Accelerating Big Profits

from Big Data

Jeff Tanner, Ph.D.
Baylor Universitys Business
Collaboratory &
The Tanner Group

Learning for Competitive

Advantage
The only sustainable competitive advantage is to (be
able to) learn faster than your competition.
Peter Senge, MIT

Agenda

Introduction to Dynamic Customer Strategy

Accelerating Learning
Application & Case Studies
Breaking Organizational Barriers

Learning for Competitive

Advantage
ev
R
+40 e

u
n
e
C

t
s
o

to

ll
e
S

C
s
e
l
Sa ime
T

le
c
y

e r i on
m ct
o
t fa
s
s
Cu ati
S

+20
%
35% 25%

in e
g
s
ar rea
M c
In

+2
%

Source: Data cited from CBP Research

The Case for a New CRM Solution

Dynamic Customer
Strategy

Big
Data
Strate
gy

Organizati
onal
Learning &
Absorptive
Capacity

Traditional Insight to
Action Model

The Tanner
Group

Traditional Insight is Too

Slow

Value in Learning Faster

Occurs after the fact have to
observe the trend
Fails to anticipate change

Tim
e

Reaction to
Competitor
s Major
Launch #1

Source: Tanner, Analytics &

Dynamic Customer Strategy: Big
Profits from Big Data

Value at the
Individual/Market Level
Value

BEFO
RE

AFT
ER

Event
Data

Event
Data
Analysis

Analysis
Action
Close Sale

Action
Lost to
Competitor

Time

Time

Dynamic Customer
Strategy

Big
Data
Strate
gy

Organizati
onal
Learning &
Absorptive
Capacity

How to Accelerate
Learning?
Start with a Conceptual Map

Satisfact
ion

Loyalty

CLV

How to Accelerate
Learning?
Add Operational
Definitions
Satisfact
ion

Net
Promote
r

Loyalty

CLV

Loyalt
y
Level

RFM

How to Accelerate
Learning?
Add Why
Satisfact
ion

Net
Promote
r

Loyalt
y

Loyalt
y
Level

CLV

RFM

Beware the Data Trap

The Illusion of
Knowing because
you have a lot of
data

No matter how many

pictures of an elephants
butt you take, you still
dont know theres a
trunk on the other end.

Who are big buyers of

washing machines?

Laundromats
Hotels
Prisons
Universities
Military

Blessed are the cheese

makers.
Monty Pythons Life of Brian

Why Hypotheses Arent

Enough
Fail to account for counterfactual.
If we dont understand why, we may just
We test & learn red
be lucky.
sells! But then our
competition does
this!

Why Loyal Shoppers Have

Greater CLV
Loyal customers are multi-channel
customers
Loyal customers are willing to pay more
Loyal customers are cheaper to keep
Loyal customers make more referrals

The Tanner

High Value Multi-Channel

Segments
Are likely to be Variety Seekers
Buy more Hedonic products than Utilitarian
products
More likely to make Impulse purchases
Implications?
Tarun Kushwaha & Venkatesh Shanker,
Journal of Marketing, (July 2013), 67-85

The Tanner

What to do Next?
Observe
Hypothesize
Historical Data Analysis

The Tanner

Case Study: Cabelas

DISCOVERY
Business Question: How to accelerate
browse/purchase cycle?
Hypotheses:
Are there higher value products likely to
trigger purchase?
Are there buyers more prone to accelerated
cycles?

Conceptual Map

The Tanner

Conceptual Map

No
Sal
e

Is value signaled by
order?

Experiment: Hot Buys vs. Basket Starters

Increased transaction
penetration.
Increase in product level
sales.
Increased margin.
Transactions including
only ad items decreased.
Increased traffic,
increased conversion.
Increased shopping across
channels.

Back to Discovery
Where can we extend the learning? (Instore merchandising strategies?)
Why some customers and not others?
What are longer-term effects?
How do basket starters change?
Within customer life cycles
Across seasons

Action
Not all best-offer models are customer
specific but NO MINDLESS DISCOUNTS!

Another Example
Canadian city transit system
Frequent rider program
Push special offers based on actual
journeys

End Mindless
Discounting!
Canadian Transit Co.

Cabelas
Full Margin Offer
Revenue Increase
Margin Increase
CLV Increase

Dollar off!
How is that different
from

Organizational Barriers
The Belief that Business Results Trumps
Learning
Business Managers Fear of Math
From Data Ownership to New Turf Battles
Executive Sponsorship & Project
Management
Lack of Organizational Learning Strategies

Accelerating
Organizational
Learning
Start with Math they already know
Co-Mingle to Break Turf
Networking
Rites of Passage: Cabelas & Amgen

Go From Project Management to Change

Management
Apply Dynamic Strategy Elements
Conceptual Maps, Operational Definitions
The Tanner

Accelerating
Organizational
Learning
Organizational Learning is a commitment
with processes
After-action reviews
Dissemination strategies
Effective community-building

Building Absorptive Capacity

The Tanner

Dynamic Customer
Strategy
The only sustainable competitive advantage is to (be
able to) learn faster than your competition.
And to act on that learning!

Thanks!
www.baylor.edu/business/collaboratory
www.dynamiccustomerstrategy.com
Follow me!
Jeff_tanner@baylor.edu
@DrJeffTanner
blog tannerismsontuesdays.blogspot