After going through this lesson, you are expected to:
1. Quantify and qualify data; 2. Identify different types of data; 3. Decide on correct sample size; and 4. Know what to measure. Customer analytics largely involves turning customer actions and attitudes into data. Not all data is the same, and knowing what type of data you’re dealing with guides you through what you can do with it. When you can interpret the data that’s available to you, you can start making better decisions about product features and service experiences. In this chapter, you will understand the different types of data, and how to work with quantitative and qualitative data. Including best practices for identifying the best metrics to manage. You’ll have to put on your analytical thinking cap (the science of metrics) and your creative thinking cap (the art of metrics). If you aren’t a numbers person and decide to hire someone who is, that’s okay. But this is still a useful chapter because you need to know how to talk to your analytics person. And you still need to know how to interpret the numbers so you can make sound decisions about how to improve your business. Quantitative Data
Quantitative data is information that’s broken down by
concrete numbers — for example, how many products a customer places in the shopping cart (3) or how much revenue you earn from a specific customer ($2,000). Quantitative data falls into two categories: ✓ Discrete (countable items) ✓ Continuous (measurements) Adding Up Quantitative Data
You encounter a lot of numbers when quantifying
customer experience with products and services. Knowing whether the data is discrete or continuous dictates the method you use in your analysis and reporting. Discrete and Continuous data
Discrete data has finite values, or buckets. You can count
them. For example, the number of questions correct would be discrete: There are a finite and countable number of questions. Other examples of discrete data are: ✓ Number of products in your catalog ✓ Number of employees you have ✓ Number of customer reviews for a specific product Discrete and Continuous data
Continuous data technically has an infinite number of
steps, which form a continuum. The time to find a product on a website is continuous because it could take 31.627543 seconds. Time forms an interval from 0 to infinity. Discrete and Continuous data
Other examples of continuous data are:
✓ Dimensions of a specific product ✓ Miles to your retail store from a customer’s location ✓ Time for a customer to find the information he or she is looking for on your website ✓ Days until a product ships to a customer You can usually tell the difference between discrete and continuous data because discrete data can’t be broken into smaller meaningful units. You can’t have half a customer, but you can have half a minute. Levels of data
Another way customer analytics data gets divided is by
the four levels of measurement. They’re levels because they start with data that’s more limiting in the type of analysis you can perform to the least limiting: Levels of data
✓ Nominal: This includes discrete data such as the name of
your company, type of car you drive, or name of a product. Nominal means essentially “in name only”; if you have a name, it belongs in this category. Nominal data is qualitative data. ✓ Ordinal: This includes data that has a natural ordering. The ranking of customers by oldest to newest, the order of callers in a queue for a call center, the order of runners finishing a race, or more often, the choice on a rating scale, such as from 1 to 5. Levels of data
With ordinal data, you cannot know with certainty
whether the intervals between each value are equal. In measuring customers’ attitudes toward their experience with products and services, you have to rely heavily on questionnaire data that uses rating scales. For example, on an 11-point rating scale, the difference between a 9 and a 10 is not necessarily the same as the difference between a 6 and a 7. Levels of data
✓ Interval: This is data that has equally split intervals between
each value. The most common example is temperature in degrees Fahrenheit. The difference between 29 degrees and 30 degrees is the same magnitude as the difference between 78 degrees and 79 degrees (I much prefer the latter of these two examples). Levels of data
✓ Ratio: This is interval data with a natural zero point. For
example, time to find a product on a website is ratio, because 0 time is meaningful. Degrees Kelvin has a 0 point (absolute zero). The steps in both these scales have the same degree of magnitude. Whenever you can establish that data is ratio, you can make reasonable deductions, such as “customers are twice as satisfied using a new product version compared to an old version.” Levels of data
Just because customers’ average rating on one product is
a 4 and the rating on another product is a 2 doesn’t mean customers are twice as satisfied. The first rating is definitely twice as high, but unless the scale is both ratio, and calibrated so the numbers correspond to customer behavior, making such claims is risky. It’s best to simply say the rating was twice as high. Levels of data Republic of the Philippines CAMARINES SUR POLYTECHNIC COLLEGES
VARIABLES Variables
A variable is a characteristic of a product or service that
varies, which can often be manipulated. For example, price, delivery time, and color are product variables. Customer variables can include gender, income, geography, new customer versus existing customer, and type of industry, to name a few. When you look at product and customer variables, you can understand how different product attributes attract more or less sales and how different customers respond to different products and feature combinations. Two Types of Variables
✓ Dependent variables are usually the things you care about
but can’t affect directly, such as profitability, customer satisfaction, and customer loyalty. You can influence dependent variables by changing the independent variables. An example of this relationship is shown in Figure 2-2. Two Types of Variables
✓ Independent variables can be directly controlled or
manipulated. For example, independent variables include price, features, advertising, and usability. Two Types of Variables
Often, independent variables correlate with dependent
variables, but the correlation doesn’t equal causation. Other variables that you’re not measuring can “mediate” or be responsible for the relationship. For example, higher sales (dependent variable) might be attributed to a new marketing campaign (independent variable) but the increase is actually just due to a growing economy that’s helped all businesses (mediator variable). Two Types of Variables
You can think of independent variables as the ingredients
you use to cook a stew. The soup is the dependent variable (what you care about), but adjusting the ingredients and their combinations is what you can control. Two Types of Variables Variables often come in the form of words instead of numbers — for example, new customer or existing customer, male or female, high income or low income. To make analysis of these qualitative values easier, you can code them into dummy variables by assigning them a number (for example, new customers get coded a 1 and existing customers get coded a 0; men get coded as 1 and women coded as 0 [or vice versa]). With your variables coded as 1s and 0s, you can compute the percentage of customers with each variable. Two Types of Variables Qualitative Data
Qualitative data is data that is not easily reduced to
numbers. Qualitative data tends to answer questions about the 'what', 'how' and 'why' of a phenomenon, rather than questions of 'how many' or 'how much. Qualitative Data
Qualitative data is often helpful by itself to explain the
“why” behind low satisfaction rates, higher sales, or high customer turnover rates. For example, if you see customers complaining that they don’t know what the total price of their order is in local currency or how to change the currency in a website shopping cart, you know what you can fix Republic of the Philippines CAMARINES SUR POLYTECHNIC COLLEGES
WHAT DATA TO COLLECT What Data to Collect
✓ Descriptive: The descriptive data becomes the template for
whom you measure. It includes demographic data like gender, age, geography, and income. It also includes self-described attitudes and preferences toward products, categories, and technology. From this data, you can create meaningful segments
You can collect this data from purchases, registrations,
surveys, interviews, and contextual inquiries. What Data to Collect
✓ Behavioral: The behavioral data becomes the framework
for testing experiences. It is the general pattern customers exhibit when using your products and services. It includes making purchases, registering, browsing, and using different devices.
