Erik Jensen teaches in the certificate program in data analytics, big data and predictive analytics at Ryerson University.
Information has always been valuable in business. Companies have always kept track of how many units they sell or how many people use their services. The utility of this information is undisputed.
But imagine, for a moment, that you run a company, and your company is the only one that tracks the number of products made and sold. Your "data-driven" strategy would give you an enormous competitive advantage – you would know things like how much raw material you need, how many employees to hire and how to set your price based on demand. This information would allow you to minimize costs, for example, while your competitors would be unable to.
Similarly, imagine if your company was the only one that did not track the number of products made and sold. You would be unable to compete, unless you also adopted a "data-driven" strategy.
This is analogous to what is currently happening in the world of big data and analytics. Analytics can give tremendous insights into your customers, and if you are the only one with these insights, then you have an incredible competitive advantage. Similarly, if you are the only one in the market without these insights, then you are in trouble.
Before big data and analytics, it might have taken weeks, or even months, before survey results were tabulated and presented to management. Again, there is no doubt that this is useful information that can inform business decisions and strategy. Today, businesses can analyze millions of tweets a day to discover public opinion about their product, and they can get the results in real time. With analytics, managers can see within hours, or even minutes, if public opinion about their offering is swaying, and take appropriate action.
Let's look at one concrete example of how big data and analytics led to better customer service and increased customer engagement.
As part of its customer-relations strategy, JetBlue Airways monitors social media for mentions of the company. Most likely, this is automated, and the system sends alerts to customer service employees. This enables them to respond very quickly to changes in customer sentiment, even if those sentiments are not communicated directly to the company.
In this particular situation, a customer of JetBlue Airways was complaining on Twitter about a delayed flight. First, JetBlue responded within the hour, thus demonstrating to the customer (and to everyone else who saw the ensuing tweet) that it cared about his time and experience. Second, JetBlue was able to offer him something useful: an update on when his flight would arrive.
Today, this type of social media monitoring is common, but consider for a moment two scenarios.
Scenario 1: You run an airline, and you are the only company with the technical ability to monitor and respond to social media in this way. Your company would generate huge customer loyalty because you can engage with customers in a personal way that no other airline can. You would know about changing customer preferences well before any of your competitors.
Scenario 2: Again, you run an airline, but now you are the only company without the ability to monitor and respond to social media. Now your company cannot provide the same level of customer experience as your competitors, and you are at a serious disadvantage. You're trying to race a Ford Model T against a modern Formula One race car.
JetBlue would apply this intervention strategy to all its passengers. Let's do some rough calculations on how this would affect the company's revenue.
In 2014, 67,445 JetBlue flights were delayed. Suppose the average JetBlue plane holds 100 people, and five per cent of those people will write something about the delay on Twitter or other social media. That's 337,225 negative tweets about JetBlue. How many of those people will choose another airline for their next flight?
An American Express survey from 2011 found that 59 per cent of customers would try a different brand for a better customer experience. So that's a potential loss of about 202,335 customers, or about $100-million in revenue if we assume that the average flight is $500 and people take trips once a year.
If JetBlue's social media outreach strategy keeps even 10 per cent of those customers who are planning to switch, that's a $10-million savings. Keep in mind that this is a very rough calculation, and we are not even taking into account consequences such as damage to the brand image and the cost to obtain new customers.
"If you're not engaging customers during the entire product life cycle through social media, you're missing out. Because someone else will," Dennis Stoutenburgh, co-founder of Stratus Contact Solutions, a customer engagement consulting company, told panelists at a recent conference.
Today, it's no longer an option to not use big data, because everyone else is already using it. A study done by Simply Measured found that 99 per cent of brands are on Twitter, with 30 per cent of them having a dedicated customer service handle. Social media has to be a core component of your customer service strategy, or you risk becoming obsolete.