How do you know if your customer analytics is having an impact? Forrester sets out to examine just that in a recently released report.

Customer Intelligence

The report, entitled The State of Customer Analytics 2012, is the result of research carried out by Forrester between February and March this year when 90 customer analytics professionals were questioned about customer intelligence practices in their enterprises and  the adoption of customer analytics techniques across their enterprises.

For the sake of this report, Forrester describes customer analytics as a set of methods, tools and metrics used to analyze customer data with the goal of better informing enterprises in their quest to win and hold new customers.

The research was not limited to the US, but also included responses from Europe, and even outside Europe, and was carried out acrossthe banking, finance and insurance (14%), utilities and telecommunications (14%),and business services (12%)verticals.

Within these verticals, Forrester found that survey enterprises are largely using customer analytics to:

  • Improve the data-driven focus of the organization: Enabling easier analysis of customer actions and data to provide data driven decision making. In the past this has been limited by the amount of data available. However, with new digital technologies the amount of data available is limitless.
  • Improve customer satisfaction, retention, and loyalty: When analytics are used on customer data it improves customer satisfaction (51%), retention (51%) and loyalty (40%) -- key drivers of adoption.

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Forrester State of Customer Analytics 2012: drivers and obstacles

Data And Skill-Related Challenges

However, while those surveyed said they were happy to use analytics to improve the customer experience, they admitted that they are having problems with:

Data management, integration and quality

The integration and management of data from multiple sources is still a major problem (54%) while ensuring data quality is also a problem for half of the respondents. This is only going to get more difficult as more customers use more devices to access more channels.

Human Resources

According to the research, many companies are finding it difficult to find staff to drive the adoption of customer analytics (37%) as well as reporting a general lack of resources to apply analytics. Hand-in-hand with this the inability of many current analytics users to communicate their findings to key stakeholders.

Customer acquisition

The research also found that customer analytics is also being used largely as a way of ensuring customer wins, with increasing opportunities to improve engagement and on-boarding programs. This is reflected in the way enterprises are assessing the impact of customer analytics on business, marketing and customer metrics. Enterprises track the impact of customer analytics across:

Learning Opportunities

  • Business metrics: revenue, share of spend and brand-orientated metrics
  • Marketing metrics: campaign performance metrics around customer wins and lift
  • Customer metrics: customer acquisition, retention, loyalty, satisfaction.

Forrester says that in in this respect its research shows:

  • Easy tracking: Users rely on easy-to-track metrics like campaign lift and response. However, the focus on volume based marketing metrics means that enterprises lose the opportunity to track marketing at an individual customer level or to analyze how marketing campaigns add to the value of the business.
  • Customer acquisition: Retention, marketing effectiveness and engagement are the most important result of the use of customer analytics. However, Forrester warns about over reliance on this and says that enterprises need metrics to measure the health of the business.
  • Customer engagement: This appears to be at the bottom of the list of metrics that enterprises user customer analytics to track. Forrester describes customer engagement as one of the lost opportunities of customer analytics; with is enterprises should be able to gain deeper insights into how customers react with content and messaging across various touch points.
  • Predictive analytics: Adoption of predictive analytics is a recent trend with 40% saying that they have been using if for less than three years, with descriptive and business intelligence reporting used for more than 10 years.

Social Analytics Leads Future Adoption

However, enterprises are experimenting with other techniques as well and will continue to do so as the variety of data available expands. Forrester found that 14% are planning to use next-best-action techniques in the next year, and 13% of respondents are experimenting with loyalty models.

Although customer analytics relies on individual customer response, customer experience management professionals say they are looking to social media as a new source of customer analytics. In the long term, 17% are planning to use social analytics in the customer-context. However, a balance between using social data and social analytics to measure the effectiveness of marketing campaigns needs to be struck.

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Forrester State of Customer Analytics 2012: future adoption


That said enterprises continue to support marketing-related analytics especially in terms of trying to gain efficiencies in marketing spend.

Based on these pointers, Forrester concludes that while customer analytics professionals are focusing on the right type of analytics and techniques in general, they need to extendtheir use beyond traditional use cases. To do that customer information professionals must:

  • Create a holistic customer analytics solution framework that uses customer analytics models across a wide number of applications tying a wide number of projects together.
  • Include unstructured data sources into customer analysis that embrace social media as an effective way to engage customers.
  • Move outside the customer analytics ecosystem and partner with those who have other expertise in analytics technology, analytical services, and data