21st Century Data Analytics: Reducing & Managing Consumer Risk

Date:   Monday , November 24, 2014

Verint Systems (NASDAQ: VRNT) provides analytic software and hardware for the security, surveillance and business intelligence markets. Headquartered in New York, the company has a current market cap of $3.25 billion.

Organizations have been using data analytics to analyze their business data for insights for enhancing sales and profits, developing better products to meet market needs, and understanding the competition for a number of years now. Large companies have teams of analysts crunching business data all the time.

With the emergence of big data, and the availability of tools to mine unstructured big data, this has opened up new possibilities of using data analytics to gain a competitive advantage for organizations. One new area, is the volume of interaction data (voice, text, social media) that is collected through the customer engagement process, and using the data to deliver a superior customer experience or to reduce consumer risk for the business.

Reducing & Managing Consumer Risk

Over the last few years, more and more organizations have come to realize that interactions with customers � through the contact center, via social media and in retail stores � are becoming a significant area of potential risk that needs to be carefully managed.

When companies think about customer-related risk, it\'s often associated with fraud and compliance. That said, brand-related and customer-churn risks also fall into the broader equation. While these are sometimes managed separately or in different silos across an organization, they can be closely correlated, and therefore, need to be balanced. Those who have had a credit card declined for suspicious fraudulent activity while traveling overseas can relate. This is just one example of how financial institutions may reduce their own risk at the expense of customer inconvenience. The downside, however, can lead to customer frustration, churn and even brand-related consequences � which in some cases can be greater than the potential fraudulent transaction itself.

Some leading organizations have already started leveraging Voice of the Customer (VoC) Analytics to help manage and reduce customer-related risk, with an ultimate goal of minimizing potential conflicts.

Managing Regulatory Compliance Risk

In the Gartner report titled \"2012 Strategic Road Map for Compliance, the firm estimated that in \"2012, the top-rated risk area among global business executives surveyed by Gartner is regulatory compliance.\" Three companies in Latin America reported $2 billion in penalties and the suspension of all sales activity for 10+ days until they could prove they had an effective ability to handle the increase in customer complaints.

All that said, how does analytics help reduce customer-related risk?

The starting point for many organizations is to put into place a solution that can automatically identify customer complaints that come into the contact center. This is typically done by leveraging speech analytics to mine customer phone calls. Companies also try to identify complaints that emerge on social media or other text channels such as email and chat by leveraging text analytics. Some organizations have also leveraged monitoring systems that track the agent desktop, in the contact center and the back office. This practices help ensure that all employees are complying with regulatory statements and processes. With these types of automated solutions, organizations can scan 100% of customer interactions and identify with high levels of accuracy when a non-compliant interaction has occurred, allowing them to escalate the issue for appropriate action.

In an example noted on callcentres.net, an editorial states that Telstra announced \"a 24 percent reduction in complaints to the industry ombudsman because of improvements. The improvement coincides with reported first-half earnings of almost $1.5 billion with a jump in mobile subscribers.\" This is one case where, when managed properly, reducing compliance risk can help increase customer satisfaction and diminish brand-related risk.

Looking Within the Organization to Reduce Fraud Risk

Customer-related fraud can originate externally, but in many cases, fraud can be intentionally or unintentionally triggered by internal employees. This happened at a leading global company that put text analytics to work to analyze live chat sessions between agents and customers. It found a small percentage of interactions where agents were unintentionally providing sensitive customer information to callers without clearly validating their identity first. This is not only a compliance violation, but one that also potentially opens the door for identity theft and fraud.

Other organizations have leveraged technology such as voice bio metrics for customer verification. Once applied, these technologies can significantly reduce the customer effort as their identities can automatically be verified based on voice, negating the need for them to remember multiple security questions unless their voice is not a full match to the one on file.

Considering the Social Chaos

The adoption of social media has created many new channels for customer complaints, which can go viral and significantly impact brand risk. However, since social media is so \"noisy,\" it can be tricky to manage. A recent example was when a prominent news source\'s Twitter account was hacked and the false announcement of an explosion at the White House was pushed out, sending stock markets tumbling down.

One of the best ways to validate the VoC that takes place via social media is by comparing positive and negative sentiment posts on your brand with those of your direct competitors. From there, it\'s critical that companies then validate social VoC with internal sources, such as phone calls, emails and chats - which is easy to do with a speech and/or text analytics solution. If a spike on social media appears, but no one has called you directly about it, it could represent either a false or insignificant issue. On the other hand, if numerous customers are calling and emailing on an emotionally-charged issue - even if you haven\'t found it on social media channels yet - it\'s likely to bubble up eventually.

Proactively addressing issues before they go viral is, in most cases, a much more efficient and effective social strategy and can help protect your brand.