365 Capital is an independent private equity firm that focuses on mid-sized and well-positioned companies, headquartered in or near the Netherlands, that have strategic and operational upside potential.
But how do you analyse a company's potential? Well of course there are many different approaches for due diligence and all will aid in understanding a company's current status better. For instance, how better to understand a company than to understand reviews left by customers in three different languages. To increase customer insights in the Swiss Sense due diligence trajectory of the 365 Capital team, we used a data-driven approach. As the title explains, we used reviews from Trustpilot to determine the opinion of the consumer.
Our data-driven due diligence analysis complemented the complete due diligence trajectory, eventually leading to a successful investment.
For 365 Capital we have assisted in the form of a data analysis project, however not an ordinary one. Going through 8000+ reviews and understanding sentiment, strengths and weaknesses and potential areas of improvement is not a job for someone without extra computing power. We have applied Natural Language Processing (NLP) techniques to gain a deeper understanding of what customers say and feel about a company.
We started by understanding the data, customer reviews, which are seen by many people as text. Of course this is correct, however reviews can also be seen as time series data containing a lot of information over time. It can function as a sort of time lapse showing how a company performs according to its customers. At the same time, we used a Latent Dirichlet Allocation (LDA) method to identify the most common topics in the reviews. By combining these two approaches we were able to understand when which topic was mentioned in reviews.
This led to interesting insights into how the company scored on topics such as customer service, delivery time, delivery quality, customer experience in shop and on website over time. To increase the understanding, we analysed a similar company and compared both on all different aspects. Analysing 8000+ reviews in three different languages is not a quick and dirty job, we turned reviews into data and analysed it thoroughly.
Overall 365 Capital gained insights in how customers reviewed customer service, delivery, delivery time, shopping experience and more over the past 5 years within days instead of weeks or even months time.
We enjoyed this project a lot as we could iterate and brainstorm with the highly analytical team of 365 Capital. The quick communication and high iteration speed with our client led to a high-quality report. Besides saving a lot of time, this due diligence project was part of a greater due diligence trajectory resulting in an investment of 365 Capital in Swiss Sense.
An official release of the investment can be found here.