For: Customer

Insights
Professionals

In The Age Of The Customer, Insight

Isnt Enough
by Jody Sarno, June 4, 2014

Key Takeaways
Follow The Forrester Real-Time Actionable Insight Delivery Cycle To
Become More Responsive
Customers have become demanding and have high expectations of being instantly
served regardless of device or channel. To do this effectively, firms must travel through
the six stages of the RAID cycle, enabling them to turn data into actionable insight faster
and better than their competitors.
Move Beyond Insight To Foresight
While the tasks may be daunting, the benefits are many for those who can harness data
and quickly translate it to better serve their customers. Firms that are able to anticipate
their customers needs as they move beyond insight to foresight will deliver swifter,
better service.

Forrester Research, Inc., 60 Acorn Park Drive, Cambridge, MA 02140 USA

Tel: +1 617.613.6000 | Fax: +1 617.613.5000 | www.forrester.com

For Customer Insights Professionals

June 4, 2014

In The Age Of The Customer, Insight

Isnt Enough
How Speed Is The New Differentiator
by Jody Sarno
with Mary Pilecki and Olivia French

Why Read This Report

For decades, marketers have recognized that customer knowledge is crucial to acquiring, retaining, and
serving their clients, but merely knowing your customer is no longer good enough. Today, customers
demand you use that knowledge to better serve them faster. Speed is the new differentiator for firms
across the globe and in all industries, and customer insights (CI) professionals are at the heart of this
revolutionary change. This report explores the path needed to transform data to knowledge at the new
pace the customer requires with the Forrester Real-Time Actionable Insight Delivery (RAID) cycle. This
momentum is essential if you wish to become an intelligent enterprise. In the age of the customer, the race
will be won or lost based on your firms ability to know your customers and react faster and better than
your competitors. Are you ready?

Table Of Contents

Notes & Resources

2 Current Market Dynamics Mandate New

Customer Insights Momentum

Forrester incorporated feedback from

numerous end user and vendor interactions,
as well as client inquiry and consulting
engagements, coupled with the analysts
own professional experience to formulate
this report.

Speed To Insight Translates To Improved

Performance
4 Adopt A Framework To Gain Speed
recommendations

6 Jump-Start Your Ability To Meet The Need

For Speed
WHAT IT MEANS

7 Businesses Are Beginning To Act At The

Speed Of The Customer

Related Research Documents

Evaluate Your Intelligence Enterprise
May 23, 2014
Extract Business Value From Your Mix Model
March 27, 2014
The Age Of The Customer Requires A More
Intelligent Enterprise
January 22, 2014

2014, Forrester Research, Inc. All rights reserved. Unauthorized reproduction is strictly prohibited. Information is based on best available
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For Customer Insights Professionals

In The Age Of The Customer, Insight Isnt Enough

Current Market Dynamics Mandate New Customer Insights Momentum

As society becomes increasingly, and perpetually, connected, putting unprecedented information
at customers fingertips, customers are increasingly demanding instant, relevant information. But
insight alone is no longer enough it must be served up immediately so the firm can react to meet
its customers expectations. This cadence requires a new customer insights imperative that no longer
concentrates on past performance but is focused on anticipating the customers next move so the
firm can promptly deliver the best possible customer experience. CI pros are finding this venture to
be no easy task. Heres why:

The clock starts ticking as soon as the customer starts clicking. We live in a world where

instant gratification is expected with a simple click of an icon. Society has come to expect that
if you Google it you will find it or by simply Amazon-ing it you can buy it. When customers
click on your site or apps, they expect that same instantaneous response and they expect you to
know who they are. Those expectations translate to a demand for quick delivery of customized
solutions, relevant data, personalization, and meaningful messaging. Too many firms find this
challenge daunting, leaving a real-time 1:1 approach to customer engagement out of reach.
Today, time is either a marketers new best friend or worst enemy.

Constantly connected customers with countless channel choices create chaos. The customer

insights technology and process infrastructure needed to enable speed to insight is playing catch
up, often missing essential components, or in many cases it simply doesnt exist. Why is this
important? Because in 2015 there will be 1 trillion connected objects and devices generating
2.5 billion gigabytes (2.5 quintillion bytes) of data every day and 80% of it will be unstructured.1
CI pros have the demanding duty to determine which data is appropriate to capture, translate,
transform, and analyze if they are to understand current and future customer behavior. Speed
to insight is impeded because much of that data is siloed in legacy systems built long before the
existence of tablets, tweets, text messaging, tags, sensors, social media, and video chats.

