Turning Customer Interactions into Money: Using Predictive Analytics to Achieve Stellar ROI

white paper | 2008
Turning
Customer
Interactions
into Money
Using Predictive Analytics to Achieve Stellar ROI Turning Customer Interactions into Money: Using Predictive Analytics to Achieve Stellar ROI
Turning Customer Interactions into Money
Using Predictive Analytics to Achieve Stellar ROI Results
"Prediction is very difficult, especially if it's about the future."-Niels Bohr
f only the famous physicist Niels Bohr had They have specific, well-defined business goals,lived to experience the power and potential of measure both direct and indirect return onIthe Internet age. Perhaps, then, he might have investment (ROI) benefits, and make the analytic Companies that arehad something different to say about the con- results easy to access and act on for all competing on predictivecept of predicting the future. While the Internet employees. In doing so, these companies analytics have well-and new technologies aren't crystal balls, the enhance existing business processes or create defined goals and sheer wealth of information that can be gleaned new actions and activities to realize positive measure direct andindirect ROI benefits.about today's customers-and then applied results on several fronts. They are able to buildtoward anticipated future behaviors-is stagger- their business by profitably acquiring, growing,ing. Failure to take this information into account and retaining customers as well as mitigatingis like leaving money on the table, or worse. You possible downside events by identifying cases ofcould simply hand it over to your competitors. fraud, and creating models to help manage risk.Today's smart companies use data, and the The companies that are the most productiveinsight gained from it, to predict customer in their use of predictive analytics start with abehavior. These smart companies then leverage targeted, specific business objective-such asthis predictive knowledge to introduce new reducing attrition with high-value customers.processes and actions that drive changes in They gather qualitative and quantitative datacustomer behavior to increase enterprise around those customers, build models to pre-profitability and mitigate risk. dict why and when they churn and then createCompanies that are successfully competing on a strategy to meet these customers' needspredictive analytics share some key characteristics. before they choose to leave. Using the resultsfrom a focused success story as a proof point, Companies Featured the organization then has the credibility tobranch out into other parts of the enterprise.Cablecom (p.4) discovered what its customersreally needed, resulting in a reduction in churn And the proof points can be extremely power-from 19 percent to 2 percent. ful. In one example, American Airlines usedRoyal & Sun Alliance (p.5) extracted and ana- predictive analytics to better understand thelyzed feedback from their motor insurance customers to improve retention and supplier relationship between various customer seg-performance. ments and differential flight patterns. TheyT. Rowe Price (p.7) defined customer segments achieved sky-high ROI results of nearly 1,200and refined its client interactions to meet the percent in a period of two months1.needs of high-asset customers (i.e., those withmore than $1 million in assets). With the rapid rate of change in the globaleconomy, the need for customer knowledge
©2008 Carlson Marketing Worldwide. Peppers & Rogers Group is a division of Carlson Marketing Worldwide. All rights protected and reserved. 2Turning Customer Interactions into Money: Using Predictive Analytics to Achieve Stellar ROI
and predictive insight has never been more that successfully implement predictive analyticsurgent. The competitive necessity for predictive will drive profitable growth, enhancing theiranalytics programs must become a priority for bottom line. senior-level executives, sales managers, mar- This whitepaper makes the case for using keting directors, and anyone else in a company predictive analytics as a catalyst for that growth.who is ready to look past short-term results It includes best practices from several globaland into a profitable future. Busine... [download for more]