Get to Know Joe: Predictive Analytics Can Create Utopia for Your Most Valuable Customers

Imagine for a moment a world where your customers' experience interacting with your organization is truly exemplary. I mean a world where you really understand your customers: their needs, their cross-channel behaviors, their likes and dislikes. Let me illustrate with two customer experiences:

• Experience 1: The customer-centric façade. Joe is a loyal and high-value customer of a global retail bank. He has been with the bank for 10 years. Joe is frustrated with gas prices and wants to cancel his airline rewards credit card and get a gas rewards card, instead. He reviews his options online. He debates between a card offered by his current bank that has an annual fee and a competitor's card with a higher interest rate but no fee. Joe can't make a decision, so he sits on the fence for a while. A few weeks later, Joe calls his bank to inquire about its card. Given that it is a "customer-centric" organization, he is greeted as a highly valued customer, and the agent tries to cross-sell Joe a five-year certificate of deposit. He declines the CD offer and explains he is interested in applying for a gas rewards card. Joe mentions that the competitor's card doesn't have an annual fee. The response he gets is the standard sales script for the gas reward car. Joe cancels his airline rewards credit card. For months to come, Joe continues to receive offers in the mail for the card he just canceled, as well as solicitations for the gas card with a standard offer that includes an annual fee. Joe is disappointed with his bank. He just doesn't feel that anyone there understand his needs. He feels like a number.
• Experience 2: The customer-centric utopia. Now let's consider a truly customer-centric organization. Joe is a loyal and high-value customer, who has been with the bank for 10 years. He goes online to his bank's web site to research gas reward credit cards. He debates between a card offered by his current bank that has an annual fee and a competitor's card with a higher interest rate but no fee. Joe can't make a decision, so he sits on the fence for a while.

  ‘The organization has seen its average customer value increase by 144 percent.’

  The following week, Joe receives a standard promotion in the mail from his bank for a gas reward credit card. It renews Joe's interest, and he contacts his bank's call center. He is greeted as a highly valued customer, and the agent asks him if he received the literature about the gas rewards card. Joe mentions that he's on the fence because the competitor's card doesn't carry an annual fee. The call-center rep offers to waive the fee. Joe accepts the offer. The next week Joe receives an offer in the mail for a home-equity line of credit targeted toward high-valued customers concerned about cash-flow during a slow economy. Joe is pleased with his bank. He feels like everyone there understands his needs. He feels like a valued customer.

The illustrations are plentiful. We can all imagine an ideal world in which we make the most relevant, timely and profitable offers to our most valued customers to grow the relationship or keep them from taking their business elsewhere. Or one in which we, conversely, have the necessary insights to make the decision not to waive the fee or make that unprofitable offer to a low-value customer. And when you consider that 50 percent of an average bank's customers are unprofitable, that's a big problem.

Core enablers
So how do you achieve customer-centric utopia? Your organization's ability to do so hinges on three core technology enablers, what I call the three "Is": Insight, Interact and Improve.

By gaining deeper customer insight, you have a better perspective on who your most valuable customers are, which ones are likely to respond to offers and which are at risk of attrition. Predictive analytics provide a superior edge for firms looking to know, not guess, what the right offer should be—or if an offer is appropriate at all. For example, by understanding a customer's current and potential value, you could flag individual customers or segments eligible to receive a waived fee or other special considerations.

Once armed with customer insight, your company can better interact. That interaction must be across multiple channels and must provide an interactive environment that is agile to each unique customer experience. Your marketing technology must provide an outlet to input these real-time data points to determine what the right cross-sell offer should be—and if you should be making a cross-sell offer at all.

Finally, your technology needs to help you to continually learn and improve from every customer interaction. Figure 1 illustrates how the customer utopia process technologically maps to these enablers.

Figure 1

A great example of this is a major financial services firm in the United States. Executives started by building a customer intelligence platform on which to base the organization's sales and marketing strategy. On that platform, the company performs an overall analysis of customers to segment, first on profitability, and then into sub-segments by credit risk, attrition risk and potential. Then, the firm uses the system as a cross-channel sales-and-marketing decision hub where daily decisions are made around actions such as deposit authorizations, proactive and reactive retention efforts, credit authorization, collection strategies and cross-sell offers. The integrated marketing platform triggers decentralized, yet relevant and profitable, decision-making across the organization to best serve the customer and the firm.

And in doing this, the organization has seen its average customer value increase by 144 percent.

The lesson to be learned is that consistent management of customer interactions across the enterprise will lead to customer-centricity, which in turn leads to greater customer profitability. I guess utopia isn't so inaccessible, after all!