This post originally appeared on Entrepreneur.com - #Growing Your Business
The right applications can benefit both you and your customers.
5 min read
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Today’s businesses have more information available than ever before, but are you using your data to its full potential? Customer data is the key to unlocking new insights that will help you scale more rapidly and efficiently. Digital tools allow you to track the behaviors of customers engaging with your website, and that data can have a big impact on your bottom line. In fact, research from McKinsey reveals that companies that utilize behavioral insights enjoy 85 percent greater sales growth and a 25 percent higher profit margin than their competitors.
Of course, simply posessing that data isn’t enough. You must find the right insights and act on them so you can improve performance like never before. Here’s how to make it happen:
1. Reduce acquisition costs.
Acquiring new customers is a core part of scaling your business, but your customer acquisition cost (CAC) can be surprisingly expensive. According to data from Hubspot, the average CAC can range from $7 in the travel industry to $395 for software technology. With better data, you can reduce these costs to improve the lifetime value of each customer and use your budget to reach even more people.
2. Use AI to offer smarter recommendations.
The story of Target essentially outing a teen girl’s pregnancy to her parents as a result of data tracking made headlines several years ago. Yet, despite the attendant controversy, most web users remain relatively comfortable with algorithms on Amazon and other e-commerce sites providing recommendations based on their prior shopping behavior. These companies use machine learning to analyze a customer’s purchase patterns, which are then used to make suggestions for similar, relevant products. The more someone buys on the site, the more accurate the suggestions become. Investing in these AI tools can make it easier for e-commerce brands to drive more sales from their existing customers, driving up revenue for a fraction of the cost of acquiring a new customer.
3. Create customized marketing.
While customer data can make a difference on a macro level, you can also use it to create personalized brand experiences for your customers. Thinking outside the box will help you use data in ways that help you form more memorable and meaningful connections with consumers. A case study from personalized video platform Idomoo highlights how Orangetheory Fitness used its gym members’s studio-reservation data and wearables to create personalized music videos for each customer, recapping their workout accomplishments of 2018.
The final videos, created by the Publicis Sapient agency and rendered with Idomoo’s advanced rendering technology, used visuals highlighting fitness information like calories burned and the number of workouts completed over the previous year. Customer heart rates were matched to original music selections based on beats per minute, so that even the clips’s soundtracks were personalized. This unique, personalized marketing approach resulted in an additional 45,000 classes being booked in a single week, while also improving class attendance to a record-high 97 percent. Gym attrition rates also declined, further highlighting the power of personalized messaging.
4. Identify your bottlenecks.
Marketing isn’t the only area where consumer data can drive scalability. E-commerce brands go through a wide range of back-end processes to deliver their products to customers. From stocking a warehouse to tracking shipments, each of these separate activities represents an additional data point — and a potential bottleneck.
By tracking each stage of the selling process and all customer interactions (particularly complaints), you can gain a better view of the inefficiencies that are keeping your service from being as good as it should be. Even something as simple as a shipping delay can leave a lasting negative impression with a would-be buyer.
Just how important is it to identify and correct bottlenecks in your sales process? Research from Salesforce reveals that 74 percent of customers will switch to a different brand if a site’s purchasing process is too complex or difficult. Using data to address these deficiencies will simplify the sales process so you don’t lose these consumers.
5. Streamline internal communications.
Customer data shouldn’t be the domain of a single department within your company; it should be shared with all relevant groups so everyone can improve their performance based on these insights. A consumer’s dissatisfaction with a shipping delay doesn’t just affect your customer-service team. It also directly involves logistics and transportation. It may even require adapting your marketing strategy or return policies. All sides need to have access to such information to find collaborative solutions that improve efficiency across the organization.
Leveraging consumer data to gain new insights requires a lot of work. But as you consistently analyze your data for information that will help you better understand your customers and their behavior, you will be better equipped to reach them in new, innovative ways. With sound data to guide your actions, you can work more efficiently and generate a larger profit.