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Vendor Landscape: Customer Analytics Service Providers, Q2 2017Tools And Technology: The Customer Analytics Playbook

by Brandon PurcellMay 16, 2017 | Updated: May 18, 2017

For CUstoMer InsIghts ProFessIonals

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Key takeawaysProviders Bridge Gaps In The Insights Life CycleCustomer analytics service providers specialize in weaving together the disparate phases of the CI life cycle — from data to insights and action.

The Landscape Is Undifferentiatedalmost every provider has a similar elevator pitch, so the ecosystem is extremely difficult to navigate for buyers.

many Jacks of many TradesVery few providers specialize in only customer analytics. Most cover other domains such as marketing, customer data management, or specific verticals.

Why read this reportCustomer insights (CI) pros often need help turning their data into actionable insights, and they look to customer analytics service providers to meet this need. Unfortunately, in a crowded landscape with more than 50 vendors competing for market share, selecting one is not an easy task. this vendor landscape report separates the market into six segments to help CI pros know where to start.

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table of Contents

Service Providers Up-Level Your Customer Analytics Game

But Data and Delivery are no longer strong Differentiators

Diverse Analytics Challenges Demand A Flexible Services Approach

Few Major In Customer Analytics; Many Minor In It

recommendations

Ask About ROI And AI; Then Try And Buy . . . Oh My!

Supplemental Material

related research Documents

Pick a Powerful Pilot to Propagate Customer analytics

the state of Customer analytics 2016

Vendor landscape: Insights service Providers

For CUstoMer InsIghts ProFessIonals

Vendor Landscape: Customer Analytics Service Providers, Q2 2017Tools And Technology: The Customer Analytics Playbook

by Brandon Purcellwith srividya sridharan, Jennifer Belissent, Ph.D., Boris evelson, Christian austin, and Kara hartig

May 16, 2017 | Updated: May 18, 2017

http://www.forrester.com/go?objectid=RES117720




http://www.forrester.com/go?objectid=BIO10005




For Customer InsIghts ProFessIonals

Vendor Landscape: Customer Analytics Service Providers, Q2 2017may 16, 2017 | updated: may 18, 2017

© 2017 Forrester research, Inc. unauthorized copying or distributing is a violation of copyright law. [email protected] or +1 866-367-7378

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Tools And Technology: The Customer Analytics Playbook

service Providers Up-level Your Customer analytics game

Chances are that you’ve invested in big data architecture to capture your customer data. You may even be merging data from multiple sources to create a single source of truth about your customers. on top of that, you may even be creating behavior-based segments or customer propensity models. excellent! But as a CI pro, no matter where you are in your customer analytics journey, at some point you will probably run into a situation where the demand for analytics from internal stakeholders surpasses your team’s ability to deliver.1 or you may not have a team at all. either way, it may be time to seek help from a customer analytics service provider, which Forrester defines as:

Customer analytics service providers help their clients transform customer data into analytical insight to optimize customer decisions and design customer-focused programs and initiatives that drive acquisition, retention, cross-sell/upsell, and targeted marketing campaigns.

CI pros look to customer analytics service providers to:

› Bridge the gaps in the CI life cycle. the insights life cycle translates raw data into insights and turns those insights into action to win, serve, and retain customers (see Figure 1). Customer analytics service providers help their clients stitch the insights life cycle together by connecting these phases. Many companies fail to bridge the gap between data and insights because they don’t have resources on hand who are familiar with advanced data mining techniques. similarly, some companies that can produce insights still struggle to take action due to organizational or technical constraints.2 Finally, companies should be continuously learning from the efficacy of their actions in a closed feedback loop, but many fail to measure results and improve over time.3

› Augment existing skill sets. Many companies look to service providers to fill the talent gap resulting from an inadequate supply of data scientists. this skill set is still in incredibly high demand, and 26% of CI pros cite “hiring talent to manage measurement and analytics” as a key challenge to customer analytics adoption.4 service providers tend to lure data-science talent with high pay, competitive recruiting practices, and the opportunity to work on a variety of challenges. Despite a crop of eager young minds flocking to this lucrative profession, the scarcity problem is only likely to worsen as the artificial-intelligence renaissance demands even more highly specialized skill sets. Unless you are google or Facebook, chances are that you’ll have tremendous difficulty hiring these pegasi and will need to seek outside help.5

› Accelerate analytical maturity. Whether you’re building new models, incorporating additional data, or applying existing techniques to new use cases — the opportunity for innovation in analytics is constantly beckoning. Customer analytics service providers help their clients climb to the next rung in the ladder of analytical sophistication. For example, a retail bank with channel-centric analytics engaged Merkle to drive next-best actions across all channel interactions resulting in a 23% marketing roI in the first year. With seasoned strategists, domain experts, and a stable of data scientists on staff, these companies specialize in identifying, developing, and delivering your next successful customer analytics initiative.




