18 Jun Importance of Customer Analytics – Knowing the Who and Why
Customer Loyalty is Dead
Businesses in almost every industry are facing heat from customers today who are more clear-sighted and less loyal toward brands. Blame it on social media, globalization, economic uncertainty, or product commoditization. But these challenging trends have made customersfickle-minded and prone to opinion influence.
The bottom line is that companies need a fresh approach toward understanding what their customers need, in order to acquire them and retain them.
No prizes for guessing that the data you have is the key to unlocking the insights into your customer that can make all the difference to your success.
Why is this important?
A Customers 2020 report says that customer experience will overtake product price and quality as the critical differentiator for brands by 2020. Many believe thisis already in motion.
Even though organizations of all shapes and sizes have enough access to customer data from their customer service operations, social media, and other offline and online presences- they are yet to unlock this data and leverage it to its fullest potential.
Challenges to Delivering Memorable Customer Experiences
Customer experience is already a brand differentiator. And, yet, studies show experience quality is actually declining.
Here’s what might be going on:
- Businesses find it hard to maintain a consistent brand presence across the increasing number of channels on which customers interact and engage.
- It’s a challenge for companies to meet the increasing expectations for fast, proactive, predictive, and personalized engagement.
- Most importantly, brands struggle to create new products, value, and services for customers when thinking about digital transformation.
The key to tackling these challenges is to become more data-driven as an organization.
This is not about creating reports and displaying data in dashboards. This is about integrating business intelligence into your data to drive decisions across the board.
Defining the Customer
Since customer expectations have always been a moving target, organizations struggle to make their services, products, and interactions appealing to the customer.
Chasing customer expectations in the ‘now’ is barely the solution. By the time you meet their current needs, they will have begun demanding yet better.
Therefore, you need to understand who our customers are and why they behave just as they do. Clearly defining their ‘who’ and ‘why’ can give you significant insights into their behavior, buying patterns, experience with your brand, and motivations to look elsewhere or be with you.
Now, you are empowered with data-driven insights to devise strategies to get new customers and keep yourexisting ones.
Customer analytics can be the backbone of your marketing. It integrates technologies such as predictive modeling, data visualization, information segmentation, and management.
Methods of Deriving Customer Data for Analytics
- Surveys – Plain old surveys that collect and analyze data from questions posed directly to the customer.
- Customer segmentation – The practice of grouping customers by their purchasing patterns, platforms of choice, preferred products, shared motivations, demographics, age, etc.
- Customer journey mapping – Learning about your customers’ journey across the touch points can give relevant insights into their pain points and why they traverse the specific journey that they do.
- Transactional analysis – Discover patterns and predictions based on customer transactions- what, how much, and how frequently did they buy?
- Cluster analysis – Extract results from surveys and group customers into clusters identifying the best labels for them to easily find services and products in website navigation.
- Regression analysis – A technique that reveals the top variables that factor in determining customer satisfaction and loyalty.
Metrics that Determine Customer Behavior
No single metric can define a buyer persona. Here are the most common metricsthat apply to customer analytics.
- How likely to recommend
- Future intent for purchase
- Customer lifetime revenue
- Product usage
- Website visits
- Return rates
- Conversion rates
- Bounce rates
- Abandonment rates
Your Leverage from Customer Analytics
Customer analytics can help you realize some tangible value-adds for your buyers:
- Laser-sharp campaigns that address specific segments of your buyers.
- Targeted marketing efforts that can be hyper-personalized for greater competitive advantage.
- Competitive pricing that has its base in customer expectations and demand.
- Customizing product packages that make sense for a group of customers.
- Manage inventory better and meet demands while cutting costs by forecasting demand.
- Anticipate customer demand and deliver products quickly to prevent loss of sales due to delay.
- Achieve higher profits with competitive prices, increased sales, and reduced cost of operation.
- Build a base of loyal customers who keep your business in shape and facilitate long-term growth.
- Deepen the levels of customer engagement by utilizing rich data to improve visibility into customer activities such as billing, buying, returns, and investments.
- Ensure cohesive experiences across all company touch points by leveraging customer data to find out which platforms they use the most and when.
McKinsey Global Institute maintains that data-driven organizations are 23 times more likely to acquire new customers, 6 times more likely to retain them, and 19 times as likely to be profitable as a consequence.
The key is to eliminate guesswork and to make fact-based decisions. Data offered by customer analytics is best utilized when organizations can use them to derive real and actionable insights.Like most strategic initiatives, the true value from customer analytics also depends on buy-in from the top-level managers. Assuming that all decisions regarding campaigns, strategies for product/service, sales and marketing plans are taken by the top management, it’s just smart to get their buy-in before beginning your analytics journey. On that path, you will learn more about your customers and be able to form enduring relationships with them that will stand the test of competitive pressures.