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SPECIES Noordwijk , 03 February 2009. The Customer Data Revolution Andreas S. Weigend, PhD Stanford University. This is superseded by Canalys. SPECIESS. SPECIESS: What do we do? Service Partner Ecosystem Conference to Increase End-customer Sales and Satisfaction

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speciess
SPECIESS
  • SPECIESS: What do we do?
      • Service
      • Partner
      • Ecosystem
      • Conference to
      • Increase
      • End-customer
      • Sales and
      • Satisfaction
  • What would Amazon.com do?
  • What do I do?
    • Teach, Consult, Speak
      • People and Data
      • Marketing 2.0: People have changed!
      • Impact of changing economics of communication: Individuals, society, and business
      • Attitude to information access has dramatically changed. Contribution
      • Business: You enable future of work: Single person, fraction of a person

WWAD

how can you get business insights
How can you get business insights?
  • Myth: At the beginning, there is data. And then you create actionable insights
    • Analysis is good to help us create hypothesis
  • WWAD?
    • Measurement and data-centric culture?
    • Yeah. But more importantly:
    • Experiment centric culture
  • Instead: Ideas (“Hypothesis”)  Actions  Experiment  Data
    • Reverse the direction?
    • Data  Ideas … Ideas  Data
    • Iterate (“f-word”)
    • Institutional learning, not random experiments

WWAD

you want to be phame ous
You want to be PHAME-ous!

Phishing

  • PHAME
    • Problem
    • Hypotheses
    • Action
    • Metrics
    • Experiments
you want to be customer centric
You want to be customer centric
      • Yeah, yawn, but what does that really mean?
  • To support customers in their decision making
  • Where is your organization?
    • Mini case: Vodafone Incredulous
      • [Video]
      • Metrics gone wrong
customer centricity help people make decisions
Customer centricity: Help people make decisions
      • Cost saving phone trees
      • “Government award”
  • WWAD? Play with reversing the direction of information flow
    • OLD: What can the ISP do for the user?
    • NEW: What can the customer do for the ISP?
  • Customers do want to communicate with the company!!
    • Not just be communicated at!
    • What are their expectations?
    • It should be as easy as hitting up their friends, and they should listen!

WWAD

conversations
Conversations
  • Conversation / Communication
    • Between whom?

Company

downcasting

Individuals

leverage the social graph
Leverage the social graph
    • Example: New communications service
  • US phone company with deep experience with targeted marketing
  • Sophisticated segmentation models based on experience, intuition, and data
    • e.g., demographic, geographic, loyalty data
        • Hill, S., F. Provost., and C. Volinsky.Network-based Marketing: Identifying likely adopters via consumer networks.Statistical Science 21 (2) 256–276, 2006
        • .
  • Response increases by a factor of 4.82 by marketing to nearest neighbors (NN)
    • From 0.28% based on segmentation, to 1.35% based on social graph

(1.35%)

(0.83%)

(0.28%)

(0.11%)

recommendations 2 0
Recommendations 2.0
  • People
    • Friends
        • Specific people you know
      • Viral marketing
    • Peers
      • Fans (G-star)
    • Experts
      • Fashion bloggers
  • Data
    • Clicks
      • Purchases
    • Forward, tell a friend
      • Relationship
    • Annotate
      • Attention
    • Search
      • Intention
    • Location
      • Situation
    • Product data
a data revolution not a software revolution
A data revolution, not a software revolution
  • Mapping companies did not realize that users can add value…
    • Example: NAVTEQ
      • acquired by Nokia for USD 8.6B in Oct 2007
      • spent USD 300M to reach breakeven
      • 1000 employees driving with GPS…
      • … vs100M GPS-enabled Nokia phones alone sold in 2008
  • …vs Amazon.com realizing early on that users can add value
    • E.g., by reviewing books
  • … vs Google enabling external developers to build services using company’s data
  • Q: When will airlines, banks etc follow?