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fIGUre 1 Customer analytics helps Bridge gaps In the Customer Insights life Cycle

Analytics gap

Insights-to-action gapMeasurement and

optimization gap

Insights

Action

Dat

a

But Data And Delivery Are No Longer Strong Differentiators

the promise of partnering with customer analytics service providers is to accelerate your analytics maturity, but they struggle to showcase their unique value proposition. Many providers have adopted similar measures around data enrichment and delivery leading to recommoditization. Despite this, the types of data that they offer, their methods of delivery, and vertical expertise are still important considerations for CI pros seeking a partner. In an effort to differentiate their services, vendors offer:

› Access to additional customer data sources for enrichment. In an effort to help their clients attain the elusive 360-degree view of the customer, 80% of customer analytics service providers offer data enrichment. this makes perfect sense because data is the lifeblood of analytics. and incomplete data yields incomplete results. location-specific data sources like geospatial and weather data help marketers deliver contextually relevant messaging. Demographic, behavioral, and psychographic data add important features for customer segmentation. and vertical-specific data such as category-level trade data in retail or complaint data in banking offers a broader external view of the industry landscape. With the need for well-curated and complete data only becoming more pronounced, enrichment will continue to be a crucial facet of customer analytics service provider offerings.

› Proprietary accelerators that blur the line between product and service. By virtue of performing the same type of analysis across multiple clients, many customer analytics service providers have codified their approach in semi-productized solutions. although each business’ data is unique, there are common variables within and across verticals. Firms frequently need




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to prepare these variables in the same way and feed them into the same set of algorithms. For example, the k-means clustering algorithm is often used for customer segmentation, and many vendors offer accelerators that reduce data prep time with an integrated customer data model that they optimize for clustering. like data enrichment, accelerators are becoming table stakes — 78% of the 50 vendors that we surveyed for this report offer accelerators for specific types of customer analyses, and the average vendor offers eight different types.

› A combination of industry expertise and analytics acumen in verticalized offerings. Just as many providers have created horizontal customer analytics accelerators, others offer similarly productized capabilities vertically. often these vertical offerings blend vertical-specific data, analyses, and use cases. For example, dunnhumby offers a behavioral and attitudinal survey tool for consumer packaged goods brands that are starving for customer data. In asset management, Dst systems offers predictive wholesaling to match the right advisor with the right investment opportunities at the right time. and in retail banking, Beyond the arc accelerates clients’ voice of the customer capabilities using a banking-specific text analytics taxonomy.

Diverse analytics Challenges Demand a Flexible services approach

no two client engagements are exactly alike, so flexibility is compulsory for customer analytics service providers that wish to remain relevant. this means hiring resources with diverse skill sets who can tackle client challenges using a wide array of tools and customer analytics techniques. to help CI pros navigate this ecosystem, Forrester surveyed 50 customer analytics service providers, took dozens of briefings and inquiries, and spoke to buyer and vendor experts. specifically, we found that customer analytics service providers offer:

› Talent: a range of skill sets to meet client needs. If you ever wondered where the data scientists are hiding, look no further than your customer analytics service provider. all 50 of the surveyed vendors in this report have data scientists on staff, and in 26% of these companies, they account for more than 50% of employees! But just as a great guitarist alone doesn’t make a great band, the data scientist is only one of many essential personas for customer analytics service providers (see Figure 2). Marketing specialists transform insights from analysis into campaigns, bridging the insights-to-action gap, and then measure results. Data engineers wrangle the data from multiple disparate sources for modeling. and industry specialists, business analysts, and strategic consultants ensure that the results map to high-level organizational goals.

› Techniques: classic table-stakes methods and emerging ones that differentiate. Vendors offer a broad range of customer analytics techniques, but some are more widely available than others. For example, vendors almost universally offer segmentation. It is like the Beatles of customer analytics techniques — it has been around for decades and still stands the test of time like the seminal album “abbey road.” Customer journey analytics on the other hand is more like taylor swift, a promising rising star whose long-term relevance has not yet been established. Finally,




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cognitive analytics, the most recent addition to the customer analytics arsenal, is like skrillex — an ultramodern glimpse of where this domain is likely to go. Fewer providers offer these newer and not entirely proven techniques.

