The first step to creating a five-star marketing and sales strategy is understanding who is buying and using your products or services and why they are doing so. While this may seem obvious, the importance and value of customer data is often overlooked in the world of marketing. In addition to helping you identify potential leads, customer data allows you to understand what resonates with your current customers and what you can do to better meet their needs.
What Types of Customer Data Are There?
There is always the temptation to collect as much information as possible about your customers and their purchase habits from their order data, but it’s important to take a step back and classify each piece of data to help determine its value and which phase of a solution it could be delivered in, if at all. In this light, there are three key types of customer data you’re going to want to look at to maximize the efficacy of your efforts:
Basic demographic customer data like name, age, location, and contact details are typically provided by the customers themselves when they complete a purchase. In contrast, clickstream data is collected by tracking a user’s actions and reflects the clicks, engagement, and pattern of movement through your website, including actions taken through email marketing and search engine browsing. Transactional customer data encompasses details related to customers’ purchase histories, including when, where, and how the purchases were completed, which is critically important information when working to increase customer satisfaction and loyalty.
Although you know your business best, remember to be selective; data that doesn’t fall into these categories is likely extraneous, and if the data isn’t relevant, it’s not needed.
What Can Customer Data Tell You?
Knowing who your customer is, what they want from you, and why is crucial, and demographic and behavioral data can tell you just that. This information can guide your strategy in terms of the types of content you produce, where and when you advertise, and what your current customers will want or need next. This type of data is incredibly valuable in this sense and can more or less make or break your brand.
In terms of transactional data, the most common type of analysis is done through evaluating the recency, frequency, and monetary (RFM) aspects of a given customer’s purchase history as described in my previous post. Using RFM segmentation to record and analyze your customers’ transaction histories, namely what they purchase from you, when, and how often, will tell you which products and services to offer them in the future and how to effectively market it to them.
How Can You Collect Customer Data?
You can start by accumulating customer data every time they interact with your company, whether it’s on the phone, in an online chat with customer service, or in a store with a salesperson. Setting aside the personal and financial information provided by customers themselves, however, there are two key ways to manually collect valuable customer data: through web analytics and customer feedback.
Google Analytics is, by far, the best free way to collect customer data. If effectively used, it allows you to track the performance of your website landing pages and marketing campaigns and their correlation with purchases to understand whether or not they’re driving sales. Another tried and true method of collecting customer data is through customer feedback. There are countless methods to engage your customers and solicit their opinion: social media, email and pop-up polls and surveys, telephone calls, the live chat functionality on your website, dedicated online feedback forms, and requesting feedback on order confirmation pages are all commonly-used techniques.
The Emergence of Software-Based Customer Value Analytics
Of course, there are also countless types of software that you can use to automatically collect, organize, and analyze information about your customers and their behavior. In addition to traditional customer data and analytics, software-based customer value analytics can help you acquire new leads and customers by implementing innovative customer sourcing and profiling models, increase the profitability of your existing customer base by building next-best-action models, and avoid customer attrition and fading by identifying churn drivers and building relevant solutions through an omnichannel customer experience.
Using technology to translate data into insights allows you to effortlessly derive value that can be used to improve the customer experience and attract new prospects. Software can accelerate sales cycles while retaining and scaling the personalized nature of customer relationships, making it easier than ever for you to understand and connect with your customer base.
How Can Data Improve Your Customer Relationships?
Although the utilization of customer data can help you to identify leads and prospects, it’s worth it to focus on strengthening your relationship with your current customers as this will inevitably lead to increased customer loyalty. Companies have succeeded in the past by using their customers’ purchase or behavioral habits and using this information to make their lives easier – or just more enjoyable. For example, an Australian airline provides “exceptional” customer service by tracking flyers’ seat preferences, food choices and dietary restrictions, previous travel history, and other relevant data to personalize their experience. This innovative use of customer data has led to praise from both customers and the media.
Personalization in general is a big advantage of integrating customer data into your strategy – from tailored promotions to adding specific products or services based on customer wants or needs, this use of customer data can play a major role in establishing a long-term relationship with your customers.
In addition to improving your customer relationships, it’s worth mentioning that the integration of customer data and analysis into your strategy can increase your profits. It’s a universal truth that up to 80% of your total business profits come from just 20% of your total customers, so using customer data can help you to identify, nurture, and target the cream of the crop. Read my next blog post to learn more about customer segmentation and how it can benefit you.