The market has moved from requesting insights to demanding foresights. For many CI

teams, the task used to be complete when they delivered the requested data into the hands of the
requestor typically sales or marketing. But now those same teams are demanding predictive
insight so that they can anticipate the customers future behavior and preemptively take
action. When speaking with a new-world technology-driven consumer packaged goods (CPG)
company, the CI leader shared, We have more than enough data, and we have been talking
insights for a long time but, candidly, my leaders dont seem interested in what happened. They
dont want insight they want foresight. They dont want to know what happened they need
to know what will happen next.

2014, Forrester Research, Inc. Reproduction Prohibited

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For Customer Insights Professionals

In The Age Of The Customer, Insight Isnt Enough

Speed To Insight Translates To Improved Performance

Few marketing challenges are more difficult than identifying and influencing what drives customers
attitudes and behavior. Adding a real-time element to these imperatives sounds formidable, but this
is no longer a pipe dream. What was once considered bleeding edge is today being implemented in
leading firms across the globe. Industries as diverse as travel and leisure and financial services have
embraced real-time marketing to enhance loyalty, increase customer satisfaction, and stay relevant
in the age of the customer. Speed is the new differentiator; those who can execute that will have the
competitive advantage and will be able to:

Anticipate client actions before they occur. Foresight in this context is defined as knowing

when your customers will make their next moves and what they will be. This foresight gives
leaders time to calculate the right moves whether upselling, cross-selling, retaining, or
simply servicing them and to optimize the outcome for both the company and the customer.
Examples of foresight can range from a simple understanding of how often a customer places an
order to an advanced knowledge of knowing exactly when they will order. Amazon is a prime
example of this analytic apex as demonstrated by its recent Anticipatory Shipping patent filing.
While it hasnt yet announced plans to launch the service, the patent signals that Amazon feels
confident in its ability to predict what customers want even before they order it.2

Personalize the customer experience. The Kroger Company, the nations largest traditional

grocery store chain, believes that customer data and the speed in which you use it is so
important to improve the customer experience that it owns 50% of dunnhumby, a database
marketing firm. Kroger recently purchased the Southeasts Harris Teeter supermarket chain and
one would assume that Kroger officials quickly called in their data partner, confident that it
could enhance the customer journey and glean more insight from Teeters loyal e-VIC program
card carrying customers. By using customer data to customize the weekly specials sent to each
loyalty member, the shoppers feel the store understands their needs and Kroger improves its sales.3

Increase overall profitability. Every business has an obligation to its stakeholders to become

more profitable and enhance revenue growth. By knowing your customer and anticipating his
next steps, you can hasten the process to determine the right channel to serve him, the right
products to sell him, and the right time to service him in order to retain him. Firms use this
forward knowledge to carry optimal inventories, staff for demand, and optimize the path to
maximize both the customer purchase behavior and the overall profitability to the firm. Happy
customers stay longer, buy more, and advocate for and evangelize companies that best serve
their needs. Just ask loyal customers of Neiman Marcus, a company renown for best-in-class
customer satisfaction and service. They will tell you how they happily pay a little more to get
much better service in return.

2014, Forrester Research, Inc. Reproduction Prohibited

June 4, 2014

For Customer Insights Professionals

In The Age Of The Customer, Insight Isnt Enough

Adopt A Framework To Gain Speed

If you wish to fix the issues that are impeding your speed in serving the customer, start with
understanding the time and effort needed to execute each phase of the RAID cycle below (see
Figure 1). RAID enables you to:

Turn data into insight. Data allows firms to report what happened; insight allows them to

report what should have happened. If you report how many blue widgets were sold, shipped, or
consumed, you deliver data. This is often referred to as looking in the rearview mirror. Telling
the firm how many blue widgets should have been sold, shipped, or consumed and by whom,
based on past performance, is delivering insight. The first piece of information is interesting;
the second piece is compelling because the firm can rapidly engage those who didnt purchase.
This provides a clear forward-looking vision of what should be done based on what happened.
Acknowledge which type of information you deliver and take the first step in the cycle.

Evolve from insight reporting to presenting predictive foresight. Insight is transformed into

foresight when data scientists use advanced algorithmic approaches based on past performance
to foresee or predict future probable events. Intelligent enterprises effectively prepare their
firms to know what is likely to happen next by delivering foresight.4 Dicks Sporting Goods uses
customer behavior knowledge to learn what actions customers have taken; it then marries that
knowledge to social media behavior to determine why.5 Firms can then translate this insight
into a predictive model that presages future customer behavior and internal activity, e.g., the
number of incoming calls expected in customer service, how many returns to anticipate, and
even which coupons drive which customers to purchase shoes versus socks.

