Our world is getting ever more consumed by technology. It is but natural that organisations will have to adapt fast to keep pace with changing consumers and business requirements. In years to come strategic thinking and paradigms will be built using strong data analytics: data which is no longer just numbers but includes all forms of communication and interactions. If we were to follow IDC’s forecast, analytics has a promising year ahead as the market for business analytics software is estimated to grow by 8.9 per cent, to $33.9 bn. This means companies need to start thinking seriously about whether they are organised enough to exploit the potential of Big Data — the combination of structured and unstructured data.
In the current web-based business environment Big Data introduces the possibility of a fundamentally different type of decision making based on unstructured data available on the web. Therefore, as information becomes more readily accessible, it can threaten companies that have traditionally relied on proprietary structured data as a competitive asset. Online retailing is one sector that will benefit immensely from this unstructured data if the volume and quality of data available from the internet purchases, social-network conversations, and, more recently, location-specific smartphone interactions can be assimilated.
The benefits can be many especially in the $500 bn India retail market where only $500 mn is the size of online retail market. Marketers therefore are exploring innovative ways to understand and use the information available on blogs, twitter, youtube and social networks to tap the online market.
One may ask how analytics drives all the e-commerce and digital media. At the outset, analytics has a huge role to play in digital marketing strategies — it empowers marketers to capture and mine data exhaustively and cost effectively through advanced analytics tools and techniques. Now this information is vast — we are talking of about 35 zettabytes of information that will be available to companies by 2020. According to Forrester Research Inc, less than 20 per cent of the organisations are expected to increase marketing spends in traditional media, such as newspapers, magazines, television and direct mail. In contrast, more than 60 per cent of them are expected to increase spend in digital media, such as e-marketing.
We are at the crux of this digital revolution and there is no escape. It’s driven by the community, content and commerce; so let’s call this the 3Cs. Digital marketing involves the community, as organisations would deal with the aspect of engaging customers, creating awareness about their offerings and providing customised services. Content, as it is necessary to provide relevant information to customers, drive traffic and improve user experience. Commerce, as organisations need to optimise spend, generate revenue and customer loyalty through online engagements.
Smart companies have understood the 3C model and are leveraging it to their advantage. So while we are witnessing a ripple effect with many e-commerce companies mushrooming in the last two-three years, these companies may have to be prudent and invest in analytics to better understand their evolving customer needs and drive sales. Recently Indian and MNC e-commerce companies and start-ups have for the first time recruited students from premier business schools. A lot of them are students with an understanding or operations research and analytics. The trend is an indicator of the importance of analytics in e-commerce.
The trend is here to stay. Online stores with high volumes of customer engagements and behavioural data create the perfect environment to apply advanced analytical solutions. This helps elevate performance of key store functions, such as
- Demand generation: driving quality traffic to the store. Data analysis helps understand the key marketing activities, driving traffic to the web store and accurately forecasting web traffic.
- Web-store experience: online customisation for enhanced user experience. Analytics helps in areas such as click-stream analysis, cart abandonment analysis and experimental design to help increase click-through.
- Supply chain operations: order fulfillment and inventory optimisation. Analytics solutions could include standard performance measurement framework and managerial dashboards to manage daily store operations.
- Customer support: customer tech and warranty support centre. Customer surveys and call-center analytics can help identify problem areas, drive down costs and build customer relations.
The new-age customers are well informed and empowered. While there is a huge opportunity, there are many challenges in engaging with them as well. The challenge for organisations is to be a part of the customers’ conversations involving their product and to influence their choices. Hence, the adoption of digital channels such as social media, e-mail marketing, online search and display ads is growing steadily. Start-ups and established MNCs are moving in to provide various online services and bridge the gap with new age customers in this burgeoning space.
India is all about economies of scale. A huge population and access to the internet among the upwardly mobile and even the tier 2 markets has opened up avenues as never before. Taking advantage is an Indian e-commerce major that recently announced its plans to increase headcount in India over the next six months by adding 500 people to their existing 1,000 people team.
Apart from addressing customer reach-out through analytics, creating a brand experience is equally important. Marketers who can proactively engage customers can expect to increase the circle of influence many times over by making these “engaged customers” their brand advocates. E-commerce makes benefits better; business is open 24/7 and not limited to any locality, there is better inventory management and better control on operations. A case in point in the Indian context is ‘cash on delivery’ promise by a major e-tailing company — this is an interesting concept catering to the demands of the Indian customers who may not want to use credit cards to make payments before the goods that have been ordered online are delivered. Some of them may not even know how to make online transactions.
Lastly, it is critical that customers not only continue to use a specific product/service but also try out other offerings from the same brand. That can only be achieved if customers are satisfied with their previous experiences. Satisfied customers act as a company’s covert sales force and significantly reduce the cost of acquiring new customers. However, influencing customers enough for them to champion a product or service requires a scientific approach, the right marketing mix and deep behavioural insights to segment them and understand their unique requirements and, above all, a test-learn-optimise culture.
One needs to determine the drivers of loyalty — it could be rational, emotional or brand-image led. Internally available data, assessing customer sentiment through social media, using analytical tools to analyse unstructured and conversational data will help gain insights, create an effective targeting engine to offer the most relevant products and services to customers.
While some companies prefer to grow organically, many are seeing value in investing early in nurturing an analytics ecosystem within the organisation and developing various advanced analytics solutions to address customer needs. Digital channels enhance an organisation’s ability to reach its target customer in the most effective and efficient manner; however, analytics helps companies measure the previously immeasurable to make better decisions faster.
The author is worldwide head and vice-president, HP Global Analytics