Tag: data analytics


How to Gain Customer Insight… The Right Way

Many mid-sized businesses correctly worry that mistakes in new product introduction or revisions can be very risky. Customer dissatisfaction often results in shifting market share.

The price of being wrong is very high.

When faced with the challenges inherent in customer perceptions of new product introductions or revisions, companies, especially mid-sized companies, have few good choices:

Make a well-informed guess about product features and launch; use online surveys and their inherent weaknesses; or use expensive, costly, and time consuming focus groups.

We’ve developed a new way to effectively gather information that is accurate, inexpensive, and dynamic to the day to day shifts in your business. We would be glad to demonstrate in a no-obligation conversation and assessment how this may work for you.

Aside from being expensive, traditional focus groups reflect a reaction to a snapshot in time, and only get responses relevant to that snapshot.  The participant interaction has to be well managed to avoid a domineering personality and group makeup is limited to a geography and/or a collection of people willing to devote time to the process.

Real time moderator skills are essential as the group only persists for a couple of hours and nuanced followup is often not possible.

This “single-shot” qualitative approach can provide impact, but is limited in that insights that were relevant at a time can quickly become obsolete, follow up is not possible, and participant segmentation is not easy.

At Keane Consultants, we turn the traditional model on its head. Through dynamic, virtual online focus groups we give businesses the ability to rapidly test and reiterate concepts.

Groups are built on specific participant criteria.

Members dialog over a period of weeks on specifically assigned topics and interact with each other in a thoughtful, persistent way.

As results come in, a moderator can ask for direct feedback on the concept and re-test based on what the group produces. This constantly iterative process employs the type of analytical strategies that have only previously been available in quantitative research settings. The new qualitative model marries the voice of the customer with sophisticated analytics, while following the constantly changing state of a company over time.

Here’s an example:

One of our clients sells to elementary schools. We gathered a group of teachers in our best performing, previously identified segment (based on our customer analytics algorithms), and asked them to commit to a month-long engagement in an online focus group.

In the first week we gave the teachers a survey and discovered that the product we are selling needs more teacher instruction on how to use. That week, the company created an infographic that helped explain each of the steps and what was required of the teacher. In week two we showed them that infographic and asked them to comment on its individual aspects. By week three we we had a refined, teacher approved infographic that we immediately implemented as part of the product.

Under traditional circumstances, the company would have only realized the initial insight that it needed more instruction. At a fraction of the cost, we were able to take that insight and produce multiple iterations of its solution while, at the same time, asking our group a series of other questions about its preferences.

The New Qualitative Model

Recruit It is imperative that a company uses a segmentation model to guide its recruiting processes. The most relevant segmentation method will vary, but it is absolutely crucial to the recruiting process in order to marry the results of the conversations to the eventual implementation of the concepts.  We build these segments from both specific customer behavior and market data.

Beyond careful selection and random sampling, the number of participants must be significant. For the average group, twenty is a solid number. A good moderator will encourage participation over the duration of at least a few weeks. By offering compensation – usually no more than $50 depending on the product and title of participant – group members will remain engaged.

Iterative Questioning and Discussion – The content of each activity is obviously exclusive to each company, but a consistent engagement over several weeks testing multiple iterations of a concept is universal. The varying methods of discovery at this phase include, but are not limited to, surveys, content discussion, and product and messaging ranking.

After each wave of activities the company can internalize the information, make adjustments accordingly, and test the new ideas in the marketplace.

Quantified Reporting While immediate insights are digestible at a granular level, week to week, activity to activity, the overall pattern of responses at the conclusion of a group’s engagement tells a story that can transform the overall marketing trajectory of a company.

Depending on the format of the group, it is easy to track each of the participant’s responses and tag them with the according segment and category of response. Some examples response categories could be “emotional,” “functional,” or “aesthetic.” Paired with participant segment labels, the aggregation of these descriptive tags tell a story that goes beyond an informative response to specific material. It gives companies insight on the behavior patterns of specific segments. It’s possible that young men in large cities with median income respond in a drastically different way to the overall stream of questioning than elderly women in the country. The ability to pinpoint what these differences are, and act on them not only on specific projects, but throughout company-wide targeting strategies can be transformative.

By implementing this model at Keane Consultants, we have seen the type of transformation that is possible. It can at first seem astounding what this level of engagement and reporting can do for an organization, but the logic of it quickly becomes obvious.