Seize the opportunity to turn foresight into action. When foresight is delivered to an

infrastructure that can respond with a fully automated, preemptive call to action before or
at the time of the transaction or event, the firm maximizes opportunity or minimizes threat.
Monsanto Company strongly believes in the power of using data to predict the effects of
external factors such as weather on crop production, so it bought a big data weather company,
The Climate Corporation, to help boost yields and profits.6 Monsanto knows that if a farmer can
be preemptively notified about an anticipated water shortage, he can use different products to
take corrective action on weeds and pests. The results will lead to more yield per acre and higher
profits for both the farmer and Monsanto.

Measure the action. Return on marketing investment, average acquisition cost, and average

retention cost are a few of the key metrics an intelligent enterprise tracks to determine success
or failure of every marketing initiative, event, or engagement. These measurements enable speed
in the decision-making process by offering insight into the success of the current campaign or
incentive. Marketers are rapidly developing new marketing mix models to measure success and
increase marketing performance.7 This gives the marketer the knowledge required to decide to
continue the program or terminate it and move on.

2014, Forrester Research, Inc. Reproduction Prohibited

June 4, 2014

For Customer Insights Professionals

In The Age Of The Customer, Insight Isnt Enough

Turn measurement into new knowledge. CI professionals will need to translate the

measurement results into new insights about the customer. Every touchpoint or encounter is
a new learning opportunity. Updates to segmentation schemas, lifetime value and propensity
to purchase models, even next best offers should now reflect the newly acquired knowledge.
Sometimes the insight will be specific to a customer, other times it will be about the benefits
of a campaign type or channel choice of a group of customers. While RAID is a standard
process, the types of information moving around the circle are dynamic. The CI pro should
apply flexibility in the use of the process, depending on the data type. Continuous updates are
required if the real value of the process is to be realized.

Return measurement to the source of knowledge. By ensuring that the knowledge gained

from the measurement step of the RAID cycle is brought back to the original data source, the
firm can continuously learn from every customer encounter. If a customer is sent three emails
and fails to act on or even open them, that fact should be automatically noted and tied to the
customer record. The understanding that email is not the most effective touch strategy for this
client can then be fed into future projects and marketers can act accordingly. The process is
brought full circle as the knowledge gained feeds the CI professional with new insights on into
how to ensure the success of upcoming initiatives.

Figure 1 The Intelligent Enterprise Cycle Of Insight

Knowledge back to
source data

Data to insight
Data

Knowledge

Insight

Measurement
to knowledge

Insight to foresight

Measure

Foresight

Action
Action to measurement

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2014, Forrester Research, Inc. Reproduction Prohibited

Foresight to action

Source: Forrester Research, Inc.

June 4, 2014

For Customer Insights Professionals

In The Age Of The Customer, Insight Isnt Enough

R e c o m m e n d at i o n s

Jump-Start Your Ability To Meet The Need For Speed

Firms of every size and in all industries will need to evaluate where they are in their journeys to
know their customers, anticipate their behavior, and quickly respond to their needs. Win the race
with a few simple steps toward the finish line, including:

Slow down if you want to go faster. Its ironic that in a time when the demand to go faster

is the new norm, the best advice is to slow down now so you can move faster, further, and
with greater purpose later. Slow down and examine the workload for extraneous activities
so more time can be spent on insight, foresight, and action. For example, Forresters CI
clients anecdotally report that 30% to 70% of their workload is spent on ad hoc reporting.
To save time, standardize the frequently asked requests. Then examine institutionalized
reports reports that have been produced for a long period of time. Are they still needed?
Eliminate the low value items that rob you of precious time and resources so you can focus
on delivering the RAID cycle.

Take the Forrester intelligent enterprise self-assessment to determine where you must

improve. To keep pace with your customers and ultimately get ahead of them, you must
become smarter about your customers. You must also become more agile in your ability to
act upon customer insight. Those firms that succeed in becoming intelligent enterprises will
thrive in the age of the customer. Take the test and determine where you are in this journey
and follow the recommendations to begin the process needed to improve.8

Pick a current data report and transform it into an insight deliverable. While there is

no common cure or one-tool-fixes-all approach to rectifying failures in the RAID cycle,

most firms fall flat in the beginning of the race when it comes to transforming data to
insight. Examine your deliverables and determine if you are reporting or predicting. If
you are currently reporting, convert a CI report into an insight deliverable. For example,
demonstrate how many customers should have renewed, illuminate those that didnt, and
recommend what should be done to rectify the situation. After you master this leg of the
race, move on to the next phase in the cycle until you find yourself at the finish line.

Think big, start small, and proceed slowly. Tackling the big issues requires a clear vision so

prepare to tell the firm the big story in terms of the benefits and the importance of achieving
speed to insight. Start small by picking a specific area or problem, like churn, and apply a
predictive model that will automatically calculate those that are about to attrite. Go slowly
as you socialize this new, quicker, forward-thinking method with those outside your team,
ensuring they understand how the model identifies these customers and the benefit of
such an approach. Dont talk about the need for speed; demonstrate the benefits of actually
traveling at these new tempos.

