Our last two installments of the Big Data & Customer Intelligence series focused on predicting and influencing customer behavior. In this article, we’ll take a look at methods for determining customer value which is another important element of Computational Marketing.
Identify Your Best Customers
Most savvy marketing companies understand the importance of centering the corporate strategy on a loyal customer base. The key is to use big data analytics to uniquely identify high-value customers. It is useful to realize that your most loyal customers are the signal and everything else is noise. Your best customers are the ones who are the most satisfied and the least cost to your organization. But looking for your best customers is easier said than done. One way to do this is to identify all your customer touch-points such as order management, customer service, e-commerce, even customer interaction on the company blog. Both supervised and unsupervised machine learning techniques can serve as the vehicle for making this classification.
Another important strategy is to tap into yet another “V” of big data, namely Value. The desire is to uncover subtle customer interactions and extending the predictive model by uncovering the “long tail” of machine learning model features (a potentially large combination of additional variables) that collectively predict the identity of high-value customers. You basically want to build up your internal representation of each customer to obtain a 360 degree view. In doing so, you should calculate the value of each customer (revenues and costs to the organization) so you can isolate the most valuable customers. In summary, profile your customer base to determine the characteristics of your best customers.
Results From Analytics
One result of this effort is a good set of characteristics that have a strong signal of customer value with very little noise. As a bonus, you’ll probably identify several markets that are unproductive for your business; customers who spend very little money and take a lot of time with your customer service representatives. Armed with this information, you’ll know where to focus your marketing dollars, all thanks to big data.
Making Overtures to Your Best Customers
The last step is to take your customer value results and make targeted overtures to your best customers. You can turn your big data analytics team into a market research operation. You want to find out what your high-value customers absolutely love. Social media analytics can help you find out their passions. Based on a customer’s passion, you can figure out a freebie or other promotion to build a bond that no competitor can break.
[The next in the series will discuss understanding your customer’s social influence and taking action on that knowledge]