A voracious appetite for data is quickly becoming one of the defining traits of modern corporations. Companies of all sizes are racing to find ways to harvest relevant data, hire data scientists and implement business intelligence tools that will help them understand their clients and markets. Without appropriate methods for interpreting it, however, data becomes little more than an expensive waste of storage.
Once you have a means for gathering high-quality data, robust analytics can reveal the true value of your data by crystalizing its meaning and informing crucial decisions. Analytics applied to your firm’s real source of revenue and primary reason for existing—your customers—can be the gateway to explosive growth. Customer analytics services are divided into three main categories: descriptive, predictive, and prescriptive. This article explores the differences between them and the benefits of each.
Descriptive analytics help you understand what has been happening in your organization.
Many customer analytics firms excel at this kind of analysis because it is based upon data that is already available to you or could easily be made available through existing systems. Here are some possible applications of descriptive analytics:
- Imagine you want to assess the impact of a recent marketing campaign on recurring purchases of your products. Data readily available in your CRM could be exported and analyzed by a customer analytics service provider to give you insights into repeat sales.
- Perhaps you want to know whether customer attendance at a recent trade show has had any impact on your NPS. Through appropriate customer analytics consulting, you could tie pre-event and post-event NPS data with registration data to discover any correlation.
Descriptive analytics are extraordinarily useful in retrospective and post-mortem scenarios where you want to learn from past experiences, but what about when you want to be forewarned of potential future trends?
Predictive analytics help you understand what could likely happen in your organization.
Compared to descriptive analytics, there are relatively fewer customer analytics firms offering predictive analytics, but there are still some strong options. These services are based on the concept of a “what-if analysis,” and they use statistical models to project past trends into the future. Here are some examples of predictive analytics at work:
- Imagine you want to see the potential effects of raising prices by 5%, 10% or 15% for a specific product. Customer analytics services could help you forecast consumer responses based upon similar moves from the past.
- Perhaps you want to know what would happen to revenue at one store location if you were to open another location nearby. Synthesizing past data from several systems could help you foresee changes in customer behavior.
Although confidence intervals vary somewhat with predictive analytics, the insights they provide are crucial to successful customer analytics.
Prescriptive analytics help you understand possible actions you could take because of what has been happening or what could likely happen in your organization.
Whereas predictive analytics can help you understand probable outcomes, they cannot make decisions for you. Only customer analytics services providers on the cutting edge offer the option of building a course of action from your data. Here are some ways this might happen:
- As your prescriptive system tracks demographic information of customers who visit your stores (e.g. zip codes connected with credit cards swiped at a specific location), your marketing automation system could be triggered to recommend sending promotional materials to those demographics.
- Depending upon your data architecture, you may be able to identify repeatable actions that could be connected to automated suggestions in a business intelligence dashboard.
The real power of prescriptive analytics lies in their ability to streamline decision making and accelerate appropriate action.
Customer analytics are crucial for maintaining a competitive edge in the Digital Age, and our expertise in customer analytics consulting will help you jump to the next level. Whether your business is new and aggressively growing or mature and seeking new target markets, we can guide you through the process of adopting a strong analytics strategy.