2014, Forrester Research, Inc. Reproduction Prohibited

June 4, 2014

For Customer Insights Professionals

In The Age Of The Customer, Insight Isnt Enough

W h at I t M e a n s

Businesses Are Beginning To Act At The Speed Of The Customer

Business has long moved at a slow and steady pace governed by the internal clock of the company
and all its moving parts. Many firms recently awoke and found themselves in a nascent race against
that same clock, which is now owned and operated by the customer instead of the company. Firms
across all industries will compete alongside one another and against the clock to meet the expectations
of their customers. Firms will find that product and service superiority are table stakes yesterdays
differentiator. The new determining success factor will be how well you use your customer data to
immediately meet customer needs. In the age of the customer, customer insights professionals will
enable their firms to act at the speed of the customer, which Forrester defines as:
The speed at which business must operate to satisfy the customers need for immediate information,
product, or service delivery. This speed will vary by industry and by engagement but must be as near to
real time as possible, as timing becomes increasingly critical to an enhanced customer experience.

Endnotes
Ginni Rometty, chariman, president, and CEO of IBM, claims that by 2015, there will be 1 trillion
connected objects and devices generating 2.5 billion gigabytes of data every day and 80% of that data will
be unstructured. Source: Ginni Rometty, A New Era of Value, Mobile World Congress 2014, February 26,
2014 (http://www.ibm.com/ibm/ginni/02_26_2014.html).

Amazons anticipatory shipping patent filing outlines the practice of predicting what customers want
and then shipping it to a warehouse near the client before they buy it in order to fulfill next day delivery
promises. Source: Greg Bensinger, Amazon Wants to Ship Your Package Before You Buy It, The Wall Street
Journal Digits, January 17, 2014 (http://blogs.wsj.com/digits/2014/01/17/amazon-wants-to-ship-yourpackage-before-you-buy-it/).

Kroger understands the importance of customer behavioral data, which begins with its loyalty card
program. The recently acquired Harris Teeter chain also has a loyalty program which Kroger is hoping to
leverage. Kroger owns 50% of dunnhumby, a database marketing firm. Source: Ely Portillo, Shoppers could
see changes in VIC program, prices, fuel stations at stores, News & Observer, July 9, 2013 (http://www.
newsobserver.com/2013/07/09/3020573/shoppers-could-see-changes-in.html).

Forrester defines the intelligent enterprise as: A company in which customer knowledge is drawn from
everywhere, created centrally, and shared across the entire enterprise so all stakeholders can act upon it and
measure the results. To learn more about the intelligent enterprise, see the January 22, 2014, The Age Of
The Customer Requires A More Intelligent Enterprise report.

2014, Forrester Research, Inc. Reproduction Prohibited

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For Customer Insights Professionals

In The Age Of The Customer, Insight Isnt Enough

Dicks Sporting Goods has mined rich customer data from its loyalty card members to know customer
behavior including the what, where, and when. By adding social media data, they can now add the why to
the equation. Source: Alicia Fiorletta, DICKs Sporting Goods Turns Social Data Into Actionable Insights,
Retail TouchPoints, June 19, 2013 (http://www.retailtouchpoints.com/cross-channel-strategies/2650-dickssporting-goods-turns-social-data-into-actionable-insights).

Monsanto understands the importance of data and advanced the predictive capabilities. It recently
purchased The Climate Corporation in order to leverage climate data research to better anticipate the
effects on crop yields and company profitability. Source: Monsanto buys big data weather company to
boost yields and profit, RT, October 3, 2013 (http://rt.com/news/monsanto-buy-climate-corporation-687/).

To learn more about advanced ways to apply market mix models, see the March 27, 2014, Extract Business
Value From Your Mix Model report.

To gauge how far you have traveled in the journey to become an intelligent enterprise, Forrester has created
a self-assessment tool. To ensure your company fully benefits from this diagnostic tool, take the test, share
the results, review and discuss the implications, and craft a roadmap to address the gaps you identify. To
utilize the self-assessment tool, see the May 23, 2014, Evaluate Your Enterprise Intelligence report.

2014, Forrester Research, Inc. Reproduction Prohibited

June 4, 2014

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Forrester Focuses On
Customer Insights Professionals
As a data-driven marketer, youre responsible for capturing,
managing, analyzing, and applying customer knowledge and
insight. You draw from all sources of customer data, marketing
automation technology, and customer analytics to improve
marketing and business performance.

CHARLES IBRAHIM, client persona representing Customer Insights Professionals

Forrester Research (Nasdaq: FORR) is a global research and advisory firm serving professionals in 13 key roles across three distinct client
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