10/31/2019 Using IBM Watson to Answer Two Important Questions about your Customers |

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Using IBM Watson to Answer Two

Important Questions about your
Customers
byBob Hayes on March 13, 2019 in Artificial Intelligence, Customer Experience
Management, Data Science, Machine Learning

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Customer experience management (CXM) programs are necessarily a quantitative endeavor, requiring CX
professionals to decipher insights from a sea of customer data. In this post, I will illustrate how you can use
IBM Watson Studio to analyze one source of customer data, customer survey responses, to answer two
important questions about the health of your customer relationship: 1) what is the current level of
satisfaction across the CX touch points and 2) which of these touch points is responsible for ensuring
customers are loyal?

Customer Experience Management (CXM) programs rely on di erent types of data that come from a
variety of sources. The most popular source of customer feedback is surveys. Customer surveys are
used to help you answer two broad questions about the health of your customer relationship:

1. What is the current level of customer satisfaction with di erent aspects of your business (i.e.,
product, ease of doing business, technical support)?
2. What is the likelihood your customers will exhibit di erent types of loyalty behaviors toward your
company or brand (e.g., likelihood to stay, recommend and buy more).

These two questions will help you understand how well you are meeting the needs of your customers
and, more importantly, understand what you need to do to improve customer loyalty. In today’s post, I
will present a case study to illustrate how you can use IBM Watson Studio to answer these two
questions.

Why IBM Watson Studio?

IBM Watson Studio, an end-to-end analytics solution to help you gain insights from your data, was
designed for data scientists, application developers and subject matter experts to collaboratively and
easily work with data to build and train models at scale. Of the di erent deployment options that are
available for IBM Watson Studio, I signed up for IBM Watson Studio Desktop and I will be using this
deployment in this post.

IBM is using the power of its Watson Studio platform to extend the power of AI to people who fall
outside the realm of data science, machine learning and AI experts. IBM Watson Studio is an end-to-

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end analytics solution to help you gain insights from your data. Watson Studio accomplished this feat
by providing a platform to help you prepare data and build models on your own desktop using their
easy-to-use visual drag and drop tools.

Before diving into IBM Watson Studio, it’s important to give some background on both the survey data
and the analytics behind driver analysis.

Case Study: The Survey Data

A company conducts an annual customer relationship survey to help them understand and improve
the health of the customer relationship. Using a 0 (Extremely Dissatis ed) to 10 (Extremely Satis ed)
scale, the customer relationship survey asked customers to indicate how satis ed they are with the
customer experience across eight business areas or touch points:

1. Ease of Doing Business

2. Account Management
3. Overall Product Quality
4. Purchasing/Invoicing/Delivery
5. Utility of Web site
6. Technical Support
7. Communications from the Company
8. Future Product/Company Direction

Using a 0 (Not at all likely) to 10 (Extremely likely) scale, the survey also asked customers to indicate
their likelihood of engaging in di erent types of loyalty behaviors:

1. Advocacy Loyalty (e.g, likelihood to recommend, buy again, overall sat)

2. Purchasing Loyalty (e.g, likelihood to expand usage, buy di erent types of products/services)
3. Retention Loyalty (e.g., likelihood of renewing service contract, staying)

IBM Watson Studio Desktop

To answer the two questions posed earlier, I will follow a 5-step process for the current case study:

1. Load Data
2. Add and Prepare Data
3. Explore Data
4. Analyze Data
5. Communicate Results

To use IBM Watson Studio, simply follow the instructions to install it on your desktop.

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After installing and logging into the Watson Studio platform, you can create a new project or manage
an existing project. In the screenshot above, you can see that I already have three projects. I will click
on the New Project button to create a new project.

Next I will create a New Project in which I will try to answer the two important questions.

1. Load Data
The rst step is to load the data into Watson Studio. The raw survey data are in an Excel spreadsheet,
with the columns representing the di erent variables in your data set. Using machine learning
nomenclature, think of the customer experience (CX) touch points as the features of your model and
the three di erent types of customer loyalty as your outcomes or criteria.

