Analytics trends 2014
In 2014, eight business analytics trends will rule the day - or will they.
When a leading water provider faced rising competition
Deloitte Analytics gave them clarity on the needs of their customers
One of Australia’s leading water providers knew their industry was changing. Much like the gas and electricity industries previously, they were moving towards a highly competitive environment.
The client had over 200,000 properties connected to the water network with total assets valued at over US$2 billion. They wanted to make better use of their data assets in order to grow and retain their customers, and they asked Deloitte Australia to help.
The client, a leader in the changing water industry, wanted a deeper understanding of their customers. Specifically, they wanted to make better use of their data to:
- inform, serve, grow, and retain their customers
- provide insight to support improved targeted customer acquisition and product development, reduce bad debt, and align third party relationships.
Deloitte Australia was engaged to consider large amounts of customer data and prepare a detailed customer segmentation which would support, amongst other things, a clear understanding of the market situation, competitive landscape and channels, analysis of channel and market opportunities, and the identification of key market segments.
How analytics helped
Every company’s data is an asset and many of a company’s day-to-day operational systems collect and develop this data asset. For this client, data was sourced from a wide variety of systems, both current and superseded within the company, including customer master data, geospatial data, and all billing and usage from various financial systems. The data was also enriched with external information from the Australian Bureau of Statistics.
An artificial intelligence technique was applied to segment over a quarter of a million customers. The segmentation model simultaneously and holistically considered close to 600 different metrics across ten different data domains including customer master data and information on usage, premises, payments, and events affecting the customer, etc. It was determined that there were five similar groups with thirteen sub segments.
The segmentation model had the ability to track customers changing segments over time, and allowed the team to predict on a targeted per-customer basis the best strategy for migrating customers from their current segment into a more desirable one, or stopping them migrating into a less desirable segment. The prediction function also allows for new customers to be categorized into a segment.
The artificial intelligence technique has a visual interface to the models allowing interactive exploration of the meaningful metrics with regards to each segment. Additionally, traditional dashboards were created to ‘load’ the segments with key variables to be investigated, such as financials, services, and customer contact. Each segment had a number of plain English descriptions, allowing strategic and tactical utilization of the deeper understanding of each customer group.
The segments were also illustrated geospatially using Google Earth. This gave the ability to drill right down to household level, determining the customer segment and receiving key dashboard information about that customer. It also allowed interactive exploration on the customer segments and the ability to see geospatial similarities and differences which prompted initiatives focused on each segment’s patterns.
The member firm client used the information obtained to:
- target specific initiatives around water savings, for example water tanks and shower heads
- improve bill payment rates
- ensure they retained loyalty from developers, i.e. developers had to choose whether to use the member firm client for sewerage installation or whether to complete the process themselves.
Deloitte Australia facilitated interactive workshops with the various stakeholders to plan the implementation of the relevant aspects of segmentation. In addition, the solution has generated further business, including additional reports on customer credit ratings as well as developer and third party insights. The work carried out with this water-based company is applicable with any industry or company providing a service in a competitive environment or anyone who wishes to better understand their customers.
Analytics must be used to be useful. Abstract theory might be interesting, but it won’t solve your business problems – unless you put theory into practice.
Learn how to link your business strategy to advanced analytical techniques to improve decision-making capabilities.
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