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Behavioral Analytics: Find Out How To Use Behavioral Analytics To Drive Profits Today
Behavioral Analytics: Find Out How To Use Behavioral Analytics To Drive Profits Today
l a r o i v a h Be s c i t y l a n A
Learn to:
Turn customer data into action Find profits in customer patterns Apply behavioral insights today
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Behavioral Analytics
FOR
DUMmIES
These materials are the copyright of Wiley Publishing, Inc. and any dissemination, distribution, or unauthorized use is strictly prohibited.
Publishers Acknowledgments
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Table of Contents
Introduction....................................................... 1
Conventions Used in This Book ............................................... 1 Icons Used in This Book ............................................................ 1 How This Book Is Organized .................................................... 2
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Behavioral Analytics For Dummies Chapter 6: Ten Revolutionary Benefits of Behavioral Analytics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Keeping Up with Customers ................................................... 42 Maintaining Speed with So Much Data .................................. 42 Combining Different Data with Ease ...................................... 42 Building Business Strategies .................................................. 43 Defining Business Tactics ....................................................... 43 Segmenting Customer Data .................................................... 43 Using User-Friendly Analytics ................................................ 43 Getting Low-Cost, In-Depth Insights ...................................... 44 Taking Advantage (Truly) of Cloud Computing ................... 44 Expanding Data Enrichment Capabilities ............................. 44
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Introduction
f youve ever wondered why your customers do what they do, then youre going to love the world of Behavioral Analytics. Youll also love the insights this book offers about the principles and tools you can use to discover behaviors among various customer groups. And youll be intrigued by the reasons we believe Behavioral Analytics will revolutionize Business Intelligence. Behavioral Analytics may sound big brotherish, but it really isnt. Behavioral Analytics relies on the data your company collects to uncover behavior patterns that help you get more customers, keep the customers you have and keep them spending and grow your revenues and profits. In this book, you find out how Behavioral Analytics can offer up information that you cant easily or quickly obtain any other way. Welcome to Behavioral Analytics For Dummies.
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The chapters are designed to stand alone, so if youre dying to know about how to apply Behavioral Analytics, head straight to Chapter 4; if you want to choose a Behavioral Analytics solution, turn to Chapter 5; or just turn the page and keep on going.
These materials are the copyright of Wiley Publishing, Inc. and any dissemination, distribution, or unauthorized use is strictly prohibited.
Chapter 1
uman behavior is dynamic. Some people are creatures of habit and cautious. Others are spontaneous risk-takers. Some lead, others follow. And, to add to that, any random event can completely change peoples actions. What you dont know about human behavior could be hurting your business. But dont worry. You dont need to be a psychologist to take actions that drive more revenue to the bottom line. You just need to unleash the power of Behavioral Analytics. When you do, youll get insights into customer behaviors that help you get more of the right customers, keep the customers you have (and keep them spending), and grow your revenues. In this chapter, we explore the concept of Behavioral Analytics, how companies like yours are using it to make better, more profitable business decisions, and how to get started down the road to valuable behavioral insights. What you discover is that, unlike other analytics tools that require hours of training, Behavioral Analytics is easy enough for anyone in your organization to begin picking up on actionable insights that result in true business value.
These materials are the copyright of Wiley Publishing, Inc. and any dissemination, distribution, or unauthorized use is strictly prohibited.
These materials are the copyright of Wiley Publishing, Inc. and any dissemination, distribution, or unauthorized use is strictly prohibited.
cookie sales. In other words, with milk as the focus, there isnt a high affinity to cookies. The measurement of that affinitys strength is only one example of what separates Behavioral Analytics from just analytics. Imagine how long it would take a grocery store chain to come to that conclusion by manually wading through sales reports in search of this pattern. This insight might be forever buried, and opportunities to sell more cookies through strategic promotions could be missed. Behavioral Analytics combs through billions of records in a flash to offer these types of valuable insights.
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CRM analysis
Customer Relationship Management (CRM) is a critical component of your companys success. Behavioral Analytics helps you discover which interactions and channels drive conversions, purchases, returns, and support calls. With this information, you can learn to predict and guide your customers toward the desired behavior or the most cost-effective channel.
Loyalty analysis
Its easier and cheaper to keep a customer than to get a new one. Behavioral Analytics reveals the attributes that make customers loyal, how their affinities differ, and what strategies are most effective at acquiring, retaining, and keeping those customers active.
Marketing effectiveness
Stretching your marketing budget allows you to reach more customers with your message. Behavioral Analytics offers insights that help you optimize marketing strategies and tactics by segmenting customers by behaviors, identifying the most effective campaigns, and better targeting various messages, offers, and channels.
