F I N I N G T H E VA L U E O F B I G D ATA C U S T O M E R A N A LY T I C S EBOOK

Business Metric Questions

QUESTION ANSWERS

What key indicators is our company focusing on right now?

What is our current customer conversion rate, and what

impact would a one-point increase in the conversion rate
have on revenue?

What is our current new customer acquisition rate and what

impact would a one-point increase in the acquisition rate have
on revenue?

What is the current cost to acquire each new customer?

How many orders are lost with customers abandoning

products in their shopping cart? How many orders fail that
could be completed?

What would be the impact of a 10, 20 or 30 percent increase in

sales conversion on revenue?

What do our current upsell and cross-sell efforts look like?

What is our current average order size?

What is the current cost per sale – sales costs/sales

revenue?

What is our current customer retention rate and what is the

annual revenue impact for every point increase in this rate?

How much time is spent on the average customer service call

or conversation? What do the 25th and 75th percentiles look
like?

What is the average cost per service call and what are the
cost components? Truck rolls? Service agents? Other?

What is the current cost of inventory? What is the cost

impact to improve inventory turns?

PA G E 17
Datameer D E F I N I N G T H E VA L U E O F B I G D ATA C U S T O M E R A N A LY T I C S EBOOK

Data Questions

QUESTION ANSWERS

Where is our customer data coming from right now? What

state is it in? Where is it stored? What format is it in?

What touch-points or areas of the customer experience

does it cover? Can the results be used in those touch-
points?

Do we have enough demographic data and attributes on

our customers? Can we create a more detailed model of
their behavior and actions?

How long does the average analytic cycle take today? Why
does it take this amount of time? Can self-service big data
analytics reduce this cycle time?

If outfitted with self-service big data analytic tools, could

analysts access the data they need?

How can the results be sent to the business teams to use

it? What form do the results need to take so it is usable by
the business teams?

PA G E 18
 FREE TRIAL T W I T T E R LINKEDIN
datameer.com/free-trial @Datameer linkedin.com/company/datameer

©2016 Datameer, Inc. All rights reserved. Datameer is a trademark of Datameer, Inc. Hadoop and
the Hadoop elephant logo are trademarks of the Apache Software Foundation. Other names may be
trademarks of their respective owners.

SAN FRANCISCO
1550 Bryant Street, Suite 490 • San Francisco, CA 94103 USA • Tel: +1 415 817 9558 • Fax: +1 415 814 1243

NEW YORK
9 East 19th Street, 5th floor • New York, NY 10003 USA • Tel: +1 646 586 5526

HALLE
Datameer GmbH • Magdeburger Straße 23 • 06112 Halle (Saale), Germany • Tel: +49 345 2795030

SINGAPORE
Datameer Singapore Pte Ltd • 03-20 Galaxis 1, Fusionopolis Place • Singapore 138522, Singapore • Tel: +65 6809 1157

HONG KONG
12/F International Commerce Centre, 1 Austin Road, West Kowloon, Hong Kong • Tel: +852 2824 8646