By Jeff Sauro

Although it might not be called customer analytics, chances are, you’re already familiar with some form of customer analytics. The efforts and activities of product development, marketing, sales, and services are driven to anticipate and fulfill customer needs. That is, you can’t sell a product unless someone has a need for it.

Customer analytics is a new term and is broadly used, but it generally includes the following actions and activities:

  • Gathering data: Pull together customer purchase records, transactional data, surveys, and observational data at all phases of a customer’s journey.

  • Using mathematical models to detect patterns: There are many number crunching, statistical analysis, and advanced modeling techniques that help turn raw data into more meaningful chunks.

  • Finding the insight: From the patterns of the data come insights into causes of customer behavior.

  • Supporting decisions: Understanding past behavior helps predict future customer behavior from data instead of relying on intuition.

  • Optimizing the customer experience: Detect problems with features, purchases, and the product or service experience.

  • Mapping the customer journey: From considering, purchasing, and engaging with products and services, mapping the touchpoints and pain points helps identify opportunities for improvement.

Customer analytics is different from many of the other metrics within an organization. The four critical ingredients of customer analytics are:

  • Customer focused: The first word in customer analytics is customer. This means that the metrics collected need to come from customer actions or attitudes, or are derived in some way that’s connected to customers.

  • At the individual customer level: You need access to the lowest level of customer transaction data, not data rolled up at the product or company level.

  • Longitudinal: Customer analytics involves looking at customer behavior over time.

  • Behavioral and attitudinal: You need a mix of what customers do and what customers think. Although customer actions (purchasing, recommending) are ultimately what you care about, attitudes affect actions — so measuring and understanding customer attitudes helps to predict future behavior.