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Merchandising planning
Merchandising is half art and half science. Behavioral Analytics helps you understand what products are selling in combination with other products, who is buying your products, and other insights that help you improve stocking, layouts, and buying strategies.
Promotion effectiveness
Youve already learned from experience that some promotions are more effective than others but do you know why? You can focus your promotions with laser precision by understanding customer response behaviors across segments, channels, and categories, and exploiting that impact on transaction size, sales, and margins. Heres a key point of differentiation: Most companies segment on standard demographic data, such as age, gender, company size, region, and so on. The truth is those demographics may not have any correlation with the behavior you desire. Behavioral Analytics allows you to segment on any combination of aspects across both demographics and behavior.
Purchase analysis
Your sales reports show you how much of any given product or service your customers are purchasing. Behavioral Analytics helps you discover the patterns within those purchases, from market basket analysis to purchases over time to the most profitable geographies and store layouts so you can leverage their relationships to different customer segments.
Web Analytics
Web Analytics collects valuable information about what visitors are doing on your Web site. But when you combine the insights of Web Analytics with Behavioral Analytics, you uncover factors that impact online behavior, traffic patterns, and monetization, or making money. You also identify which content drives more traffic, more clicks, and more sales.
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Getting Started
With so many benefits to Behavioral Analytics, you are probably eager to see these tools in action. Before you can run an analysis, though, you need to prepare your data and your team for what lies ahead. Here are three simple steps to get your company on the road to business insight success.
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Chapter 2
ata analytics is nothing new. Data mining has been around as long as statistics, but the concept started to gain widespread momentum in Corporate America in the 1990s. Thats when software companies began developing sophisticated technologies to sift through what they then considered mountains of data with much more depth than ever before possible. Since then, weve seen the rise of Business Intelligence (BI), specific types of BI such as Predictive Analytics, and specific BI applications such as Web Analytics all steps toward the advent of Behavioral Analytics. Plus, weve seen the amount of data collected increase exponentially. Indeed, there are many different approaches to data analytics, and each one offers valuable insights. But, Behavioral Analytics goes a few steps beyond reporting statistics to analyzing behaviors and even the drivers of those behaviors. In order to fully understand the benefits of Behavioral Analytics, its important to get the big picture of the overall data analytics landscape and where Behavioral Analytics fits into that picture. Behavioral Analytics doesnt do away with BI, Predictive Analytics, or Web Analytics, rather it works with
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Advanced BI tools require monolithic, proprietary, massive applications that require PhDs and statisticians to code complex models to answer even relatively simple questions. Larger companies require you to submit formal analysis requests that take days to filter through the queue. Even then, youve just answered one question. By that time, the opportunity to grow revenue may be long gone!
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From this data, companies can optimize their Web sites in an effort to guide visitors to desired destinations. For example, if a specific landing page is getting lots of traffic but not many registrations, the page may need a more compelling offer or a better design. If most visitors are entering the site from a specific referring site, the page can be dressed up to cater to that sites demographics.
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Millions of Records Figure 2-1: A behavioral database only counts actual patterns, requiring far less storage than other database types as the size of the data increases.
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Software-as-a-Service solutions
With massive amounts of data to be analyzed, you need a scalable, highly-flexible infrastructure. Cloud computing is ideally suited! Cloud computing is a style of computing that relies on dynamically scalable and typically virtualized resources provided as a service over the Internet. It allows the scalability to handle billions of records terabytes of data and you only pay for what you use. For processing power, you can turn processors on or off at will, enabling you to run Monday morning or end of quarter reports quickly and easily, but then not pay for that processing power when it isnt being used. Software-as-a-Service (SaaS) has many advantages over traditional on-premise software, and most companies are actively involved with SaaS or considering SaaS solutions. In the BI and analytics market where expensive and hard-to-use solutions are frustrating managers and business analysts alike, SaaS solutions offer alternatives that are cheaper, easier to deploy, and easier to use. Beware of the SaaS BI vendors who are just moving decades-old relational technologies into the cloud. While they may take some cost out of the equation, their motive is to apply more and cheaper storage and computing power to an old solution. Think of it as putting a new engine in your 1984 Chevy Chevette. It may get a little bit faster, but its still not going to win any races. In other words, SaaS BI tools that arent specifically built to embrace the cloud may offer slightly faster results than traditional BI, but the old underlying technology still limits the speed.
