technology
Developing a better insight into their customers through the use of business analytics can give
organisations amuch-needed competitive edge, says Distinct Consulting’s Darren O’Neill. He spoke to Grainne Rothery
A number of factors have combined in recent years – increasingly savvy and demanding customers, lack of true differentiation between products and services, and poor customer sentiment – to make the job of acquir- ing and retaining business about as difficult as it could get for many organisations. However, one way that businesses can improve their chances of success, according to Darren O’Neill, partner at Distinct Consulting, is by systematically using analytics to bet- ter target their services and products based on individ- ual customers’ needs. “A lot of the traditional differentiators – service,
product and some sort of geographical advantage – that organisations would have had in terms of cus- tomer acquisition and retention have somewhat been eroded,” he explains. “Over the last number of years, prices have been driven down, consumer sentiment is very negative and there’s not a whole lot that differen- tiates – products are very similar if you look across the different service providers and retail brands.” Organisations can distinguish themselves by better
understanding their customers’ needs and responding to these, he says. This can mean determining their atti- tudes to, for example, service, customer contact, add- ons and price. “And to do this, you really need to have a lot more customer data that you can analyse and therefore make better decisions about how you handle your customer.” O’Neill believes that now is a critical time to consider
developing a business analytics programme. “The next number of years are going to be particularly difficult in this country,” he says. “People are effectively going to sit on whatever money they have – they’re not going to spend as easily as they may have done before. However, when this recession passes, and inevitably it will, con- sumers will be more sophisticated in terms of how they buy. “I think organisations need to prepare themselves
and start understanding their customers better so that when we start coming out of this recession they can really capitalise on having laid down the groundwork. If you don’t really understand your customer, how do you shape and target your products, your service and your prices? How do you differentiate yourself?”
According to O’Neill, the insurance sector, which
currently has a 22pc switching rate, is a prime exam- ple of a category where putting the customer at the centre of the business is crucial. “A lot of insurance products have become very commoditised in the last number of years,” he says. “It’s up to insurers to really think about why they want customers to stay with them and what they need to do to increase their reten- tion levels and acquire customers in the first place. “There’s a real need out there for organisations to
better understand their consumer behaviours. You can only do that by collecting more data on customers and conducting analysis of that data to better understand their needs, wants and potential future behaviours.” While the insurance sector in Ireland could do better
in this regard, telecommunications companies have tended to use analytics more effectively. “All the main- stream telecoms companies in this country would use propensity models. They collect huge amounts of data on their customers. They would have very segmented views of their customer base and target products accordingly. They’re constantly looking at their cus- tomers, reviewing their segments and examining how they target and place products and plans into those dif- ferent segments.”
Barriers to entry For smaller companies, lack of data is one of the main barriers to getting into business analytics, says O’Neill. “For bigger organisations, meanwhile, there may be silos across different functions. In an insurance compa- ny, for example, the claims function would have a data- base and application that doesn’t necessarily talk to the underwriting function, which doesn’t necessarily talk to the sales and marketing function. Having disparate systems within companies is a classic problem for banks, insurers and large government departments.” The next potential problem, he says, is the cleanliness
or quality of the data. “Another barrier would often be the cost of implementing an enterprise-wide analytics capability. But you can do this in a more tactical way, where you buy it as a service and run it within a specific function where you have a certain goal in mind. Because it’s done on a service basis the company doesn’t need to
Winter 2010 Irish Director 61
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