Customer analytics can not only help you target customers more effectively, but also save you money.
Our guide will explain what customer analytics actually are and how you can use them.
The term customer analytics describes the process of collecting and systematically evaluating customer data. In this way, it is possible not only to determine the needs of customers, but also to predict future developments with regard to churn or purchasing trends.
The data for customer analytics comes from a wide variety of sources and channels such as the CRM system, communication on social media, transactions, or newsletter tools.
The basic concept of customer analytics can be summarized as follows:
Customer data is evaluated and processed with the help of analysis technologies in order to make better, more informed decisions.
Customer analytics enables you to learn about and understand customers and their needs, desires, and motivations. These insights will help you identify and target the most valuable customers. Customer analytics can help you get more out of your business model in the following ways:
Customer analytics are primarily suitable to support existing customers. Managing those customers is much less time-consuming and cost-intensive than acquiring new customers. Loyal existing customers often buy more and at higher prices, which is how they create more value. They are also less price-sensitive and have a higher payment morale.
All these reasons speak in favor of intensively addressing existing customers, yet many companies are rather reluctant in this respect. Deutsche Post’s Dialog Marketing Monitor 2019 found that only about 30 to 60 percent of companies use targeted communication with existing customers. Customer analytics enable you to tap the potential of your existing customers and provide them with the best possible individual support.
If you want to take advantage of the opportunities offered by customer analytics, a structured approach is recommended. Find below the most important steps on your way to successful customer analytics.
For successful and insightful customer analytics, it is important to determine which goals are actually to be achieved. Depending on the type of response desired, there are the following approaches:
First, you should understand who your customers are by looking at the Customer Journeys. Consider all points of contact between your company and your customers. The following questions can help you:
Collect customer data in all possible interaction points with your customer. Possible sources include:
Compile the data in a central location, such as the CRM system.
Filtering out the relevant information from the flood of information collected is important, as is finding a common thread. A CRM system or a Customer Data Platform (CDP) helps you sort your data so that it can be evaluated effectively.
With the help of data visualization and dashboards, you can present collected data clearly. Reporting tools in your CRM system or external tools such as Datawrapper can help you do this.
Not only charts, but also infographics or videos can be used for visualization. The better the data “comes to life,” the easier it is to identify outliers, patterns, and ultimately opportunities and market gaps.
The consulting firm McKinsey has found that the use of customer analytics offers companies significant added value and has a substantial impact on the performance of companies. It was determined that the use of customer analytics brings considerable benefits in KPIs such as profit, sales or ROI.
Companies that make extensive use of customer analytics are more likely to report outperforming their competitors on key performance metrics, whether profit, sales, sales growth, or return on investment.
For example, companies that use customer analytics comprehensively report outstripping their competition in terms of profit almost twice as often as companies that do not.
Many well-known companies are already using customer analytics successfully. The following examples show how diverse the possible applications can be.
The world-renowned streaming provider knows its users very well and suggests potentially relevant content to them every time they log in. With more than 182 million subscribers (April 2020, source: theverge.com), Netflix is able to gather data on a wide variety of people and their viewing habits. The use of Big Data analytics helps to identify patterns in search and viewing habits and make suggestions on this basis
Netflix collects a wide variety of data. For example, it collects data on how long a series is watched, whether it is watched to the end, and at what point it is interrupted. If, for example, 70 percent of users who have started a series watch it to the end, Netflix can decide on the basis of this data to produce another season.
Through its data-driven, personalized content offering, the streaming provider thus manages to retain its users and counteract churn.
Amazon collects a wide variety of information about its users and their purchasing and surfing behavior in order to offer them a better user experience. For example, it records which products are viewed and for how long, as well as many other metrics.
With the help of this data, a 360-degree view of the customer is created, which makes it possible to suggest suitable products. This makes purchasing decisions easier and prevents users from feeling lost in the flood of products.
Customer analytics is the collection and use of customer data. It helps you make better decisions based on data.
It is important that you formulate target questions which will be answered using customer analytics. The collected data must also be processed in a way that allows patterns to be identified and insights to be generated.
As a founder and entrepreneur, I experience every day how important customer centricity is for companies.
Integrate the essential customer perspective into your product genesis and marketing processes. That puts horse powers on the street, until it runs.
About
Content
Toolbox
100% free of charge | 25 min. individual consultation
This service is not only available because of the current corona situation.
But right now it is more important than ever, together and for each other.