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Chapter 3
hen you enter the world of Behavioral Analytics, youre confronted with new concepts, new opportunities, and new ways to realize new possibilities with your customer data. By interacting with the data directly, you can discover, explore, and share insights with others in ways that were never possible before. Thats the value proposition of Behavioral Analytics. Driving value and Return on Investment (ROI) with these tools depends on first realizing the unique value of the technology itself. As you wade deeper into Behavioral Analytics waters, youll begin to not only realize the value of these Business Intelligence (BI) tools, but youll also be amazed at the types of actionable insights you will get about your customers behaviors insights that will guide you toward decisions that help you optimize the relationship between your customers and your company. In this chapter, you discover the power of affinities, or associations, between transactions, how to look into the future through the lens of Behavioral Analytics, and how you and anyone in your organization can begin putting these tools to work.
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When you understand what your customers tend to do in any given situation or after a given set of actions, you can predict what they will do next time and make changes as necessary to either facilitate or avoid those actions. Indeed, Behavioral Analytics yields nuggets of information that can drive your entire business strategy to more effective heights.
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Chapter 4
hen it comes to any type of data analysis, you want actionable insights. You want to apply the statistics, comparisons, and patterns to get new customers, keep the customers you have, and grow profits. Behavioral Analytics positions you to accomplish all three goals. Behavioral Analytics software does the heavy lifting for you, analyzing mountains of data that offer insights into areas about which you may not even have thought to inquire. Once you glean those insights, though, its up to you to put them into action. The good news is anyone in your organization can wield these tools to look like an analytical superstar because Behavioral Analytics is the user-friendliest of BI tools. In this chapter, you see how to put your Behavioral Analytics results into action. That may mean optimizing your online marketing, monetizing your Web site visitors, improving
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person there. You can even find out what factors are increasing or decreasing conversion rates and what is driving customers away. Behavioral Analytics also identifies patterns and trends in your Web Analytics data that reveal high-value behavioral information, such as identifying sequences of pages viewed by visitors who convert to customers and how those sequences vary over time, geography, and similar criteria so that you can increase conversion rates. You can also identify areas of stickiness and use those to drive traffic to other areas; optimize your ads and offers by understanding how placement, time of day, and customer profiles affect click-throughs; and increase session length and page views by discovering common traits of returning visitors and what keeps them on your site.
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Behavioral Analytics can get you answers to questions about which products sell together and how often; what top products are attached to promoted items, by frequency, count, basket size, and margin; and optimal product assortments and how they vary depending on the store location and demographics. You can also get insights into customer behavior when you are out of stock on some items in a set. Do customers switch to a different set, do they purchase online, or do you lose the sale? You can even uncover the key factors related to underperforming or overperforming stores in specific product categories and learn what new and emerging purchasing patterns you can capitalize on in your store layouts. With Behavioral Analytics you can freely explore your pointof-sale transactional data, understand in detail the behavioral patterns of your customers and their impact on product category performance, and make decisions that increase revenue and margin by tailoring product assortments to local demand instead of using a one-size-fits-all-approach. You can also optimize inventory levels by understanding how out-of-stock situations impact your bottom line, and quickly identify and replicate best practices across stores. Arming your merchants at all levels with the ability to gain the insights they need in order to make smart decisions every day is not just a best practice, it is good business.
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Chapter 5
n the world of Business Intelligence (BI), Behavioral Analytics is a relatively new segment. While industry experts predict an explosion in the years ahead with new start-ups emerging on the scene, the number of vendors to choose from is still relatively few. Still, not all vendors offer the same level of technology. Choosing the right vendor is vital to your success, which is what this chapter is all about.
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Is this a pure-bred Behavioral Analytics solution? Look for technology designed to analyze behaviors, not just the same old technology trying to be applied to this new area. There are tons of analytics vendors out there tucked into neat little niches. Be sure that you arent trying to put a round problem into a square hole. In order to get the customer behavior insights you need, you need a vendor with insightful Behavioral Analytics tools. Not just any analytics vendor will do.
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Chapter 6
ehavioral Analytics is poised to revolutionize Business Intelligence (BI). In fact, the revolution is already brewing in the boardrooms of companies looking for deeper insights into customer behavior. No longer is it enough to merely understand what a customer did or try to predict what he might do. In order to walk customers down the path to your desired action, you need to understand their behavior patterns and fast.
In this chapter, weve put together ten reasons why Behavioral Analytics is revolutionizing BI. If thats not enough to convince you, read some case studies from reputable companies in the Behavioral Analytics space, and youll see these reasons come to life in practical applications.
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Jennifer LeClaire is coauthor of several books, including Web Analytics For Dummies. She is a new media entrepreneur, a guest technology analyst for CBS Radio, and a columnist at Newsfactor. com. Jason Rushin, having spent 15 years in technology and marketing, has written numerous articles and papers.