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I uploaded this data set by clicking on the upper right “browse for les to upload” link and selecting it
from my laptop. That data set will be stored as a Data asset.

2. Add and Prepare Data

After you have uploaded your data set to Watson Studio, the next step is to explore the data set to
better understand the variables in your data set. Watson Studio uses a Modeler Flow (click Add to
project button) to help you with this task and other, more in-depth analyses.

The Modeler Flow is based on IBM SPSS Modeler that uses Nodes to perform certain functions on your
data. The various Nodes can be found in the Palette window on the left side of the application.

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Add Data. In this step we need to rst import the data asset to the Modeler Flow. Simply drag and
drop the Data Asset Node into the main part of the Modeler Flow window and then double-click the
icon to nd and connect your data set.

Prepare Data. Next, you will need to prepare your data for exploration and analysis. Simply drag and
drop the Auto Data Prep Node into the Modeler Flow window. The Auto Data Prep Node automatically
prepares your data for analysis (e.g., changing strings to numerical values). Connect the two nodes by
clicking and dragging from the two circles on the respective Nodes.

Next, to view the prepared data, simply click the upper right corner of the Auto Data Prep Node and
click “Preview.” A new window will open with the new data. I see that, although my raw data were
originally in string/text format (even though they were numbers), the Auto Data Prep Node
transformed those values to numerical format. In addition to automatically preparing your data,
Watson Studio lets gives you options to conduct additional operations, including ltering and binning
variables as well as selecting samples.

3. Explore Data
Next, we can explore our data by calculating some descriptive statistics for our measures. Simply add
the Statistics Node to the window and connect it to the Auto Data Prep Node. Click on the upper right
of the Statistics Node to open the window to select the variables you want to include in the analysis
(Add Columns) and the statistics you want to see for those variables and click save.

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To view the statistics, click on the Statistics Node and hit run. An Output panel will open up to the right
with a list of icons, each representing a particular analysis you ran. Double click the icon to view the
results (see below). You can see the descriptive statistics for each of the variables selected (scroll down
if necessary). You can check for outliers or invalid values to ensure your data are clean for analysis.

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You can also view the values in graphical format. Add the Histogram Node to the Modeler Flow
window. Again, attach the Histogram Node to the Auto Data Prep Node, then open the Auto Data Prep,
add the variable of interest. Save then run the node. The Output panel will open up again with a new
icon representing the results of the analysis. Double click the icon to view the results (see inserted
picture below for Advocacy loyalty). The data look good (all variables within possible ranges (0 to 10)).

4. Analyze Data
The next step is to analyze the data. For our example, to answer our questions, we need to look at two
types of analytics: 1) Descriptive and 2) Predictive. Descriptive analytics are used to indicate the current
state of the world. In our case, descriptive analytics helps us know the current satisfaction level of each
customer touch point and the current state of customer loyalty. The level of satisfaction is indexed by a

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summary statistic. While di erent summary statistics can be used, I use the mean score (sum of all
responses divided by the number of respondents).

Predictive analytics are used to make predictions about future events. In our case, predictive analytics
helps us know how strongly/weakly each of the customer touch points is related to customer loyalty.
This information tells us the relative importance of each CX touch point in ensuring customers are
loyal. The relationship between CX touch points and customer loyalty can be calculated by simply
correlating the ratings of the touch point with the customer loyalty measure. This correlation is
referred to as the “derived importance” of a particular touch point. If the survey has a measure for
each of the eight (8) touch points, we will calculate eight (8) correlations for each of the measures of
customer loyalty. Higher correlations (max is 1.0) indicate a strong relationship between the touch
point and customer loyalty (e.g., business area is important to customers). Low correlations (near 0.o)
indicate a weak relationship between the touch point and customer loyalty (e.g., business area is not
important to customers). I added the three loyalty metrics to the model. Because research has shown
that di erent types of loyalty are impacted by di erent types of CX touch points, I needed to build
di erent models for each type of customer loyalty.