WWAD

we business
We-Business
  • Myth: Company is in charge
    • Owns customer
    • Owns product
    • Owns brand
  • WWAD? Customer supported customer support
  • getsatisfaction.com: “Customer service is the new marketing”
    • Platform where everybody can contribute
    • Smart relevance functions use user data and decide what bubbles up
    • If some reseller is really good, they will soon be on top because people constantly give implicit (clicks) and explicit feedback
    • All: Reputation systems, incentive to not give positive feedback after positive experiences with suppliers
    • Opening up
    • Layers

WWAD

customer network value
Customer Network Value
  • MYTH: Unique users matter
    • From newspaper copies sold
    • Focus on engagement (from pages / browsers / people)
  • WWAD? What actually matters is
    • what they do (1st order), and
    • what they tell others (2nd order)
    • Strong and weak virality
  • Communication and connectivity
    • Incentives
    • Example: Amazon Share the Love
    • Phone company case / Recommendations

WWAD

marketing 2 0
Marketing 2.0
  • OLD: The 4 Ps of marketing
    • Product
    • Placement
    • Pricing
    • Promotion
  • NEW: Ecosystem Marketing
  • Design interactions with and between your customers empowering them to create value
    • For themselves
    • For other customers, and thus:
    • For your firm
  • Other terms
    • Feedback Marketing
    • Conversational Marketing
where is the conversation
Where is the conversation?
  • Call 800-4-SCHWAB
  • Where are the conversations
    • With other customers
    • With customer service
    • With “the brand”
  • WWAD? Design the ecosystem such that the whole is more than the sum of its parts

WWAD

reputation relevance respect
Reputation. Relevance. Respect.
  • Reputation is based on sequence of interactions
  • Reputation is a shortcut in decision making
  • Relevance
  • Reputation
  • Respect
  • Instrument the world: Design system for interactions

Create an ever growing pool of data which creates value for you and your customers

my camera and microphone
My camera and microphone
  • Adobe Flash installed on approx 1 billion connected computers and mobile devices
what really has changed
What really has changed?
  • Attitude of consumers / customers to information they are creating and sharing
  • Both about themselves…
    • Hopes, dreams, and fears
      • Knowingly and unknowingly
  • and their relationships
    • Tagging someone in a picture
  • Need for Data Strategy
    • Example: Dopplr
    • Amazon Wishlist
  • But just data isn’t all: Focus on experiments
    • Algorithms have reached ceiling
    • Data now key differentiator
        • (incl company learning, richer data to power recs for others)
summary 1 of 2 me business
Summary (1 of 2): Me-Business
  • User focus (“E  Me”)
    • User is at the center of Web 2.0(not the company)
    • CMR (Customer Managed Relationships) or VRM (Vendor Relationship Management) (not CRM, Customer Relationship Management)
  • System engineered for feedback (“Instrument the world”)
    • System engineered to improve over time by leveraging user data (not deteriorating over time)
  • Network effects (“Viral marketing”)
    • Demand-side economies of scale (not only supply-side economies of scale)
  • Data strategy (“Users create value”)
    • Google Maps: Make it easy for outsider to use and enrich the data (not increase security)
  • Why? Spreading memes and genes
    • Belonging, immortality, self-interest (e.g., file sharing sites)
summary 2 of 2 the customer data revolution
Summary (2 of 2): The Customer Data Revolution
  • 1. Sniffing the digital exhaust
    • Mainly implicit data, some explicit data
    • What is new? More data sources, esp. location data
          • 100GB per person on the planet
  • 2. Individuals talk about themselves
    • Mainly explicit contributions
  • 3. Individuals reveal relationships with others
    • Directed, asymmetrical, multidimensional (not binary!)
  • The Customer Data Revolution: Shifting expectations
    • Attitude of individuals to their information
    • Economics of data
discussion
Discussion
  • What are the implications for you?
    • Do experiments: Measure interactions in an instrumented world
      • Example: MrTweet
    • Long-term focus: relationship focus

Relation-ships

Inter-actions

Trans-action

thanks
Thanks
    • Thanks to:
  • Kimmo Alkio
  • AnttiReijonen
  • Mari Huhtiniemi
  • … and all of my friends in the F-Secure Family!
    • Plus:
  • Ted Shelton (The Conversation Group)
  • Mingyeow Ng (just follow MrTweet on twitter!)
    • More information:

www.weigend.com