It worked for this zoo, and it can for you too
We’re serving you up three easily-digestible features to help you get to grips with business’ hottest tech trend (read the first one). By the end, you’ll understand what everyone means when they say “big data” and “data analytics”, and how to take advantage of new technologies to do dramatically better business and gain serious competitive advantage. Warning: this content is for ambitious managers, not tech-heads. This is a jargon-free zone.
It’s all well and good knowing what the jazzy new tech lingo means – and if you’ve followed this series since last week, you’ll now have a handle on what exactly big data and data analytics are and why they’re attracting so much attention. But what’s the point of knowing about a trend unless you can in some way harness it to grow your business?
That’s what this second part of our beginner’s guide series is all about. Read on to discover how businesses are using analytics to gain competitive advantage – and whether you should be too.
The big data challenge
The masses of data you can collect, about almost any interaction a customer has with your business, can be completely overwhelming. There is data to be captured on every single customer, each time they visit your website, buy something from you, open your email newsletter, interact with you on social media, call your customer services team, visit your premises, and interact with one of your marketing campaigns – to name but a handful.
And that’s before we get onto all the data you create at the back-end of the business, across your own operations and systems. It’s little wonder that the world is generating 15 petabytesof data every day with all this lot going on and being charted digitally. (It’s this morass of data within an organisation, or in a whole community or organisations, that is ‘big data’ – as we established in part one of this series.)
It’s obvious that all this data – big data – should be incredibly useful in learning how to better understand your customers. But there’s no point having all that data if you don’t know what to do with it. The trouble is that even if you can capture the data, the vast majority of it will be unstructured.
The idea of capturing everything that could be meaningful, then finding some way to trawl through millions of data points to draw our meaningful patterns, probably and understandably seems rather daunting.
That’s where business analytics software comes in because the most sophisticated offerings on the market do all that hard work for you.
Business analytics and big data: the opportunity for businesses
Business analytics software rummages through the data for you and identifies trends, inefficiencies, opportunities and ways to improve the customer experience. Business analytics is also increasingly moving into predictive analytics – i.e. anticipating a customer’s needs or behaviour before they have done so themselves, and ensuring you have the most suitable offering or marketing available to them at the most opportune time.
To recap from the first part of this series, analytics can help you:
- Find new efficiencies and optimise performance
- Build incredibly detailed customer profiles on an individual and group basis
- Give customers an unprecedentedly customised user experience
- Help you draw meaningful insights and sentiment analysis from social media activity
- Reduce complaints
- Reduce fraud
- Predict customer needs and behaviours
- Dramatically improve operational efficiency, customer engagement and customer retention
In its predictive capacity, analytics can help you:
- Base your customer strategy on predictive profiles
- Predict the best way to win the right customers
- Predict the best way to grow customer relationships
- Predict the best way to keep the right customers longer
- Use predictive intelligence at every customer interaction
Using business analytics to gain competitive edge
Analytics is about better decision-making in business. It is about using the most advanced technologies to process information too enormous and complex for the human brain to grapple with, and then finding the most effective ways to use insights from that data to improve your business.
It’s about identifying your most efficient business drivers, as well as the weaknesses in your operations. Analytics will help you allocate resource away from inefficient parts of the business and instead into more highly profitable and productive areas, ensuring you are constantly improving your bottom line and optimising your operations and productivity on an ongoing basis.
For example, if you’re processing hundreds or thousands of transactions or customer interactions every day, it would be hugely useful to have a real-time solution for working out how to allocate resource and ensure stock or people power is always in place to meet constantly fluctuating demand. If you implement analytics software able to do that, you will be ready to serve customers exactly when and where they need it, stay on top of costs, refine your operations, improve productivity and ensure you stay stocked up with what’s needed at any given time and location. You can manage operations and stock according to real-time demands.
You can also offer a seriously customised user experience that makes every person who interacts with your business feel like you know them well enough to know exactly what they want and when they want it. It can achieve this thanks to deep insights into individual and group customer behaviour, profile, demographics and location.
This approach can come hand-in-hand with unprecedentedly targeted marketing thanks to the customer insights that analytics gives you. You will get to know your customers better than ever before, and be able to speak to them in ways that best appeal to them.
Let’s look at a business that’s used analytics to understand more about how all this works, and how it plays out in reality:
Case study: Cincinatti Zoo
Topline results of using IBM Business Analytics: More than $2.2m generated in total benefits, with full ROI delivered within three months. Annual ROI is now 411%.
Cincinatti Zoo & Botanical Garden might know how to perfectly nurture its 500 types of animal and 3,000 species of plants, but the US tourist attraction found that it needed help with growing revenues and visitor numbers.
It boasted 1.3 million visitors a year, but wanted more, and also wanted to be able to give those customers a better experience. It wanted to grow food and retail sales through improved marketing, and better manage its workforce and labour costs by understanding demand patterns throughout the year.
The zoo had a $26m budget, two thirds of which it generated through its own fundraising efforts. This meant it had the lowest public subsidy of any zoo in Ohio – a position it was proud of and keen to maintain.
Management wanted to boost sales, membership and attendance, and realised that the best way to do so would be to offer a truly brilliant and new customer experience. So it introduced analytics.
How Cincinatti Zoo used IBM Business Analytics
Highly sophisticated analytics software was able to analyse membership, admissions, food and merchandise sales down to the individual level. This gave management unprecedented insights into customer behaviour, at an individual and group level.
Management were abl
e to see patterns in data sets specific to demographics and geographic location, which allowed them to develop a far more targeted marketing and expertly refine their customer segmentation.
The analytics software was able to draw out trends in buying behaviours, such as peak buying times. It also enabled the zoo to identify which were the most and least effective marketing and advertising campaigns it was running, so it could reallocate resource accordingly.
IBM Business Analytics did – and does – the following for Cincinatti Zoo, resulting in overall ROI of 411% and total benefits of $738,212 per year:
- Provides a 360 degree view of customer behaviour that helps to optimise marketing decisions, resulting in savings of more than $40,000 on marketing in the first year, while driving enhanced and measurable results.
- The Zoo has seen a 4.2% rise in ticket sales by targeting potential visitors who live in specific ZIP codes.
- Food revenues increased by 25% thanks to optimising the mix of products on sale and adapting selling practices to match peak purchase times.
- Eliminating slow-selling products and targeting visitors with specific promotions enabled an 18% increase in merchandise sales.
- Reduced advertising expenditure by 43% by eliminating ineffective campaigns and segmenting customers for more targeted marketing.
- Saves the Zoo more than $100,000 per year by identifying less effective promotions and discounts, allowing resources to be redeployed to more productive initiatives.
- Increases overall attendance, prompting at least 50,000 new “visits” in 2011 through enhanced marketing.
- Provides insights that enhance operational management – for example, that ice cream sales peak just before closing time, leading to a decision to keep more ice cream stands open until the Zoo closes. This boosts revenues by as much as $2,000 per day in summer.
- Contributed to a more than 25% increase in food sales and a 7.5% increase in retail sales compared to the previous year.
Find out more about IBM Business Analytics