› Tools: open source and proprietary tools for analysis. to remain competitive in a world that’s flooded with advanced analytics technologies, most customer analytics service providers have become tool-agnostic. nine out of 10 companies report using open source tools such as r or Python for analysis (see Figure 3). another 70% report using sas, and the same percentage have built their own proprietary tools in-house. given the preponderance of data scientists at these companies, the widespread use of r, Python, and sas — the most popular tools among analytics pros today — is not surprising.6 the additional mastery of proprietary solutions from adobe, IBM, and teradata speaks to the proliferation of these technologies among clients.

fIGUre 2 Customer analytics service Providers offer rich and Diverse talent to ensure Client success

“What percentage of your customer-analytics-aligned employees are bestdescribed by each of the categories below?”

Data engineers who are comfortable wranglingdata from Hadoop and distributed file systems

Data scientists who use open source tools suchas R and Python to build models

Noncoding data scientists who rely on datamining solutions with a graphic user interface

Business analysts who are comfortable exploringdata and creating reports but cannot perform

advanced analytics

Industry specialists who have a considerableknowledge base from years of working in a

single vertical

Marketing specialists

Strategic consultants

Less than 10% 10% to 25% 26% to 50% More than 50%

40% 36% 16% 8%

40% 36% 16% 8%

28% 44% 20% 8%

36% 42% 14% 8%

14% 32% 28% 26%

30% 38% 24% 8%

58% 24% 16%

2%

Base: 50 global professionals whose firms provide customer analytics servicesSource: Forrester’s Q4 2016 Global Customer Analytics Service Provider Vendor Landscape Online Survey




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fIGUre 3 Most Customer analytics service Providers have Become tool-agnostic

“What tools do you typically use to analyze your clients’ data?”(Multiple responses accepted)

6%

6%

8%

30%

30%

34%

34%

46%

70%

70%

90%

Angoss

Pitney Bowes

FICO

Alteryx

SAP

Adobe

Teradata

IBM

Proprietary tools that we build in-house

SAS

Open source tools such as R or Python

Base: 50 global professionals whose firms provide customer analytics servicesSource: Forrester’s Q4 2016 Global Customer Analytics Service Provider Vendor Landscape Online Survey

Few Major In Customer analytics; Many Minor In It

For a CI pro looking for help, navigating the customer analytics service provider ecosystem can be a frustrating exercise. Vendor elevator pitches are maddeningly similar: “We apply advanced analytics and domain expertise to derive valuable insights from customer data.” Despite this lack of differentiated messaging, customer analytics is not the main offering of many vendors. approach, key analytics methods, employee personas, buyer personas, data enrichment, and average engagement cost differ depending on a vendor’s core competencies. CI pros should consider (see Figure 4):

› 1. Advanced analytics service providers for gnarly data-science engagements. Customer data is certainly not the only type of data, and advanced analytics providers don’t discriminate. their teams of skilled data scientists apply data mining techniques such as machine learning to all of their clients’ big data challenges. In addition to customer analytics, these companies provide the pantheon of analytics services — supply chain analytics, operational analytics, risk management,




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etc. Many of these providers are larger consultancies with analytics shops such as accenture, Fractal analytics, and Mu sigma, while others are the services arm of analytics software vendors such as IBM, sas, and teradata. Most advanced analytics providers work across industries and offer a suite of verticalized solutions like behavioral customer segmentation for banks and recommendation analyses for retailers. Many advanced analytics providers employ data-science resources globally and use a combination of open source and proprietary tools for analysis. Because of the enterprise nature of projects, engagements can range from $100,000 to more than $1 million.

2. Customer analytics service providers for customer-focused projects. Unlike their more indiscriminate advanced analytics cousins, customer analytics providers specialize in analyzing customer data for marketing and customer experience use cases. they major in classic customer analytics techniques. For example, all five vendors in this category — Buxton, Css Corp, lenati, Precision Dialogue, and tiger analytics — offer behavioral customer segmentation, churn analysis, and customer lifetime value as core competencies, and only one does not offer cross-sell/upsell analysis. Because their focus is firmly on the customer, they typically sell directly to the CI organization in addition to the chief data officer or chief analytics officer. typical engagements include classic customer analytics standbys such as customer churn analysis and customer lifetime value analysis.7 In addition to data scientists, these firms typically employ marketing specialists who help translate analytical insights into action. Customer analytics projects tend to be narrower in scope, so engagements usually run from $50 to $500,000.

