Webinar Must-Have Customer Analytics For Your Acquisition And Retention Tool Kit

1. WebinarMust-Have Customer Analytics For Your Acquisition And Retention Tool Kit Srividya Sridharan, Analyst March 23, 2012. Call in at 10:55 a.m. Eastern time

2. Agenda

3. Marketers are focused on proving the value of marketing investment Source: January 13, 2012, “Metrics That Matter For B2C Marketers” Forrester report

4. Acquisition trumps retention as a marketing priority Source: February 22, 2012, “The Evolved CMO In 2012” Forrester report

5. Most marketing departments employ outdated thinking Source: October 28, 2010, “It’s Time To Bury The Marketing Funnel” Forrester report

6. How effective and efficient are my marketing campaigns? How can I effectively target the prospects most likely to respond? What is the optimal marketing mix to drive revenue? Funnel-based analytics optimizes marketing Sample metrics Analytical methods • Brand awareness • Reach/frequency • Impressions • Click-through rates • Trial rate • Response modeling • Pattern detection • Trend analysis • ROI analysis • Campaign performance Source: October 28, 2010, “It’s Time To Bury The Marketing Funnel” Forrester report

7. Marketers use measurement results to optimize marketing spend Source: January 13, 2012, “Metrics That Matter For B2C Marketers” Forrester report

8. What is a newly acquired customer’s future worth? Is it worth servicing the customer at this cost in the long run? At what point do I re-engage and increase the depth of the relationship? How do I prevent a customer from churning? What next-best offer can I present to retain customers? But a lot is left to be answered about the customer

9. Agenda

10. Marketers need to put the customer at the center Source: October 28, 2010, “It’s Time To Bury The Marketing Funnel” Forrester report

11. Choose customer experience over customer relationship Source: April 29, 2011, “Beyond CRM: Manage Customer Experiences” Forrester report

12. Each interaction is an opportunity to know more about the customer Discover Explore Buy Engage The amount of information about the customer grows as the relationship advances through the customer life cycle.

13. Whether funnel or life cycle, analytics helps answer these core questions “We want to mitigate the risk of losing our high-value customers.” “We want to understand the effectiveness of different marketing investments on customer acquisition.” “We want to encourage repeat usage and trial.” “We want to optimize the cost of acquisition.” Acquisition Retention “We are losing share of wallet to our competitors.” “We want to move low-value customers into the high-value segment.” “We lack a comprehensive customer view and struggle to fully leverage customer value.” Profitability “We want to manage our customer portfolio based on profitability and not revenue.”

14. Customer life-time value (CLV) helps devise customer-focused acquisition tactics Customer lifetime value Current customers who create value Current customers who destroy value Potential customers not currently served Identify and target. Achieve value creation quickly. Increase profitability. (and/or) (and/or) (and/or) Acquire at reasonable cost. Increase volume. End relationship. (and/or) Increase duration.

15. Activate analytics at each interaction point Discover Explore Buy Engage • Focus on retention, loyalty, and engagement to drive profitability. • Focus on recovery. • Intervene to reduce number of unprofitable customers. Value of analytics Profitability • Intervene to cross-sell/upsell and drive revenue. • Reduce cost to serve and drive margin. • Acquire profitable customers through better targeting. • Make customers profitable faster. Customer lifetime With customer-focused analytics Without customer-focused analytics Source: July 29, 2011, “How Analytics Drives Customer Life-Cycle Management” Forrester report

16. Framework to think about analytics needs across acquisition and retention *Not focusing on these techniques for this webinar

17. Map out analytical options to life-cycle stages Focus areas for this webinar Source: July 29, 2011, “How Analytics Drives Customer Life-Cycle Management” Forrester report

18. Agenda

19. What Segmentation uses existing customer response data to select prospects for targeting purposes (one of the many uses). Why Identify look-alikes in the prospect universe. Focus resources in most attractive segments. Segmentation helps target campaigns at precisely identified prospects Source: February 28, 2011, “Improving Customer Segmentation” Forrester report

20. Plenty of options for segmentation Source: February 28, 2011, “Improving Customer Segmentation” Forrester report

21. What A response model identifies the prospects who are most likely to respond to an offer and assigns a score to the prospect file. Why Use response as a precursor to the purchase decision. Assess incremental impact of targeted campaigns. Response models predict response to acquisition campaigns

22. What Propensity models used in acquisition campaigns assign scores to a prospect according to their likelihood to purchase a product. Why Predict the product conversion event. Present relevant cross-sell offers. Propensity models ensure conversion with greater probability

23. Challenge Stagnant growth in certain product categories Increasing competition in specialty retail market Analytical approach Used segmentation to identify new target groups in its prospect population Results Modified merchandising, media, and in-store strategies, depending on what product categories the new target group is willing to invest in Increase share of wallet opportunities for newly acquired customers Case study: specialty retailer

24. Challenge Inability to target the customer with the most relevant message Analytical approach Used uplift modeling to focus efforts on incremental response Results Increased sales by 73% on a campaign for direct deposits Saved $400,000 per acquisition campaign on individuals that would have purchased anyway Case study: regional bank

25. Agenda

26. Retention-focused analytics techniques Source: December 14, 2011, “Must-Have Analytics For Your Retention Tool Kit” Forrester report

27. What Churn analysis helps to understand customer defection and attrition. Why Signals when to worry about customer attrition Pinpoints timing of customer defection Refines retention targets Churn management ensures revenue protection Image Source: http://aaeworks.com/

28. What Cross-sell analysis uses association data-mining techniques to lure customers to buy more from a portfolio of products and services. Why Helps build product clusters and bundles Presents relevant and contextual offers Cross-sell and upsell analysis expands footprint of products and services Image Source: http://www.getelastic.com/defining-cross-sell-upsell/

29. Streamlined approach to CLV improves customer retention Source: June 3, 2011, “Navigating The Customer Lifetime Value Conundrum” Forrester report

30. Challenge Improve customer retention, boost upsell and cross-sell, and enhance customer satisfaction through one-to-one personalization of cross-channel communications with customers. Customer interaction channels Branch offices, call center, self-service portal, email and text messaging, and direct-mail statement inserts Analytical approach Cross-sell model, next-best action Results 20% to 30% increase in upsell and cross-sell and improvements in customer satisfaction surveys Case study: British financial services firm

31. Agenda

32. Don’t isolate acquisition from retention analytics. Choose the mix of analytical techniques that drive balanced customer growth. Tackle acquisition and retention analytics at the individual customer level. Deploy analytical models not as “projects” but as interconnected ways to drive customer value. Recommendations Source: July 29, 2011, “How Analytics Drives Customer Life-Cycle Management” Forrester report

33. Questions?

34. Srividya Sridharan +1 617.613.6393 ssridharan@forrester.com Twitter: @Srividya www.forrester.com Thank you