A couple of years ago, Clarabridge wrote a white paper about three major trends that are speeding up the adoption of text analytics. To be honest, I’ve been fascinated by the rapid pace at which this adoption has played out.
In the not-so-distant past, I would need to explain to prospective customers what text analytics was all about, discuss the challenges related to customer experience, then connect the dots. How times have changed! Companies today clearly understand the inherent benefits of this discipline and how it helps to improve customer experience. We see this understanding reflected across all sorts of activities from increasing numbers of inbound calls to RFPs to self-service downloads[link]. The light bulb has gone off and everyone now “gets it” intuitively.
The Missing Benefit
As the market moves from early adopters to mainstream users, our company has focused increasingly on demonstrating the tangible value of text analytics. Recently, we led an entire session at C3 on how to communicate the value of text analytics to your CFO. Panelists talked about increasing efficiency in customer care by driving down repeat calls, creating self-service opportunities, and more. Still, there’s been one key benefit of text analytics that remains hard to quantify and pin down. What impact does this have on revenues?
By chance, I recently came across a study by Watermark Consulting
How do Clarabridge customers measure up in their financial performance as compared to their non-Clarabridge peers? Wouldn’t it be cool if I could find an easily understood benchmark showing how Clarabridge customers actually outperformed their peers?
ROI Revealed?
So here’s what I did. First, I looked at the two dozen Clarabridge customers that have been with us for more than one year. I then eliminated the ones that are not publicly traded and I was left with a set of mostly Fortune 1000 companies representing almost all the major industries in the Standard and Poor’s 500 index. Using this set, I created a model similar to that of a mutual fund—comparing the performance results of $1,000 invested in our “Clarabridge Major Industries Index” versus that same investment in the S&P 500.
The results?
Those who invested in text analytics, and by extension in better understanding the concerns and desires of their customers, outperformed their peers. Pretty compelling evidence that working with Clarabridge tends to lead to greater tangible returns over time, all in a simple but striking visual that hits home!
Looking at this chart, I’m tempted to quit my day job and invest in companies that use Clarabridge!
Tony, your implication is that investing in Clarabridge text analytics is driving stock market performance of this group. Seriously?
The correlation is interesting, but I’ll bet those same companies are all using Microsoft Office, too. Maybe Excel is the reason they outperformed the market?
I do agree that text mining has a lot of leverage for customer-centric B2C companies who seek to understand what their customers are saying and then act to improve the customer experience. Based on our research, there’s good evidence that Customer Experience leaders outperform the industry average, but it’s through a combination of things including strategy, culture, people management, process/experience design and technology.
Text mining is a powerful tool to make sense of what is being said on the Social Web and elsewhere. But if Clarabridge or other text mining vendors start hyping this kind of correlation as “compelling evidence” then we can expect a repeat of the CRM failure pattern when the lofty expectations you set are not realized by customers. Please, let’s not go there again.
Hi Bob,
Ok… you caught me. I sometimes secretly close my office door and practice text mining cheers to the sounds of John Phillip Sousa on my iPod. Sales hat aside, I do think that we fundamentally agree on the core point that I was getting at in the blog. Companies that focus on the customer experience tend to outperform their peers when compared side by side. Do I think it’s solely because of text analytics? Nope, but we believe it does play a critical role, so much so we’re betting our company on it.
We’ve now been deeply involved in implementations of text analytics in over 70 enterprise customers including many fortune 100 companies, and we’ve found two important factors in having a successful customer experience management program. First, companies that dedicate people, resources and technology specifically to understanding and disseminating the insights customers have across the corporation will always be more successful in their programs. Second, the marriage of structured and unstructured data creates a powerful union that when understood jointly will give deeper and more impactful insights into customer needs, desires and problems. It’s most assured that this will require an architecture that is flexible enough to plug in existing technologies like BI, CRM, DBMS, and existing and new data sources (or listening posts if you will) from traditional customer service to surveys to “social media”.
If you build the right infrastructure (tech, data and personnel), you’ll have a town that will be able to respond to the growing needs of its community.
Thanks for taking the time to respond, we value these conversations, and if nothing else, blogs like this can help to spark conversations about what strategies do and don’t work when it comes to creating a great product or service for your customer.
So, my question is what role you think text analytics plays in a customer-centric strategy?
Regards,
Tony
Thanks, Tony.
I think you nailed it with these statements:
“First, companies that dedicate people, resources and technology specifically to understanding and disseminating the insights customers have across the corporation will always be more successful in their programs. Second, the marriage of structured and unstructured data creates a powerful union that when understood jointly will give deeper and more impactful insights into customer needs, desires and problems.”
And I’m a big proponent on the use of unstructured data in Voice of Customer programs. I wrote a paper on the subject 3 years ago and it’s great to see growing interest and adoption.
Of course, even the best VoC program won’t work, no matter how much customer insight is gained, unless the organization does something with the insight. This execution element is critical.