3. Customer data management providers for a single source of customer truth. Customer data management providers construct the foundation for customer analytics by integrating data from siloed sources to create a holistic view of the customer. reconciling a customer’s identity across internal data is already onerous, but often these providers help resolve customers’ anonymous online identities from cookie data as well. Many of these vendors such as Infosys and VirtusaPolaris come from an It consulting heritage, while others such as Wunderman offer a data management platform. Customer data management providers employ many data engineers in addition to data scientists. and because they straddle the border between technology and the business, their clients include the chief data officer as well as the CMo. Many of these providers also offer customer analytics such as churn analysis or cross-sell analysis on top of their data wrangling services.

4. marketing analytics providers for propensity-based targeting. the no. 1 driver behind customer analytics is increasing marketing performance, and marketing analytics providers have a laser focus on this use case.8 Using techniques such as behavioral customer segmentation and customer look-alike targeting, they identify the right customers to deliver the right message to at the right time. additionally, they typically offer campaign management and marketing measurement services, closing the feedback loop on the insights life cycle. they are more likely to provide data than other vendors, apart from strategy consultants, and of course they sell into the CMo’s or the CI organization. this category contains traditional marketing service providers such as acxiom and experian as well as more recent entrants with proprietary marketer-friendly technologies such as BrIDgei2i and lityx.




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5. Strategy consultants for road mapping and change management. traditional strategy consultancies have invested in considerable data-science talent for advanced analytics, but they also offer guidance on the pieces of the puzzle that are often missing — people and processes.9 the Big Four and their ilk help architect the correct organizational structure for customer analytics and determine how best to staff it.10 Deloitte, eY, Ironside, and KPMg all now offer tactical analytics services to complement their strategic offerings. they also offer data enrichment in addition to analytics in the form of demographic, vertical-specific, social media, address, and census data. For customer analytics, they tend to serve the CMo or CI organization, and unsurprising is the cost of a typical engagement, which is upward of $500,000 on average.

6. Vertical specialists for niche industry solutions. these companies employ seasoned industry vets in addition to data scientists and offer packaged vertical-specific services. While data scientists may use the same algorithms to predict churn at a bank as they use at a retailer, the data, regulatory environment, and eventual implementation of the model are quite different. With a deep understanding of industry-specific use cases, data, market forces, and technologies, vertical specialists are in a position to master niche customer analyses. For example, financial services specialist Dst systems offers advisor portfolio segmentation and predictive wholesaling for its brokerage business, and haVI offers customer engagement and promotion analytics for quick-service restaurants and automotive clients. Most vertical specialists offer industry-specific data enrichment to clients in addition to their services.




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fIGUre 4 the six segments of the Customer analytics service Provider ecosystem

Accenture

Angoss

AtosCognizant

Fractal Analytics

Happiest Minds

Mu Sigma

PwC SAP

Teradata

Advancedanalytics

Analytic Partners

BRIDGEi2i Decibel Insight

LatentView Analytics

AcxiomEpsilonMerkle

Rise InteractiveMarketinganalytics

Deloitte

KPMG

Ironside

EY

VerticalspecialistsStrategy

consulting

Wunderman

Majority personasMajority buyers

Wipro

Virtusa Sonata

HPE

Protiviti

Neustar

Infosys

Clarity Insights

Customer datamanagement

HAVI

Beyond the Arc

DST Systems

dunnhumby

Houston Analytics

Ugam

Head of CX Data engineers

Business analysts

Data scientists

Marketing specialists

Strategic consultants

Industry specialists

CDO

Chief analytics officer

Customer insights org.

CMO

Ardent IO Allant GroupBuxton

CSS Corp

Lenati

Tasseologic

Tiger Analytics

Precision DialogueIBM

Experian

Lityx

Customer analytics

Note: These categories are not mutually exclusive. Many vendors offer capabilities in several of thecategories that appear above.

SourceLink

Experfy

SAS Genpact




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recommendations

ask about roI and aI; then try and Buy . . . oh My!

selecting the right service provider is essential to the successful implementation and evolution of your organization’s CI function. an inexperienced or unqualified vendor may lead to a protracted or failed project that could jeopardize your CI budget for years to come. Despite the similarity between provider value propositions, there are a few key criteria to keep in mind. When selecting a customer analytics service provider, CI pros should:

› Adopt a methodical approach to shortlisting vendors. When selecting a customer analytics service provider, CI pros should follow Forrester’s five-step approach to narrowing down the field of service providers.11 First, prioritize vendors with demonstrated vertical and business-domain horizontal expertise. Case studies with quantifiable roI and customer references are always solid proof points. next, ask about project accelerators, and kick the tires to ensure that they’re actually products and not merely slide-ware. third, consider the availability of regional resources and subject matter expertise. Fourth, vet the staff who will get assigned to your project by reading through their resumes and interviewing them if necessary. Finally, choose your vendor by the depth and breadth of its customer analytics capability. remember, if this project works out, it could turn into a longer relationship requiring even deeper expertise.

