Features

Behavioral analytics: The secret ingredient for a better cake

Written on
Nov 12, 2009 
Author
Brian Kelly  |

cake_small.jpgADOTAS – Of the 20,000 visitors who clicked around your website yesterday, how many were of high value to you? What were the most effective paths that led them to your site? Of the $500,000 in promotion-driven sales yesterday, how many shopping baskets were profitable? Which customers converted and why?

You are already collecting terabytes of customer data and you’ve already invested in web analytics, CRM, and other data collections systems that provide pages of reports. But, what does it take you to get the insight to answer these questions? Are you really getting insights into why your customers behave the way they do, and what you should do next to capitalize on it?

If you’re like most companies, the answer is no. Why? Because you’re missing the secret ingredient in the recipe for success: behavioral analytics.

Just like baking a cake, building a company or marketing campaign requires a complete list of ingredients. You need that special something to separate a good from a great.

With a cake, maybe it’s a little lemon zest or a sprinkle of cinnamon. To separate your business from the competing sameness, the secret is in knowing your customers through and through and knowing it fast. Understanding what they want, why they do what they do and how, is a great indicator of what they will do next. And that is exactly what behavioral analytics adds to your business’ recipe for success.

Your existing business intelligence (BI) solutions are probably your first resource for trying to understand how to respond to your customers. However, BI tools tend to be super expensive, complex to use and either require a PhD and extensive training or a long, tedious “query request” process that puts days if not weeks between you and your requested report.

BI tools also tend to generalize your results, lumping customers into big buckets of singular behaviors, such as weekend shoppers or first-time website visitors. It’s exactly this type of generalization that waters down your customer insights, forcing you to take a shotgun approach based on what happened, rather than a targeted approach based on what will happen next.

Continuing the cake analogy, it’s like trying to eyeball those 4-1/2 cups of flour rather than measure them precisely. Well now it’s time to go back to the store and buy a measuring cup.

Your channel-specific data collection tools are also another great source of data, but the insights provided don’t go very deep. Web analytics tools, for example, collect very detailed information about your web audience’s behaviors.

However, web analytics is focused on the operational aspects of your website –- how many visitors came, how many people clicked this link, how many pages did people view. And while the valuable behavioral insights are hiding in the collected data, web analytics tools resort to dashboards and high-level views of website performance, not visitor behaviors. Try baking a cake with your web analytics dashboard, where you can only set your oven to red, yellow or green and not a specific temperature.

Want a better cake? Just add behavioral analytics –- your marketing measuring cups, your dash of online spice and your sales sugar. Behavioral analytics takes the data that you’re already collecting and helps you uncover the valuable but hidden customer behaviors that can turn your flat marketing campaigns, flavorless websites and bland promotions into blue-ribbon prize winners.

Look to the future, not the past

Behavioral analytics is a relatively new area of BI that moves the focus from the operational, “what happened” reports and allows you to drill down into the specific behaviors of your customers, telling you what to do next and how to do it. While it’s important to know that your website drew 20% more visitors this month over last month, that’s not going to drive your next marketing campaign or inform sales on how to engage with first-time customers.

Behavioral Analytics does just that, giving you insights to know that the 20% increase was driven by a combination of two marketing campaigns, and that campaign respondents were highly likely to view 12 more web pages than the average visitor, and that they were then highly likely to return to your website twice within the next 10 days.

That is the secret ingredient: being able to segment your customers or visitors by behaviors, and then being able to quickly respond and react to those behaviors.

Behavioral analytics allows you, not a statistician, to ask complex questions of your customer data and discover what drives people to certain outcomes, and then gives you specific insights into how to drive other customers toward -– or away from –- that same outcome.

Don’t forget the cross-channel mix

Behaviors are complex, especially when considering human behavior and the limitless internal and external forces at play. True behavioral analytics allows you to integrate customer data –- say online and off-line retail sales -– to better understand your cross-channel customers.

Behavioral analytics goes further by providing a relevance score to each of your analyses, so that you can instantly see that customers who have purchased a widget in response to campaign X are three times more likely to purchase a second widget with campaign Y than with campaign Z.

To make a great cake, you can’t just throw together some flour and eggs and expect it to wow your guests. Beyond the precise measurements and the right recipe, it’s the sprinkle of cardamom or the sprig of mint that turns a recipe from blah to best cake ever!

So stop relying on gut feel to drive your customer-focused initiatives. Get the right tools, get the right data and mix in that secret ingredient of behavioral analytics to really move the needle in your business.





Brian Kelly is CEO of Quantivo and is a 20-year veteran in enterprise software development and marketing with primary focus on Analytic and CRM solutions. Kelly founded and was CEO of Kelly Information Systems (acquired by Peoplesoft), which pioneered business intelligence applications for the retail industry. Prior to that, he was with Teradata where he designed and developed large-scale data warehouses and BI applications for some of the largest retailers in the US. Prior to Quantivo, Kelly was EVP of Products at Kana where he was responsible for worldwide marketing, product management and industry solutions delivery. He came to Kana from Broadbase, where he ran product management and engineering and directed the company’s highly successful IPO and managed the acquisition and integration of several technology companies. Kelly holds a BS degree in Computer Science from the University of Cincinnati.

Reader Comments.

Great article! But don’t forget about customer experience analytics –if someone is on the site a long time, they may be unhappy because they have not found what they are looking for. Tie credible customer satisfaction and experience metrics in with the mix, and the BI can get even more predictive.

Posted by Rhonda | 10:12 am on November 13, 2009.

What a lot of good sense in one place! The recognition that it’s the customers who you need to analyse not the web site is really central to our perspective – and that’s why we provide tools to capture behaviour, transform this into customer and business events and provide via Web Service or SQL interfaces to allow your tools (BI or other) to exploit the value you so rightly cite!

Posted by Malcolm Duckett | 4:40 am on November 30, 2009.

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