Customer analytics allow marketers to dive deeper into their customers’ behavior across a multitude of data points to get a more accurate view of their customers. Through customer analytics, marketers can answer important questions such as ‘who are our best customers?’, ‘which channels work best?’, and ‘where can we intercept the customer journey to improve their experience and increase conversions?’.
For many businesses, leveraging this data and gaining a better understanding of their customers will be a key ingredient in the shift from product-centric marketing to customer-centric marketing, and developing a competitive advantage over their competitors. Research from McKinsey & Company shows that “companies that use customer data analytics comprehensively are twice as likely to outpace their competitors’ profits as companies that don’t”. Furthermore, “businesses that extensively use customer analytics see a 115% increase in return on investment”.
These figures prove the value of customer analytics; however, many marketers still aren’t using these insights to their full potential. To help you get the most out of your customer analytics, we’ll explore 5 tactics you can use to improve your customer analytics strategy to reap rewards and improve your business.
1. Create targeted customer segments
Chances are, in your personal life, your method and tone of communication changes according to whom you are talking. You wouldn’t talk to your best friend in the same way you would your boss, and the same goes for marketing. Your customer base can be broken down into various groups, based on their backgrounds, needs, expectations and interests, and each group will want something different from your brand.
Customer analytics enable you to assess the characteristics, behaviors and interests of your customers and segment them according to common qualities. The ability to segment customers into various categories means that you can identify particular groups, such as your most profitable and loyal customers, and develop strategies to drive further growth within these groups.
It’s not just your best customers that you are able to identify through segmentation, customer analytics can also help you to identify your least loyal customers or those who may be most interested in a new product, allowing you to tailor your communications accordingly, to promote retention or raise awareness. Either way, effective segmentation is crucial when launching a marketing campaign and will set your strategy in good stead for the future.
2. Improve personalized offers and experiences
As well as identifying opportunities for driving growth, customer segmentation is an essential component in delivering personalized messaging and customer experiences. Research from Epsilon & GBH Insights found that “80% of customers are more likely to do business with a brand that uses personalization techniques”. By using customer insights to help you shape appropriate segments, you can tailor your marketing strategy to meet the specific preferences and requirements of your target audience, enabling you to deliver relevant offers that attract, rather than alienate, your customers.
For example, once you have identified your most loyal customers, you can tailor the messages and offers you send to add value to their brand experience, which in turn could increase their spend. These messages and offers could include reminders to buy their favorite product again at the time they normally run out, or exclusive discounts for items they have frequently bought.
Similarly, identifying your least loyal segments will give you the chance to craft tempting offers or send cart abandonment reminders that could bring the customers who are at risk of churn back from the brink, thus improving your customer retention rates.
3. Optimize results from execution channels
Utilizing your customer analytics will also help you to optimize marketing results. The modern customer has less attention to spare and is exposed to numerous adverts and campaigns daily. To make sure your campaign or ad is one that they engage with, you need to target your audiences effectively.
Customer analytics will paint a vivid picture of your customers and can provide information such as where they spend their time, what pages of your website they are visiting, and at which touchpoints they best engage with your brand. Armed with this information, you can pinpoint the most effective channels and audiences for your campaign, minimizing the risk of disappointing results.
Furthermore, by pinpointing the most relevant audiences, you can prevent annoying customers by avoiding repetition on multiple channels or delivering adverts that don’t offer any value to them. In short, customer analytics will allow you to optimize campaign response rates and reduce costs by targeting the customers who are most likely to convert, in the way they like to be approached.
4. Make better data-driven decisions
Customer data is the most reliable source of information for marketers, and research shows that “78% of organizations said that data-driven marketing leads to increased conversion and customer acquisition”. Data-driven marketing, as opposed to traditional forms of marketing such as direct mail and print advertising, allows you to connect with your customers and analyze and adapt your strategies in real-time.
Say one of your marketing campaigns isn’t performing as well as expected, analyzing how your customers are engaging with the campaign is the first step. This information will help you to uncover what is working well, and more importantly, what isn’t. You can then use this data to adapt your strategy and re-optimize your campaign. Part of that will be spending your budget in the right places within the journey to optimize key touchpoints and reflect the changes your customers wish to see in your marketing communications.
Similarly, customer analytics can reveal which platform or channel you should be using to interact with your target audience. This will increase your chances of positioning your message in front of the right people, and therefore, your chances of conversion.
5. React to external factors quickly
Knowledge is vital to business success, so the better your understanding of your customers and their purchasing habits, the better chance you have of being able to overcome any hurdles which may arise in the future. As a marketer, you can’t control how external factors will impact your brand, as the last twelve months have demonstrated, however, customer analytics will help you to better understand your customers’ resulting needs and changing behaviors, so that you can adapt your marketing strategy accordingly.
For example, the pandemic forced even the least tech-savvy customers to shop online and has placed greater importance on the multichannel experience than ever before. Over the last year, customers have shifted between traditional brick-and-mortar stores, eCommerce stores, mobile apps and social media, and this hybrid shopping trend looks set to continue in 2021. However, without understanding the rapidly evolving buying journey and spending patterns, how are marketers expecting to personalize the experience and capture their target audience’s attention?
Our research shows that 57% of retailers are concerned that they will not be able to adjust to changing consumer behavior fast enough, with collecting the right data being reported as one of the biggest barriers for this. This suggests the ability to analyze customer data is key to achieving agility and flexibility in marketing and can make the difference between getting ahead of your competitors or falling behind.
Despite the range of great benefits analyzing customer data can deliver, conducting that analysis is not always a straight-forward task for marketers. Customer data is often siloed, unclean and difficult to access, so that marketers are unable to access the information they need to derive meaningful insights. This is where a Customer Data Platform (CDP) and multi-channel marketing hub can help.
A CDP can power your customer analytics strategy by not only unifying and cleansing your data to create a trustworthy Single Customer View (SCV) but putting customer analytics in the hands of marketers. With this information at their fingertips, marketers can discover usable insights, segment their customers, and improve their understanding of buying behaviors and customer journeys. They will then be able to orchestrate targeted and effective marketing campaigns.
To find out more about how we can help you make the most of your customer analytics, join our live webinar demonstration.