Use big data analytics to identify and retain your best customers

A big data strategy should include using analytics to identify your best customers and then offering them a free service to engender loyalty.

Are you the right customer for me?

If you aren't doing business with the right customers, you could accelerate your company's demise. The wrong customers weigh down your company like a sack of potatoes tied around a swimmer's waist; the right customers are like saddling the same swimmer with a buoyant life preserver. The trick is finding the right customers, and this is where smart executives will unleash their big data analytics team.

The strategy of relationships

Your treatment of customer relationships starts with your corporate strategy. Alan Weiss, legendary management consultant and author on corporate strategy, made two very important contributions to the field of strategic profiling:

  1. The acknowledgement that relationships (i.e., services offered at no perceived cost to customers) are as important as products and services when considering what to offer to markets; and
  2. The idea that a decision must be made on whether your positioning will be competitive, distinctive, or breakthrough. (Breakthrough positioning is when a company decides to dominate a market with their offering.)

The cultivation of a fiercely loyal market starts with an executive decision to offer breakthrough relationships. Any decision that involves breakthrough positioning cannot be made capriciously -- with it comes a commitment to install the key capabilities required to support it, which in this case, involves a sizable investment in big data analytics.

It's often difficult to build a business case for breakthrough relationship offerings, as they inherently have no revenue component; that's why your relationship offerings should always be structured within the context of a revenue-generating product or service. For example, an enterprise software company may offer free analytic services to select customers as a relationship offering instead of charging for them as a service offering. If this is the approach, these analytic offerings should never be unbundled from the software -- they are part of its business case.

The signal and the noise

When executing a big data strategy that focuses on building a loyal customer base, it's useful to use a signal and noise metaphor. In short, your most loyal customers are the signal, and everything else is noise. Your data scientists should already be familiar with this concept; it's frequently used when teaching and applying statistics to business problems.

In most cases, you'll initially want your big data analytics team to search internally for your best customers. Your best customers are the ones who are the most satisfied at the least cost to your organization. The task of looking for your best customers is easier said than done.

First, the team must identify all your customer touch-points (order management, customer service, etc.) and unify your internal representation of each customer (i.e., a 360 degree view of the customer). Then, the team must calculate the value of each customer (revenues and costs to the organization) so you can isolate the most valuable customers. Finally, your big data analytics team must profile your customer base to determine the characteristics of your best customers.

At the end of this exercise, you'll ideally have a good set of characteristics that have a strong signal against customer value with very little noise. As a bonus, you'll probably identify several markets that are terrible for your business; these are the people who spend very little money and take a lot of time with your customer service representatives. Armed with this information, you'll know where to focus your marketing dollars and your precious relationship offerings.

A love connection

Once you identify your best customers, it's time to put your relationships strategy into high-gear. It's Marketing's job to bring more of these customers in the door, but it's your relationship offerings that will put your best customers over the top. What service will you provide, free of charge, to your best customers? This is another area where big data analytics can come in handy.

It's time to turn your big data analytics team into a market research operation. Their job now is to find out what else your best customers absolutely love. There are a variety of ways to do this, but a great way to start is by listening to their online conversations. The progression of social media analytics is truly exciting. It's not only a great way to keep tabs on how your best customers feel about you, but also what their other passions are. If you can tap into just one or two of these alternate passions, and offer that to your best customers for free, you will create a bond that no other competitor can break.


Not every company decides to center its corporate strategy on a loyal customer base; however, the ones that do should use big data analytics to identify its best customers and then decide what free service (i.e., relationship) it can offer that will engender fierce loyalty.

Take some time today to design a big data strategy that will bring you and your best customers together. There's no sense in throwing good money into bad relationships.