In the world of big data, customer analytics is the holy grail for marketing. But a recent Forrester Research report illustrates that most companies struggle to find value from their customer analytics efforts.
In the "State of Customer Analytics 2012" report, Forrester customer intelligence analyst Srividya Sridharan concludes that lack of data management, integration, and quality are the biggest inhibitors to making better use of customer analytics. A full 54 percent of companies surveyed have difficulty managing and integrating data from the many varied sources, while 50 percent are concerned about consistent data quality.
Companies also grapple with assembling the right type of analytics professionals, communicating the results of the analysis to relevant colleagues, performing real-time analytics and making insights available during customer interactions, protecting data and addressing privacy concerns, and keeping pace with the velocity of data generation.
And while key drivers of adoption include increasing customer satisfaction and retention (cited by 51 percent of respondents) and loyalty (40 percent), analytics use skews largely toward acquisition of new customers. Ninety percent of companies surveyed use analytics for this purpose.
Other factors driving the use of analytics include reacting to competitive pressures, reducing marketing budgets, and addressing regulatory issues.
The report identifies the use of predictive analytics as a growing trend, with 40 percent of firms claiming to use it. Conversely, 70 percent have been using descriptive analytics and business intelligence reporting for more than 10 years.
"Companies are really struggling with the predictive piece," Sridharan says. "This is a hotbed of potential for the advanced use of analytics."
The real-time aspect "is something that is still missing at most companies," she adds, but it's definitely a growing field that is starting to see a lot of interest.
"Firms that have already mastered basic analytics methodologies and gained efficiencies in aggregate analysis are now looking to adopt advanced ways to do real-time, future-looking analysis," the report says.
Additionally, companies would like to start using social data as a viable source of customer analytics. This was cited as a long-term goal by 17 percent of the companies in the survey.
However, Sridharan suggests that organizations look beyond social media for unstructured data. "While many marketers have embraced social media as an effective way to engage customers, from an analytics standpoint, they have only scratched the surface in how other data sources, such as call center data and voice-of-the-customer data, can feed traditional customer analytics processes," Sridharan wrote.
She also states that organizations should use analytics to improve customer engagements.
"Customer engagement features at the bottom of the list of metrics," Sridharan wrote in the report. "This is a missed opportunity for customer analytics practitioners to gain deeper insight into how individual customers interact with content, offers, and messaging across various touchpoints."
Customers, she says, "are leaving footprints all over the business, but companies don't know how to mine all that data."
The report credits customer analytics practitioners with doing a number of things right, including focusing on the right types of analytics and methodologies to achieve a basic understanding of who their customers are, their propensity to buy, how to target them effectively, and how best to experiment with content, features, and offers. But despite this, it also recommends that companies develop a holistic customer analytics solution framework.
"Although individual customer analytics techniques answer specific business questions, they fail to deliver efficiencies in generating insights at an aggregate level," it said.
The report's final recommendation is that organizations look outside their own four walls and connect with partners who are knowledgeable in analytics technology, analytical services, and data mining to explore the next steps for customer analytics. "It's not just about buying an analytics tool, [it's also about] employing the professional services to make sense of the data,&" Sridharan concludes.