Data Analytics Pose Opportunities, Challenges for Businesses

A Forrester Research survey found demographic, transactional and behavioral data continue to be popular sources for companies to understand customers.

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Businesses are incorporating more data sources, leveraging new analytical techniques and applying insights beyond the marketing department, according to a survey of 142 analytics and measurement professionals conducted by Forrester Research and Burtch Works.

The survey found demographic, transactional and behavioral data continue to be the most popular sources.

However, many companies also are leveraging unstructured data from social media (35 percent), internal feedback channels (27 percent) and Internet of things (IoT) data (11 percent) to gain a deeper understanding of their customers.

"From a customer analytics perspective, mobile technology is incredibly exciting because it provides location and other rich customer context data that can help companies better market to key audiences and/or understand the customer journey," Brandon Purcell, author of the report, told eWEEK. "However, that is only in theory. In practice, we're seeing companies struggle to incorporate digital data in general and mobile data specifically."

Purcell said he was surprised that only 64 percent of companies are using digital data from owned Web and mobile properties, as revealed by the survey.

"Why aren't the other 36 percent? I completely understand and respect the difficulties behind linking known customer data to anonymous cookie data, but companies should at least be capturing and analyzing their digital data in aggregate," he noted. "That's table stakes in the age of the customer."

In addition to improving the customer experience, analytics and measurement professionals are applying insights to product development (39 percent), pricing decisions (36 percent), operations management (25 percent), customer service (24 percent) and merchandising (15 percent).

According to the company’s previous survey in 2014, the average business used only four data sources, but today, companies are using six sources on average, an increase of 50 percent.

"It is very difficult to get started with customer analytics, from a data, business case and skills perspective," Purcell noted. "However, once you have those pieces in place with your first successful project, it becomes much easier to build on that foundation."

Purcell said the next big trend is customer journey mapping, wherein companies take their time-stamped event data and use it to understand the volume of customers on different journeys, the average duration of those journeys and, most importantly, the key performance indicators (KPIs) attached to each journey.

"Using journey analytics, companies can identify journeys that are broken, such as one that results in higher than average churn, and either fix the journey or route customers onto a more optical one," he said. "IBM and Teradata have rolled out journey analytics solutions to address this demand, as have smaller players like Pointillist and Indicative."