Jim Sterne on Customer Centricity (abridged)

This is an abridged version of a conversation between web analytics guru Jim Sterne and Foviance director of analytical consulting Neil Mason.
Part 1 of the uncut video is now available for viewing as Foviance’s latest Customer Experience Podcast. This is the most recent in a series of regular interviews with senior figures from the world’s most respected businesses, focusing on the ways organisations manage the customer experience.

Jim, you’ve been working in consulting and internet marketing for 15 years and specifically web analytics for 10 years – what major shifts have you seen over that time?
The big shift happened early, which was going from nothing, to reporting. Reports told us how many people visited our pages, which was a valuable way of proving that the web was a viable way of reaching people and that people were interested enough to reach in and grab the information they wanted. To make their websites better, people then went from just reporting to benchmarking, and from that to optimisation, and then to market optimisation. We’re now starting to see companies using web data to run their businesses, using web data to determine what territories they should be shipping which products into, whether they should open up new stores, add new products to their lines, or add new features to their products. These are business decisions, and people are realising that the web is a tool they can use to inform those decisions.

So organisations are now using online intelligence to make offline business decisions?
Exactly, yes. I think it’s a natural progression; an evolution. In the beginning the marketing person says to the web guy, “What’s happening on the website?” And IT says, “Well what do you want to know?” Marketing says, “Well, what do you have?” IT says, “Well, what do you need?” Finally there is enough understanding between the two, that marketing is also saying, “Gee, this data could also be used for this, this, this and this…”

And is this something you’re seeing both sides of the Atlantic?
Companies in the US are very happy to jump in and are not so risk averse, while companies in Europe will sit back and say, “Go right ahead, let us know how it goes, if it works out great, we’ll follow.” That’s part of it; the cultural issue. The next part is scale. I like to quote Bruce Sterling who said: “The future is already here, it’s just not evenly distributed.” There are companies in the US, UK and Europe who are all doing amazing things – there are just more of them in the US.

What characteristics differentiate those companies who are more innovative and more adoptive?
All the elements related to change management. Support of senior management, a grass roots understanding of the value at the coal face, and the ability to move an organisation forward. We’re moving from the idea of measuring people and pages to an understanding of customer experience. What is the customer perception of the company? This is a philosophical change. What matters is what customers want and whether we are prepared to build it. So we have to have all kinds of ways of listening to those customers. What do they want, how do they feel, and what are they responding to? That is a philosophical switch, a corporate cultural issue, and the companies that ‘get’ customer centricity are the ones that are most able to take advantage of these tools.

And are you seeing a shift towards more organisations building success around a customer centric strategy?
I am, and the ones that are doing it first are the ones that have always been data intelligent. Some organisations know everything I buy, when I visit and how much I spend. That’s a huge amount of data which they can monetise. These companies understand that if they can use that data on behalf of their customers, instead of about their customers, in other words to help me buy more things that I want to buy rather than sell me what they want to sell me, then they will be more successful. They understand that web data is just another data stream. If they look at what we are all doing on their websites as well as what we are putting in our trolleys, they can make projections and take some actions from a marketing perspective, and absolutely measure the results. The companies that are adding the web data to what they already know about their customers end up being the winners.

Web data is notoriously messy and horrible, and there’s lots of it. What are the challenges in taming that particular beast?
Web data, relatively speaking is new. There are many different technologies to measure it, there are advancements all the time, and there are innovative ways of communicating online. I mean, who thought a year ago that tracking your Twitter data would be important? Well now it is. It’s also important to go out and listen to the blogosphere and find out what people are saying about you on their Facebook page. We’ve got to join that up with how they’re responding to surveys, how they behave on websites, and what their facial expression is as they use that web page. It’s messy, it’s a bit frightening, but it’s hugely valuable and an amazing competitive advantage when it can all be brought together.

What other obstacles do you think companies will need to overcome to become more customer-centric?
Philosophy is number one. They have to comprehend from the top that customer centricity is important. Next they must get a handle on data, which is a silo nightmare for so many reasons and in so many ways. Then there’s this funny middle management problem of change management. Senior management and the people actually doing the job understand, but the people in the middle are disinclined to use this data to analyse their success. They must have the confidence to turn decisions over to their customers. Customers own the brand. It is their perception that matters, and you can’t tell them what to think. They’re telling each other what they think. You’ve got to be able to listen to that. You must accept the customer as a member of the team. Data must be collated and connected so that it is meaningful, so that when a call goes into the call centre or an activity happens on the website or something happens at the till in the store, it triggers other marketing. That’s where this is all heading – automation of marketing for the benefit of the customer.