In IBM Watson Studio, I selected the Statistics Node from the Outputs options to calculate the means
for each variable and their correlations with each of the three measures of customer loyalty. Double
click the Statistics Node to add the 8 CX touch points (predictors). You can then check the speci c
descriptive statistics you are interested in examining (I added count and mean). Scroll down in that
panel and you can add the three loyalty measures to which you want to correlate the eight CX touch
points. Hit save. Then run the Statistics Node to view the descriptive statistics of all predictors and their
correlations with each of the measures of customer loyalty. See below. You can scroll down to view the
entire output.

5. Communicate Results
Now, we have the answers to our two questions: What’s the current level of satisfaction for our touch
points and what are the correlations with each of the measures of loyalty. You can use the output for
your reporting. I took the extra step of consolidating the results into a simple table (See Table 1).

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With these data, we can

draw some conclusions
about the health of the
customer relationship.
First, from our earlier
analysis in the
exploratory phase, we
see that the means for Means of CX Touch Points and Their Correlations with (Impact on) Advocacy, Purchasing
and Retention Loyalty.
the three measures of
loyalty are: Advocacy: 8.3;
Purchasing: 6.9; and Retention: 8.3. That is, Advocacy and Retention Loyalty appear to be relatively high
while Purchasing Loyalty is relatively low; this suggests that, even though the customers are more likely
to recommend the company and stay with them for a long time, they are less likely to expand their
relationship with the company.

Customers are most satis ed with Product Quality, Technical Support and Communications from the
company. Customers are least satis ed with Utility of Web site, Purchasing/Invoicing/Delivery,
Sales Process and Company’s direction and future products/services.

Second, we can identify the CX touch points that have the biggest impact on the di erent types of
customer loyalty. The top four drivers of Advocacy Loyalty are Ease of doing business,
Communications from the company, Company’s direction and future products/services and Product
Quality. The top four drivers of Purchasing Loyalty are Company’s direction and future
products/services, Product quality, Communications from the company and Ease of doing business.
The top four drivers of Retention Loyalty are Technical Support, Ease of doing business,
Communications from the company and Company’s direction and future products/services.

I noticed that, while Web site utility received the lowest ratings of satisfaction, it also has the lowest
impact on customer loyalty. That is, Web site utility does not appear to be as important to driving
customer loyalty compared to the other CX touch points. Improving Web site utility will do very little to
improve customer loyalty.

To improve customer loyalty, this company might initially consider focusing their CX improvement
e orts on those CX touch points that have a low level of satisfaction and have a large impact on
customer loyalty. Based on the results, it appears that Company’s direction and future
products/services could be an area where there is room for improvement and it has a relatively high
impact on the three types of customer loyalty.

Summary
In this article, I illustrated how you can use IBM Watson Studio to analyze customer survey data to
answer two important questions about the health of your customer relationship. In pursuing the
answers, I found Watson Studio Desktop was fairly easy to use. I referenced their online
documentation a few times in the process and found my answers quickly, with links to documentation
and other great resources including IBM Watson Studio Community.

This post was brought to you by IBM Watson Studio. I received compensation to write this post but all
opinions expressed are my own.

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About me
I am Business Over Broadway (B.O.B.). I like to solve problems through the
application of the scienti c method. I use data and analytics to help make
decisions that are based on fact, not hyperbole. My interests are at the
intersection of customer experience, data science and machine learning. To
learn more about me and what I do, click here.

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TCE: Total Customer Experience

Learn how to build your business around the customer using customer-centric measurement and
analytics. Available in Kindle and paperback. Learn more about TCE: Total Customer Experience.

Beyond the Ultimate Question

Beyond the Ultimate Question: Book includes comprehensive review of Net
Promoter® Score (NPS) and presents better measures of customer loyalty and
best practices of customer feedback programs.

Measuring Customer Satisfaction

Measuring Customer Satisfaction and Loyalty (3rd Ed.): Book includes discussion of how to
measure the customer experience, including customer satisfaction and customer loyalty.

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