Contact us for a free assessment at sean@keaneconsultants.com or at (414) 737-3644. To hear what our clients have said, check out keaneconsultants.com.

 

Why Every Potential Acquirer of Belk Stores is Looking at Customer Data Analytics

A week ago, Belk Stores (BLKIA:OTC) announced it was considering strategic alternatives (We’re for sale) and had hired a banker.

(http://fortune.com/2015/04/06/macys-nordstrom-belk/?xid=yahoo_fortune)

Whether the outcome is a strategic acquisition by another retailer in the department store or adjacent business, a financial buyer, or no-sale,  the data room inquiries are all running to  Belk Stores customer data, because aside from the financial engineering that is a stock in trade for M&A professionals, customer analytics are where any remaining deal leverage resides.

For either type of buyer, the future value of the investment has to exceed the value paid.  In retail terms, this means an increase in average annual transaction size, and/or an increase in the frequency of transactions (whether brick and mortar or online), a longer customer lifetime (retaining customer purchasing over time) and/or the ability to generate new customers at a favorable price point.  To be successful, they have to do these better than Belk could themselves.  For a strategic buyer it’s a tall order.  For a financial buyer it requires an awful lot of acumen.

While the underlying value of the real estate (of Belk’s retail locations) will be of significant interest (look at the bounce Dillard’s got a couple of years ago when they announced a never completed REIT) the big leverage is in their customer purchase history.

Here are the essential questions to the Belk transaction:

For Strategic Buyers:

  • If the acquirer doesn’t share a lot of markets with Belk, they’re asking “if we convert Belk to our nameplate (think “Macy’s” for instance) in markets where we don’t have a presence today, can we expect Belk sales from the most recent 12 months to stay the same, shrink or grow?  This involves market definitions down to virtually the household level and a detailed examination of buying patterns by price point per merchandise category. Then those households are re-aggregated to create accurate market measurements .  A couple of years ago, without current data analytic capabilities, you really couldn’t even consider doing it.
  • Where there are shared markets, how many of our customers actually also shop Belk? Which of the two do they spend more with? By price point by sku at the household level.  How has this changed in the last year?
  • In each market, how many households have purchased from us in the last ten years? From them? (Net of moves in and out) By lifestyle, including age, what is our untapped potential, if any, in each market based on our best market experience?  What was the customer acquisition cost in each market by lifestyle in the last twelve months? Has this grown or shrunk?
  • Where penetration is low, is it a mismatch to consumer type, an assortment problem, presence of competition, or other facts? If so what are they?
  • When thinking about CAC, how many transactions does each customer have to make before the gross margin generated produces a breakeven result against the incremental acquisition cost?
  • For existing Belk customers how much spending has shifted, at the household level, to e commerce? Has this increased or decreased each household’s annual spending by market? Lifetime value? By demographic segment at the household level?  Let’s be sure ecommerce sales aren’t mixed into store sales and therefore distort store sales data.
  • How much showrooming is going on at Belk stores? (Compare foot traffic counts to same day in store transactions on an historic basis.)  Is this showrooming going to Belk online or to others? At what mix?

For Private Equity Buyers:

  • What are the trend lines in customer acquisition cost, and the components of lifetime value analyzed separately (annual size of transactions, number and lifetime length) by lifestyle and segment?  What will we do to improve these?
  • Is there enough cost take out to improve EBITDA without significant customer change?
  • What are benchmark comparables for the whole company and the industry for both for brick and mortar penetration in each existing market and  ecommerce?
  • Is there freestanding ecommerce business not associated with stores? Can this profitably be increased?
  • Any way to catch up on ecommerce with the industry? Encourage or discourage showrooming?

Same store sales don’t directly translate into customer metrics and can mask either problems or opportunities.  What are the trend lines in each category?

All of the answers to these questions now exist in the Belk customer data. They can provide a very good snapshot of Belk as it stands today. For strategic buyers, the combination of their customer data with Belk’s reveals a detailed picture.  For the financial buyer, comparing Belk actuals to available comparables describes the probability of a good outcome.

Every business should know the cost – in time and money – to acquire a customer, how much that customer will produce in revenue, and for how long. This gives them the ability to identify customer segments and target acquisition cost, budget for results, and measure performance.

Unfortunately most don’t know the cost of customer acquisition, but we do.

When you partner with Keane Consultants, you get a proven track record of success in bringing costs down and driving win rates up.

 

Contact us at www.keaneconsultants.com or info@keaneconsultants.com (414) 737-3644