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Two-thirds of “very successful” companies use marketing automation (MA) systems extensively, according to a recent study. That is perhaps to be expected. But here’s a surprise: More than a third (37%) of companies achieved best-in-class status with just limited use of MA.
But despite MA being an obvious tool, and despite research to show that a higher percentage of companies in high revenue tiers use MA, less than half of companies are actually using it.
Sometimes using data is difficult. Companies have massive amounts of data from a variety of sources and platforms. Also, the bigger the company the greater the likelihood it may have inherited IT systems from mergers. The good news is that, despite difficulties, baby steps will pay off.
The two main barriers, according to research, to getting started are lack of an effective strategy and system complexity. But one doesn’t need a massive amount of resources and planning to begin to pick the low-hanging fruit using predictive analytics (PA) in subscription-based services.
Customer churn is an area in many businesses where PA can be applied for quick benefit. Take telecommunications companies, for example.
Telcos collect a lot of data related to customer usage of services and their networks. They also track customer preferences and buying habits. They store and manage vast amounts of data on a daily basis. This data can be used to analyze customer behavior, uncover drivers of churn, and identify potential churners before they leave.
Ad hoc methods can be disposed of and actions can be automated to allow targeting based on objective customer characteristics. For example, specialized offers can be made at a point before churn becomes a danger.
CRM efficacy strategies can be measured via data on response rates, designing experiments, and analyzing the treatment effects of various methods. Know if a personal email is sufficient to reduce churn, or whether a gift is required. In the case of a gift, know for sure whether the monetary gain from customer retention will outweigh the cost of the gift.
In the experience of Proekspert employees, we have noticed these particular patterns in the telcommunications business:
But common sense, despite it being not so common (as Jefferson apparently remarked), can sometimes be misleading. Common-sense metrics like age, marriage status, sex, etc., are often non-behavioral and therefore not optimal for segmenting customers. But a fully-reactive digital overview of a customer base, combined with AI-assisted suggestions of actions to take, can generate some amazing results like these.
Life-time values of individual customers can be estimated by aggregating average revenue per user (ARPU) data. This allows you to know how much a customer is worth at the beginning of a contract, or a few months or few years into a contract. With accurate cost-benefit calculations, you know which customers are worth more to keep and you can spend accordingly.
By clustering customers into data-driven segments, easy-to-use dashboards can be created for optimal CRM. Query the entire 360-degree customer profile (e.g. most recent call center interaction information) and summary statistics, going well beyond just churn indicators.
The importance of PA and MA cannot be underestimated. In 2017, CMOs are on track to spend more on technology than even CIOs. The big budgets of marketing must now stretch to important investments in marketing technology, including infrastructure, talent, and paid media. According to a Gartner CMO spending survey, marketing chiefs are spending more than a quarter of their budgets on technology and the marketing department’s tech budget generally rivals that of the CIO’s entire IT budget.
MA is also connected directly to customer experience, since frustrated customers lead directly to churn. Gartner further predicts that by 2018 more than half of organizations will redirect investment toward improved customer experience. Research shows that among unhappy customers, 13 percent will tell 15 or more people that they are unhappy. Interestingly, customers generally do not direct their complaints to the company who could help them — 67 percent cite bad experiences as a reason for churn, yet only one in 26 (ca 3,9%) actually lodge a complaint before leaving.
Proekspert data scientists can help you take PA to the next level, with complex algorithms specifically designed to account for individual aspects in every customer segment. Accurate churn predictions enable planned customer engagement before the risk of churn becomes critical — and a healthier bottom line thanks to stable revenue.
If you are interested in what data scientists can do for your company, contact: Proekspert Data Scientist Martin Lumiste firstname.lastname@example.org