December 4th, 2012 by Denis Pombriant, founder and managing principal, Beagle Research Group

The following post was written by Denis Pombriant,  founder and managing principal of CRM market research firm and consultancy Beagle Research Group.

The social revolution is still gaining momentum and with it, that most elusive commodity, clarity. Not long ago, you could check off social with a nod to your corporate or brand blog, Twitter or Facebook account, or a specialized community. All of these are good things, but you might have still felt a bit hungry after the feast.

That’s because social is, by definition,  a numbers game, and early solutions didn’t do numbers. Social communications is a kind of good news–bad news joke. It’s good because you can suddenly have so many more connections and people to deal with—and you can guess the rest, can’t you?

Social needs help to be a whole solution. It was a necessary, but not self-sufficient, condition of modern marketing. The other part, more unsung hero really, is analytics.  Without analytics, social stirs up a pot full of things you don’t have the ability to deal with, and that can only lead to frustration. Without analytics, big data is a “problem,” mostly a storage problem for the CIO. But with analytics, big data is an opportunity for insight, listening, and formulating exact fit solutions for that most rare and coveted commodity, the customer.

You can be forgiven for overlooking analytics, at least initially, because it was a catchall phrase that often just meant sentiment. “How much do you like me?” is an important question, but hardly the end of the story. Lately vendors have stepped up nicely to give us analytics for more purposes, such as segmentation, forecasting, intent, emotion, and natural language processing…and there’s more coming.

Analytics does a couple of things we’re all going to be a lot more interested in over time.  First, it does the parsing that turns all that customer data into information that you can use to formulate strategies, test messages and offers, and respond to customer problems.

Second, it helps you analyze and run your business. That may sound like a back office idea, and it was, back when mainframes and ERP roamed the earth. But today we live increasingly in a subscription world, where most if not all of our customer feedback comes in the form of data. Given subscriptions’ notorious capability to foster churn, companies that sell products as services have become increasingly dependent on running analytics against their financial data.

For instance, what does it mean if your customer is using less of your subscription service each week? Is it a seasonal slowdown, or is the customer slowly falling out of love?  How certain is your forecast? How does this month compare to last month deal by deal? (You do keep the old data around for comparison, don’t you?)

Wherever you look in business, analytics is invading, and it is making business activity more accurate and precise because it is enabling managers to replace best hunches with fact-based decisions.

That’s why I am thinking that analytics will become a new department that will spring up within many organizations, and it will not be the same ivory tower we saw before. At first, it will be a territory jointly held by the CIO and the front office, but that won’t last due to competing demands. Nonetheless, many companies will decide that there will be tactical (departmental) uses and strategic (corporate-wide) needs for analytics processing, and that will lead to two-tier company-wide analytics.

You can see the outlines of this two-tier approach forming right now. Companies like SAS and Oracle have powerful analytics that fill the strategic requirements, such as security. They also have some nice tactical analytics for departments, but I think entrepreneurial start-ups have a better handle on the fine-grained analytics of sentiment, segmentation, natural language processing, and the like. So a two-tier strategy at the corporate and departmental levels makes sense to me.

The time frame for this evolution is the next 18 to 24 months. Much, if not most, of the technology is in place, and so are many companies. Time to light the candle.

 

 

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