Greetings! Welcome to the very first edition of InsighterCom. Through this periodic newsletter, we will share with you how analytics can add value to businesses, with a special focus on digital businesses (e-commerce, phone commerce) and direct-to-consumer strategies (digital marketing, loyalty programs, etc.)

We will kick-start this first edition with two topics. In the first topic, we take a stock of the size of the Internet population in India and draw some comparisons. In the second one, we discuss how to address the issue of limited availability of customer data – a constraint we often hear from our clients.

(A) The Internet Landscape in India

Through this newsletter, we plan to periodically discuss the overall digital landscape in India. As a first step, we start by looking at the foundational layer – Internet and its presence in India. While much has been written about this topic, the message often gets lost in a lot of statistics that most people find difficult to relate to. In order to make these numbers more tangible, here are some comparisons that we hope you will find useful:

• Current Internet penetration in India is about 5%. The penetration of cars in India is about 1%. We wouldn’t call the auto industry an unattractive sector because of low penetration, would we? Then why Internet & e-commerce?
• India has about 70-100 Million active Internet users (depending upon which source you want to believe). The entire population of France is 62 Million. There are more Internet users in India than there are people in France
• When Amazon was launched in the US (in ’95), the Internet penetration in that country was < 10%, and the number of Internet users was about 25 Million. India has 3x as many users now as the US had then
• The number of fixed broadband users in India is half that of France, and the penetration is doubling every 2 years
• India has 20 Million Facebook users. The readership of Times of India, the leading English daily of the country, is about 7 Million
• Facebook penetration in India is growing at 200%, while Times of India readership grew at ~2% last year
• As 3G networks get rolled out, it is expected that there will be about 100-150 Million users accessing high speed mobile Internet by 2015. While we expect a significant overlap between the mobile & fixed Internet user populations, making estimations of incremental users difficult, what can’t be doubted is that how people access the web is going to change drastically. The mobile Internet boom will probably be faster than the overall Internet growth in India

To sum up, the overarching message about Internet in India is that it is already sizeable, there is considerable growth still to happen, and that mobile Internet is going to alter usage behavior significantly. So be prepared!

(B) They Are Telling – Are You Listening?

A key prerequisite to using analytics is having good quality & quantity of data. Our clients often mention lack of data as a key limitation in being able to use analytical methods. To this, our response is twofold:

1. Don’t Wait for Exact Data – Start Inferring
2. Build a Data Hungry Culture

1. Don’t Wait for Exact Data – Start Inferring
   If you are a consumer facing organization, chances are that your customers are telling a lot to you. If you haven’t heard it yet, it might just be that you are not listening right. We often find organizations being too dependent on data  reported directly – through sign-up forms, questionnaires, interviews, etc. While these are valid data collection methods, smart marketers also need to infer information from the data they already have. For example:
   • If you run a typical e-commerce site, you probably send newsletters that customers open, click on, and then visit the website & make purchases. Each such action of the customer indicates to you something about his interests and background. For example, there are customers who would have clicked on women’s shoes or women’s spa, while others might have gone for men’s belts or business books or recipe books or children’s games. A close look at these different behaviors allows you to make reasonable estimates about who your customer is: man vs. woman, professional vs. housewife, has kids vs. doesn’t, etc. Armed with this inferred information, you can then identify your core segments, pinpoint opportunity areas, tailor your marketing efforts, etc.
   • While some of the above segments are easy to identify, there are others that are a bit tricky. For example, you may not be able to readily identify business customers or estimate the age of customers. For such purposes, we suggest a two-step approach:
     • The first step is to focus on the customers that have told you who they are – their age, whether they are buying for personal or business use, etc. By comparing these customers with the overall population, you can develop tell-tale indicators of these groups (There is some statistics involved here that we aren’t going into right now)
     • The second step is to look for these indicators in your broader customer base, and then assign the customers to the appropriate groups wherever there is a match
   • You can also go beyond basic demographic variables and start identifying other behavioral characteristics. For example, to understand customer satisfaction, analyze the behavior of your current customers – do they come back and buy more/less, how do they differ from new customers, what were the last transactions of those that stopped buying, etc. You will be amazed at the insights that you generate around how satisfied your customers are, what is driving this, where the gaps are, etc. And the best part is that these insights are not based on what customers are saying, but on what they are actually doing!
   • Another great example is to use past purchases to predict what categories and what product price range would a customer be interested in. For one e-commerce client, we developed indicators of “premium” purchases, and then used these to identify target prospects for a high-end product. The result was a 40% jump in overall sales. Amazon adopts the same approach through its individualized recommendations. Our sources tell us that these recommendations drive 20-30% of the company’s overall sales, which amounts to ~$9 Billion in incremental sales annually. Once again, this is all based on data that Amazon already has (and in most likelihood, so do you)These were just a few examples of the information that can be inferred by analyzing the data that most companies already have. So the next time you are tempted to say no to analytics because you think you don’t have customer reported data, think again!

2. Build a Data Hungry Culture
   The other data-related aspect that we stress a lot to companies is developing a culture of being hungry for data. Digital commerce is a marketer’s dream come true – the customer tells you how she found you, what she is looking for, how does she make her purchasing decision, what did she compare things with, what all did she end up buying, how many times does she come to your store, etc. But most organizations do not record this information, or do it in a way that can’t be systematically analyzed. That is a lot of useful information being thrown down the drain. Done right, this information can be extremely useful, and help create a sustainable competitive advantage for any company. The key is to develop a hunger for collecting data, and collect it in a way that is conducive for analysis.

We will come back to this topic in more detail in the following editions, when we discuss recommendations, gaps, opportunity areas, and pitfalls related to data capture.