Big Data is working hard to get into the minds of customers and uncover accurate information about how the customer really feels, thinks and responds to products, services, advertising and brands. But like eager field-scientists exploring a verdant new continent, companies attempting to navigate and leverage Big Data risk getting lost in the weeds.
Now — still early on in our understanding of Big Data's true impact — is the time to avoid the most common mistake that companies make when embarking on tech-based research about customers: losing their way amidst all the complexity of systems issues, technical possibilities and implementation snags. Instead, when it comes to Big Data, your firm must stay focused on the business outcomes you want to achieve. And in many firms, the most promising outcome is unleashing vast stores of hidden wealth their customers can create. Thus, the most important question regarding Big Data at almost any company is: How much are your customers really worth?
Uncover the Hidden Wealth of Your Customers
It's a remarkable fact that most companies can tell you to the penny how much their furniture is worth, but don't have a clue about the real value of their customers. Neither do their bankers or investors. And of course, customers are the basis on which firm value rests.
The most forward thinking companies are adopting some form of Customer Lifetime Value (CLV) to assess the value of customers to their bottom lines. But by now, CLV is highly limiting and narrow — it only assesses the value resulting from a customer's purchases of your products and services. And in today's increasingly networked, social-media-infused reality, that's missing a whole lot of customers who can generate value far beyond anything they buy. Purchasing is just one way — and often not the most lucrative way — customers can create value for your firm.
That's because customers are your most credible and persuasive marketing and sales resources — much more knowledgeable about buyers' needs, and much less expensive than the resources you're probably currently using to grow your business. Big Data needs to capture this reality and focus your organization on it.
Expand the Value You Harvest From Customers
Consider a customer we'll call Catie. She's a solid, if modest, purchaser of your products and services. Let's say she purchases $6,000 per year resulting in a profit of $2,400 (feel free to use your own numbers for a solid if modestly profitable customer in your business). Her CLV might be $7,000 or so and that's where even companies with advanced analytics stop.
But Catie blogs regularly and participates in a variety of social media and professional networks — networks that have plenty of potential buyers. And she's respected. She's also interested in speaking at her professional association meeting — and would be willing to talk about the success she's enjoyed on an important project — success that your product or service helped to make possible. She also scores high in your Net Promoter Score surveys, but at the moment (like most "promoters") she's never actually referred a profitable customer to you. That's because you haven't reached out to her to do so. And that, in turn, is because these characteristics of Catie, and the potential value they would bring, haven't shown up from Big Data.
By the way, Catie is not fictional. She's a composite of actual customers, such as Salesforce.com's MVPs (Most Valuable Professional) and SAS Canada's "Customer Champions" and other "Rock Star" customers that I write about in my book, The Hidden Wealth of Customers.
Now suppose you identify her as a modest buyer, but a high-potential referral and lead-generating source. So you engage her by giving her speaking opportunities, you co-present at her industry association, host a webinar featuring her, invite her to local customer forums, and give her a leadership role if she's interested. And suppose as a result of these activities over the next year, Catie generates four direct referral customers, another 17 additional leads who become customers (remember, unlike the webinars and speeches by your executives, hers are much more credible to buyers because she's one of them). That makes her referral and influencer value to your firm (after allowing for other factors that influenced purchase decisions, along with the cost of supporting Catie's advocacy) equal to $33,080 — or 13.8 times her value as a purchaser.
A primary goal of Big Data must be to show you this potential, and to record it as it's realized.
Expand the Value You Create for Customers
Improving the customer experience is a fine idea. But companies often take it to extremes. It's always a good idea to look for new ways to create value for customers. But focusing only on doing so through your product or service is entirely one-dimensional. The hard reality is that your product or service, however great it is — however much it helps your customers get a job done or provide an enjoyable experience — is likely just not that important to their lives in the grand scheme of things.
So let's take customer value up a notch, to a higher, richer dimension. SAS Canada, for example, gives its Customer Champions opportunities to take leadership positions in its customer communities, increasing their professional networks and building their professional reputations. Salesforce.com seats its MVP customers in the front row of its massive annual Dreamforce event, and keeps them updated with important industry information. In our example with Catie, you can help her build her professional visibility with speaking and webinar engagements, and increase the reach of her blog by providing "insider" information that other bloggers don't have access to. Companies are creating much greater satisfaction than "getting a job done." They're helping customers build social capital. They're improving customers' lives. Other leading firms such as Procter & Gamble, Lego, and Hitachi Data Systems engage in similar activities.
Does your data capture such opportunities? Does it show which customers are influential on the Web? Which are plugged into and respected by networks attractive to your firm? Does it reveal customers who want to gain recognition in their peer groups and who have great stories they can tell (based in part on help from the product or service you provide)?
Make sure you're not getting bogged down in Big Data. Instead, focus it on unleashing the hidden value of your customers.
- How to Find Out What Customers Will Pay
- How One Company Uses Customer Data to Drive Sales
- Use Big Data to Predict Your Customers' Behaviors
- Does the 18-to-49 Demographic Matter Anymore?