› Ask about plans to support AI. Whether your organization is ready or not, artificial intelligence (aI) is upon us, and customer analytics service providers will play an integral role in embedding aI in the CI function. From analyzing unstructured data like images and video for customer understanding to training deep neural networks on massive data sets, CI pros will be some of the first early adopters of aI technologies within enterprises. and they will look to their service providers for models, guidance, and best practices. today, only 30% of vendors cite “cognitive analytics” as a core competency. In two or three years, that number will likely be 100%!

› Start with a narrow pilot and expand contingently. savvy CI pros must kick off a new vendor relationship in a limited pilot before signing a check with multiple zeroes and commas.12 this affords vendors the opportunity to put their best foot forward and prove value early on and mitigates the potential risk of an extended and costly misadventure. look at the pilot project like a dating period. ask: Is the vendor responsive to your needs? how often does the vendor contact you with updates? Does the vendor align with the culture of your organization? and most importantly — at the end of the pilot, do you feel fulfilled, or would you have been better going out on your own? remember, there are always more fish in the sea.




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supplemental Material

Survey methodology

Forrester’s Q4 2016 global Customer analytics service Provider Vendor landscape online survey was fielded to 50 firms that offer customer analytics services. For quality assurance, we screened respondents to ensure that they met minimum standards in terms of the types of analytics services that they offered to their clients and the breadth of their resources.

Forrester fielded the survey in December 2016. exact sample sizes are provided in this report on a question-by-question basis. this survey used a self-selected group of respondents and is therefore not random. this data is not guaranteed to be representative of the population, and unless otherwise noted, statistical data is intended to be used for descriptive and not inferential purposes. While nonrandom, the survey is still a valuable tool for understanding where users are today and where the industry is headed.

https://go.forrester.com/apps/

http://forr.com/1einFan

http://www.forrester.com/Analyst-Advisory/-/E-MPL172

https://www.forrester.com/events?N=10006+5025




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Companies Interviewed for This report

accenture

acxiom

allant group

analytic Partners

angoss software

ardent Io

atos

Beyond the arc

BrIDgei2i

Buxton

Clarity Insights

Cognizant

Css Corp

Decibel Insight

Deloitte

Dst systems

dunnhumby

epsilon

experfy

experian Marketing services

eY

Fractal analytics

genpact

happiest Minds

haVI

houston

IBM

Infosys

Ironside

KPMg

latentView analytics

lenati

lityx

Merkle

Mu sigma

neustar

Precision Dialogue

Protiviti

PwC

rise Interactive

saP

sas

sonata

tasseologic

teradata

tiger analytics

Ugam

Virtusa

Wipro

Wunderman Worldwide




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endnotes1 see the Forrester report “Vendor landscape: Insights service Providers” and see the Forrester report “the Forrester

Wave™: Insights service Providers, Q1 2017.”

2 see the Forrester report “Close the Insights-to-action gap With a Clear Implementation Plan.”

3 see the Forrester report “the Insights-Driven Business.”

4 the other top challenges to adopting customer analytics are data-related (including responses for “ensuring data quality from a variety of sources” and “accessing data from a variety of sources”) and organizational (including responses for “bridging the disconnected priorities between It and the business” and “getting buy-in from business stakeholders on the value of measurement and analytics”). see the Forrester report “the state of Customer analytics 2016.”

5 If data scientists are unicorns, then specialists in aI are their even more rarely mentioned winged cousins, pegasi. see the Forrester report “techradar™: artificial Intelligence technologies and solutions, Q1 2017.”

6 source: “sas, r, or Python survey 2016: Which tool Do analytics Pros Prefer?” Burtch Works, July 13, 2016 (http://www.burtchworks.com/2016/07/13/sas-r-python-survey-2016-tool-analytics-pros-prefer/).

7 see the Forrester report “techradar™: Customer analytics Methods, Q2 2016.”

8 see the Forrester report “the state of Customer analytics 2016.”

9 see the Forrester report “the Forrester Wave™: Insights service Providers, Q1 2017.”

10 see the Forrester report “the Customer Insights Center of excellence.”

11 this selection methodology is adapted from the following report. For more, see the Forrester report “the Forrester Wave™: Business Intelligence Platform Implementation service Providers, Q2 2017.”

12 see the Forrester report “Pick a Powerful Pilot to Propagate Customer analytics.”















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