Using Customer Data To Drive Growth
When it comes to data, countless companies sit idly on a veritable gold mine of customer information that can be used to increase growth, improve customer retention, and even inform future product research and development. There are countless reasons for this costly inaction: disorganized or “messy” data formats, a failure in creative thinking (“They’re already a customer!”) and even the sheer number of customers data points on hand, among others. But while wading into a sea of customer data, looking for insights and then acting on them can seem daunting, it doesn’t have to be as complicated as it may seem.
So let’s take a look at a few of the ways that you can harness data you’ve already accumulated to benefit your business.
Often, a primary source of data for e-commerce companies is accrued simply because an individual purchased a product from you. Even something as simple as using this data to address your customers by name in future communication can go a long way to creating a more engaging experience, and the level of personalization is only limited by your data.
And while everyone loves the thrill of a new sale, the fact is that it can cost your company up to five times more acquiring a new customer when compared to maintaining relationships with existing ones. In fact, studies show that increasing retention rates by as little as 5% could increase sales by over 25%. Combined with the knowledge that this process is overall more economical than seeking new customers, it’s a proven and extremely cost-effective way to increase your bottom line.
Though you’re probably already champing at the bit to start putting your data to work in order to increase retention, the fact of the matter is that most businesses cannot live on repeat customers alone. And while it’s been established that acquiring new customers can be a costly endeavor, using existing customer data can help you identify potential customer pools with a higher rate of conversion or even discover potential market segments that have been under targeted.
One of the simplest ways to do this is to employ the use of lookalike audiences. This is effectively just what it sounds like: You’re taking information on existing customers and delineating commonalities that can be applied to finding new customers. Whether these shared traits are geographic, economic, social or demographic, employing the intrinsic value of the data your existing customers have given you is a phenomenal way to increase conversion and decrease per-customer spend when it comes to finding new customers.
Another valuable tool is to dig deep into your historical data on existing customers. Think of it this way: You’ve probably been spending money and effort acquiring customers over time, with some campaigns/methods working and others failing spectacularly. Being able to look back and parse out what succeeded and what didn’t can drastically increase your ROI when it comes to creating a more effective, more targeted customer acquisition strategy in the future.
They say hindsight is 20/20, and by looking at past customer data, your ability to see your future customers will come into startling focus.
Inform Future Decisions
Too often, companies are founded on the idea that people will find products; however, in this new age of data, products should be finding people. What I mean is that there is a huge cost in creating a product and taking it to market in the hopes that customers will find it, love it and purchase it.
Armed with data on your existing customers, you can turn your organization into a much more efficient developer of products by reading this information to not only know which past products have been hits, but with whom and for what reasons.
Companies like Netflix and Amazon have become juggernauts because they use their vast stores of data to identify customers and then bring them products that will prove irresistible to them. The best part is that you don’t have to be on the scale of those companies to take advantage of the lessons of their success. Every customer you’ve ever had was telling you something about your company and products through their decision to make a purchase. Understanding what that is (color, fit, price, etc.) is really just a matter of breaking that data into groups based on commonality and assessing the trends within them. Armed with data, you no longer have to invest in a product launch and merely hope that it will provide a return; instead, you can know what the customer looks like and target them with your own irresistible offering.
Ultimately, the lesson here is that though combing through data can be daunting — and perhaps reveal some hard truths about your business — it is absolutely essential to creating a more nimble, profitable and engaging business.
Like so many things, acquiring data on your customers these days is easy; the hard part is understanding its underlying value and knowing how to deploy it to maximize the benefit to your business. We’re past the age of one-way marketing. We now live in an age where the customer is more engaged than ever, constantly trying to tell you things. As an e-commerce business, it’s your job to listen.
See the original article here: https://www.forbes.com/sites/forbestechcouncil/2020/03/13/using-customer-data-to-drive-growth/#18989ad34457Categorised in: posts