Business plan№ 1 July 2018
The Digital Customer
Against the backdrop of tougher competition to get the attention of customers, Russian companies are prioritising the development of customer-oriented strategies. Innovative, digital solutions for interaction with their target audiences can help.
Russia’s Higher School of Economics (HSE) recently carried out a study entitled "Customer focus of companies in the Russian market: words or reality?" The title pinpoints a key challenge for Russian businesses: entrepreneurs like to talk about the need for building customer loyalty, but few are even ready to analyse their existing processes.
In the HSE study, three quarters of respondents claimed to systematically study customer behaviour. However, only about half of the respondents were willing to take the next step to improve their goods and services. "Saying the words ‘customer focus’ may work as an advertisement to attract customers. Many companies cite them among their competitive advantages in IPO submissions or even on their websites, but what these words mean in practice is an open question," concluded the HSE.
Yet it is not all doom and gloom. The survey results also showed that Russian businesses are increasingly focused on developing ways in which to improve their customer focus. The positive examples given by forward-thinking companies will encourage other businesses to work harder to gain competitive advantages in the market. One of the most effective tools here may be digital solutions.
Judging by behaviour
The main task for any company aiming to improve its customer focus is to determine what a specific customer will want at a specific time. In practice, this means knowing which product the customers want and when they will be ready to buy it. One way to obtain this information is by gathering and processing big data.
А company making orange juice. It wants to to become more customer-focused, to give consumers a little more than they’re getting already. The company sells exclusively through retail outlets. By using big data to analyse consumer behaviour, it was able to establish that people often bought juice together with party goods (a correlation that was observed in sales ahead of the holiday season). Subsequently, the juice maker signed an agreement with retail chains to have its products displayed in the party goods section of their stores. This boosted profitability by 30–40% in the first year.
director of big data competency at the IT company Technoserv
These intelligent solutions do not have to be limited to the analysis of consumer behaviour, but can also be used for general analysis of the customer service process. In particular, big data can be used to analyse why customers contact call centres and how they are dealt with by managers. This is a way of both assessing the quality of a company’s customer service and also improving it – for example, by preparing answers to customers’ most frequently asked questions. The method also facilitates the monitoring of managers’ work, eliminating mistakes before they have serious consequences.
These approaches have relevance beyond the retail sector. For example, Metalservice, one of Russia’s largest dealers in rolled steel (annual sales of approximately 1 million tonnes), has its own call centre. It receives and handles over 4000 orders a day – a vast array of first-hand information.
As Georgy Shatirov highlighted, collecting and processing customer behaviour analytics using big data technologies is a method which can be applied universally. It can be effective in both B2C and B2B markets, because in either case business is done by people. The fact that the customers may have different interest profiles (personal consumption vs corporate procurement) is immaterial.
"The economic crisis encouraged greater focus on the customer by making it harder to make profits using traditional marketing tools," highlights Georgy Shatirov. "But there was a major leap forward in technology at the same time, which made a lot of complex tasks manageable. For example, the last five years have seen rapid advances in distributed computing, which makes it possible to collect and process data at high speed. What we might call an evolutionary breakthrough has given rise to a multitude of opportunities, some of which are already being capitalised on in the business sector."
Online trading is a vivid example of how B2C digital solutions also work for B2B.
In early 2018, Metalloinvest launched its electronic catalogue in Russian and English at products.metalloinvest.com. The website lets customers browse the company’s product range and order goods directly from the site.
With an expected growth of yet another $7.3 billion in 2018, the market size of big data will almost certainly break past the $40 billion mark in 2018. As more and more industries understand the benefits that big data analytics provides, current strategies and programs will need to evolve and develop to support larger workloads.
In early 2018, Metalloinvest launched its electronic catalogue in Russian and English at products.metalloinvest.com
Detailed specifications enable potential customers to judge the quality of the products available. Dimensions, chemical composition, mechanical properties and minimum order are quoted. Packaging and labelling are also illustrated. There is a video showing how various product groups are made, and information on their uses in different industries.
Here, a large industrial company has implemented a solution that was previously more likely to be seen in the B2C sector.
In B2C, one of the most notable examples in the Russian market of applying and developing such tools is Aeroflot, which has not only mastered electronic commerce, but gone further by using big data analysis to design and promote tailor-made offers to customers.
The electronic catalogue takes interaction with our customers to a new level. It lets customers obtain the product information they need quickly and place orders online.
Sales Director at Metalloinvest
The information used for analysis is gathered both by Aeroflot itself (data from the company’s CRM and revenue accounting systems and online activity on its websites) and through external sources (such as global booking systems). This data is processed to generate target consumer groups for use in future marketing efforts.
The Aeroflot site now proposes travel itineraries based on users’ past preferences, which increases the chances of ticket purchases and also boosts loyalty.
"Increased customer focus has a direct impact on sales. It is a long-term investment that is definitely worth making. If customers like the service and the quality offered by a supplier, they will return," said a representative of Evraz, another leading Russian metals company. New technologies create new possibilities, but also help to optimise existing tools.
Evraz has digitalised the documentation of all its transactions. An important point here is the synchronisation of solutions with the development of a personal account service for customers, resulting in a new level of interaction between account manager and client.
The consumer can see their order being processed in real time and download the final documents quickly. Evraz has now maximised automation of its business processes, saving its customers’ time. This is bound to have a major impact on loyalty. The next step in the development of digital methods of improving customer focus will be machine learning, whereby IT systems perform tasks relying on their own experience of similar tasks in the past.
The goal is to identify more subtle patterns in customer relations, enabling companies to discern indirect links not identifiable by simply analysing data slices. It will be achieved by combining customer profiles with the sort of things that the customers are likely to want and the products that the company can most profitably supply. Experts believe companies will then be able to offer customers products they didn’t know they needed but might be inclined to buy if they were to be offered. The technique would mark a paradigm shift from analysing consumer needs, to actually creating them.
Companies that are serious about customer focus strive to know their customers’ needs better than the customers do themselves. New digital solutions are bringing them close to doing so. "The demand for customer-oriented technologies will continue to grow," says Georgy Shatirov, "because understanding customers is most companies’ best means of running a successful business. I am confident that in a few years’ time the companies that are unable to use these methods will simply no longer be in business.”
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