The benefits of having a multidimensional view of the customer
When we talk about a multi-dimensional view of the customer we refer to view of the cu-stomer purely from the business perspective in relation to profitability, risk, responsiveness, loyalty, behavior and preferences. So, ability to see a single customer along these dimensions would undoubtedly give any organization incredible competitive advantage of being able to serve customers better and in return being awarded by customer’s larger share of his wallet.
And this can certainly be achieved by using predictive analytics whose main output are probabilities, which in this case would be probability of being loyal, profitable… etc. So if you know that specific customer is of low value to you, whose cost of serving is far greater than the value he brings it to you in terms of profitability – who cares about his loyalty and preferences? You don’t want to waste a cent of marketing budget on him, in fact you want to open the door as wide as you can and let him go. On the contrary - customer in the highest value segment whose loyalty scores are dwindling deserves to be phoned by your top account managers to see how you can improve your service to him. And if you know his preferences and buying habits - you know what to offer him to have him re-think his intention to leave you. This is what we mean when we say knowing the next best action toward the customer even if action is – don’t do anything, let him go!
At this level, analytics are no longer used for decision support – they are used for decision making. All you need is to look for constellation of these probabilities and next action toward the specific customer, or customer segment becomes crystally clear. You just need to act on what these numbers are telling you and “count the blessings”. This is what I call “holy grail” of analytics and until an organization can do all the above and more – usage of analytics is nowhere close to optimal. And for these companies who use analytics at that level and for those purposes – pay-offs are huge, but you may never know about it.