Knowing and understanding your customers deeply is a core requirement for every business to acquire, retain and satisfy them, but not too many businesses or brands allocate the effort and investment this deserves. Today’s customers are smart and connected. They know what they want even before they start engaging with you. And they fully expect businesses to know their needs, preferences and habits and create a great customer experience for them, every time.
Fortunately, businesses are in a better position than ever before to do this using business analytics, which is the practice of looking at and analyzing past business performance to get insights for future business planning.
Business analytics can be applied to optimize performance in any area of a business such as HR, operations, marketing, sales or finance. Specifically, the practice of looking at customer, sales and marketing data to drive sales and improve customer experience is referred to as customer analytics.
Here are 5 critical customer analytics tools and markers that every business should consider leveraging to drive growth and profitability.
1. Customer Acquisition
Having a critical mass of customers is necessary for business success. Analyzing how you acquire your customers is therefore critical for building your customer base efficiently. How many were the result of your print and TV advertising? How many made their first purchases after clicking on your digital advertising or social posts and learning more about your brand? How many were enticed by local offers and promotions? Understanding this through analytics metrics such as cost per lead and customer conversion rate helps your focus your customer acquisition spends in the most effective way and add more customers at the lowest cost.
2. Customer Segmentation
All customers are not the same in terms of what they buy, how often they buy and how much they spend on your products or services. Segmentation is the process of breaking down your customers into sub-groups based on their purchase and shopping behavior. This then allows you to target each of these of these groups with products, bundles, prices, offers and promotions that they are most likely to respond positively to.
3. Customer Satisfaction
Happy customers are most likely to buy from you again, so assessing whether customers are satisfied with your products or services is critical. This was traditionally done using quantitative and qualitative customer surveys but is increasingly being complemented by tracking social media and analyzing customer interactions using various social media analytics tools such as social listening, affinity analysis and brand reputation among many others.
4. Customer Churn & Retention
Retaining your existing customers is a whole lot easier (and cheaper) than finding new ones. Churn analytics helps you identify how many customers you are losing in a year, how many you are predicted to lose in the future and the profile of these customers in terms of demographics, purchase profile, price sensitivity and other markers. This helps you plan your future marketing mix decisions so that the likelihood of these customers being retained or staying on with your business is maximized. The objective is to minimize your turnover rate and maximize your retention rate.
6. Potential Customer Value
Some customers will buy from you a few times only, while others may have a long relationship with your brand and buy a lot more from you during this time. Finding out the potential (or lifetime) value of your customers means estimating how valuable they can be to your business over their entire relationship with you. This enables you to target your marketing programs and investments on the most valuable customers and not just maximize the value of these customer but also extend the length of their relationship with your brand.
These are just a few analytics tools that are available to businesses today to acquire, retain, engage and satisfy their customers with the objective of building lasting customer and business value. Many more specialized analytics tools are also available for more in-depth and granular understanding of your customers.