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Unlocking the Mysteries of Big Data ROI

Three case studies show how organizations have applied data in creative and effective ways to improve customer care and increase ROI.

There’s a lot of buzz about Big Data these days—and with good reason. As more companies establish processes for collecting, analyzing and applying data, there’s a lot to talk about. That includes the big benefits of Big Data. When applied effectively, data delivers a couple of significant advantages: It provides better customer experiences and makes customer care operations more efficient. That’s an incredibly powerful one-two punch.

In our brave new world where customer experiences carry more weight and impact than ever before, it’s no wonder data has become such a hot commodity. In many ways, data holds the keys to the customer kingdom. Data can provide vast insights into customers. It can tell you who they are, how they purchase, and even help predict future behavior. As companies work to craft clearer pictures of their individual customers, data is the thread that will help pull all the pieces together.

Endless Strings of Data

You can’t make a quilt with thread alone. Likewise, data alone won’t get the job done—as many organizations are finding out. With the buzz on Big Data nearing a fever pitch over the past two years, many organizations made an effort to stockpile as much data as possible. Now, many of those same organizations are looking into the vault and seeing mile-high piles of data, and they have absolutely no idea what to do with it.

Just having data is not the solution. You have to pull from those piles of data the golden insights that enable you to provide better customer experiences and operate more efficiently. Most organizations still lag behind in the data insights department. Forester’s 2013 Customer Experience Predictions report provides this projection for many companies in the coming years, “They’ll spend enormous amounts of time and money amassing new data sources—and less effort figuring out what to do with it all.”

The quandary of too much data and too little insight has brought the Big Data revolution to a crucial crossroads. Organizations have invested a lot of effort ramping up data collection without adequately planning how to analyze and apply it. Now it’s time to put the numbers to work—to spin those golden threads into practical actions that will benefit both company and customer.

In many ways, data holds the keys to the customer kingdom.

The great thing about data (and one of the major challenges of data application) is all the different ways it can be used in the customer care environment. From improving customer communications across channels to making your marketing strategy more efficient, the collective desire for Big Data is fueled by the great potential it has across the board. Let’s look at three different examples of how organizations have applied data in creative and effective ways to improve customer care and increase return on investment (ROI).

Case Study #1: Missing the Mark With a Single-Channel Strategy

A leading wireless provider was employing a single-channel strategy to encourage customers to renew their contracts. It was sending out a direct mail piece to tens of millions of customers. Over time, the strategy was yielding increased costs and diminishing returns—resulting in a price tag of $130 for each customer save.

After pouring through the data, the company designed a three-tiered retention strategy using text messaging, direct mail and phone. The goal of the program was threefold: Increase retention, increase ROI and decrease renewal traffic to its retail stores (which are primarily used for acquisition and, therefore, the most expensive method of renewal).

Before any tactics were launched, the company worked to accurately identify and filter the customer database for churn risk. Customers were first filtered out due to payment issues, certain geographical locations and “do not contact” restrictions. The initial filter left nearly 2.25 million customers to be targeted. The customers were then filtered based on whether their phone had text messaging capabilities and if “do not text” restrictions were in place.

The targeted customers were sent a text message with a customized offer based on their plan type and other customer identifiers. The “phone exclusive offer” text message generated 160,000 inbound calls, saving 83,200 customers and diverting them from the retail outlets.

The next step was to send an exclusive offer via direct mail. These customers were identified based on whether they had opted out of future offer mailings and the profitability of the customer’s usage. The remaining 1.38 million customers were sent a personalized direct mail piece specific to their plan, geography, demographics and other individual characteristics. This strategy generated another 55,000 inbound calls and 28,700 saved customers.

After weeding out those who did not respond to the text message or direct mail piece, 675,000 customers remained. Sixty percent of the customers were reached with a phone exclusive offer—which resulted in another 74,000 inbound calls and 38,600 saved customers.

The Results

Ultimately, the company was able to save over 150,500 customers. With a dramatically lower cost to save each customer—$14.65 compared with $130—the company’s return on investment also increased significantly. The sales revenue realized from the saved customers was an impressive $161 million compared with $96 million prior to the multichannel campaign.

The lesson here is simple: People have the luxury of choosing how they want to communicate, which puts the burden on companies to account for varying channel preferences. By leveraging customer data, the company was able to use the various channels more efficiently. This helped ensure customers were reached through their preferred channel, while also making the company’s efforts more profitable and cost-effective.