For example, customers of certain product categories,
like consumer electronics or home furniture, tend to browse products on their tablet at night and make purchases on their desktop during the day. What Data to Collect
✓ Interaction: The interaction data becomes the task
scenarios that you simulate and measure during a usability test. It includes the clicks, navigation paths, and browsing activities found on websites and software. The classic usability test typically focuses on this level of granularity by simulating real interactions. You can use real- time data from A/B testing, Google Analytics, and lab-based or unmoderated testing to collect data for this grouping. What Data to Collect
✓ Attitudinal: Preference data, opinions, desirability, branding, and
sentiments are usually captured in surveys, focus groups, and usability tests. This is where questionnaires like the SUPR-Q (www.suprq.com), System Usability Scale (SUS; www.measuringu.com/sus.php), or the Net Promoter Score (www.netpromoter.com) quantifies how interactions and behaviors affect attitudes. These attitudes will then affect some self described descriptive attributes quantified in the descriptive grouping. Improvements you make that affect attitudinal data, like increased trust and loyalty, drive further buying behavior. Republic of the Philippines CAMARINES SUR POLYTECHNIC COLLEGES
MANAGING THE RIGHT MEASURE Managing the Right Measure
If you can’t measure the customer experience, you
can’t manage it. Improving the customer experience starts with measuring. But you must be sure you’re getting the right measure (or usually measures) to manage. The right measure(s) will: ✓ Identify problem areas ✓ Track improvements over time ✓ Be meaningful to the customer Managing the Right Measure
The wrong measure(s) can:
✓ Identify wrong areas of focus ✓ Miss problems all together ✓ Lead to unintended consequences ✓ Alienate customers Measuring Experiences
✓ Conversion rate versus number of conversions:
Conversion rates are the central metric for testing better designs, ads, and campaign effectiveness. The ratio of total users who purchase, register, or click (convert) to all users who viewed the page is an effective ratio because you can compare low traffic and high traffic pages. Measuring Experiences
✓ Number of clicks versus time to destination: When
you’re trying to make a more efficient experience, reducing the number of clicks to accomplish a goal seems like a good way to measure. Putting all functionality and content on one page would certainly reduce the number of clicks, but that probably is not what your customers have in mind. Measuring Experiences
✓ Call time or call satisfactorily resolved: Wonder why
those often scorned customer service agents you call to complain to speak so quickly? If you want to reduce call time in a customer support center, you can instruct agents to get off the phone faster, but have you really increased service or quality if customers have to call back? Often a simple follow-up question sent via email can solve this problem. Measuring Experiences
✓ Customer satisfaction as a bonus motivator: Many
companies pay bonuses based on achieving and exceeding certain customer satisfaction goals. Unfortunately and not surprisingly, this can lead employees to improve their chances for getting the bonuses in ways that make measures less meaningful. Measuring Experiences
✓ Likelihood to recommend or likelihood to repurchase:
With the popularity of the Net Promoter Score, it may seem like word of mouth is the only measure you should care about. But if everyone already knows about and owns your product or visits your website, likelihood to purchase again might be a better measure of growth. For measuring customer loyalty, I recommend using both repurchase rates and likelihood to recommend. This provides a mix of both behavior and attitude. Measuring Experiences
✓ On-time arrival versus on-time departure: Have you ever
been on a plane that pulled away from the Jetway only for it to sit on the tarmac waiting for mechanical issues or other delays? You then arrive at your destination late? It’s likely that the flight segment still counted as an on-time departure. You can’t argue with the measure: The plane did pull away from the Jetway on time and that does mean something. However, that action just doesn’t mean that much to the customer sitting in the idled plane. Measuring is good. Knowing what to measure is better. Finding the right measure means taking multiple measures and seeing which one best tracks customer sentiments and revenue. THANK YOU MY DEAR STUDENTS! SEE YOU ON OUR NEXT DISCUSSION on Customer Analytics.