People have the luxury of choosing how they want to communicate, which puts the burden on companies to account for varying channel preferences.

Case Study #2: Combatting the Costs of Churn and Acquisition

A major wireless provider was investing significant marketing dollars into maintaining its customer base, primarily through new customer acquisition. It was maintaining its numbers, but the cost of acquiring each new customer was $305. Under this model, the company had an annual net income per customer of $90.

The company’s acquisition marketing efforts were saddled with the burden of replacing a yearly churn rate of 7 percent of existing customers. To maintain its customer base throughout the year, the company added 1.7 million new customers at a total cost of $533 million.

After exploring its options, the company decided to test a telephone campaign to help maintain its customer base at a lower overall cost. The first step was analyzing the data to identify customers most at risk for churn. This population consisted of approximately 5 percent of the company’s total customer base. The goal of this proactive effort was to retain these customers and keep them from churning.

Through this campaign, nearly 1.5 million customers were contacted throughout the year. These customers were given the opportunity and incentive to renew their wireless contracts rather than allowing them to lapse. As a result of these calls, 32 percent of all contacted customers converted to contract renewal (or 473,250 individuals). More importantly, the cost to the company per renewed customer was only $28—significantly lower than the $305 cost of acquiring a new customer.

The Results

Ultimately, the telephone retention campaign reduced the annual churn rate from 7 percent to just over 3 percent. It also increased the annual net income per customer from $90 to $100. That’s an annual gain of over $130 million, and a net income gain to call center cost of 10:1.

This is an example of how data can be used to adjust and enhance marketing strategy. By identifying customers at risk and making a concentrated effort to reach out to them, the company was able to earn their loyalty, taking the pressure off its acquisition marketing and increasing their profitability. The bottom line: A strategic retention campaign can help companies maintain overall customer base at a lower marketing cost.

A more personal approach of using real-time data improved results and enhanced the overall value of the campaign.

Case Study #3: Personalization—Using Real-Time Data to Make Stronger Connections

A national public policy women’s organization was running a phone campaign centered on a survey. At the beginning of the call, women were asked what the most important issues were to them. After providing a response, callers were then led through a standard appeal, which was the same for everyone, no matter how they responded to the survey.

With the standard appeal, the response rate was 30 percent with a fulfillment rate of just under 84 percent for a total of $506,652. Thinking that a more personalized approach would produce better results, the organization instituted a new strategy to better engage callers.

To more effectively speak to the donors’ interests and the issues they were passionate about, four different appeals were developed based on donor responses to the initial survey question. The idea was a simple: More closely aligning the appeal with the response would create a stronger connection between the individual and the organization, making them more apt to respond positively. Greater personalization also makes the call seem more conversational and less like a prepackaged message.

To bring the strategy to life, innovative “Inscription” call center technology was used. This technology automatically tailors the script and allows for real-time changes based on data gathered during the call. Using Inscription to tailor scripts to donor responses, the response rate for this campaign increased to 33 percent. The scripting survey appeal also helped to increase the dollars per completed call, and the dollars fulfilled by 6 percent.

The Results

A more personal approach of using real-time data improved results and enhanced the overall value of the campaign. It also served to heighten donor engagement and connection with the organization, which may increase long-term donor value moving forward. In addition to the customized appeal, donors were asked at the end of the call what issues should be focused on in the remainder of the year. Their responses generated the next two telemarketing appeals.

This example shows that while technology and data analysis may be complex, the insights they provide don’t have to be. Sometimes it just means taking what you know about your customers (which is essentially what data is) and using it to create a more relevant conversation.

Keeping Customers at the Center

As the buzz on Big Data shifts from adoption to application, it’s important to keep the customer at the heart of all your efforts. It’s easy to get lost in the figures or intimidated by the “bigness” of all that data. But remember: It’s not about numbers; it’s about insights. It’s about what you can learn about your customers that will enable you to provide better experiences.

Dana Allender

Allender_DanaBio: Dana Allender is vice president of new business development at InfoCision Management Corp. (www.infocision.com), the second-largest privately held teleservices company and a leading provider of customer service solutions for Fortune 500 companies. Along with call center solutions, InfoCision offers business intelligence, direct mail, digital printing and interactive services. You can reach Allender at dana.allender@infocision.com.