Customer Analysis is a golden key for businesses to explore new avenues of customer happiness. This is the practice where you don’t just put your products and services for sale for everyone out there, but specifically for those who really need/buy them.
Among the many, many tools that we see businesses using to radically amplify their sales, Customer Analysis is by far one of our favorites. After all, today it is all about personalized experiences for customers and clients, isn’t it? If you don’t have a clear picture of how customer analytics is and why it is important, this article is for you!
The whole premise of this customer data analysis is to make sure your customers buy from you again - and perhaps that is why of the 92% C-level executives who rely on data for marketing insights, a whopping 81% do so to understand their customers according to this study.
In theory, it is a very simple concept. Those feedback forms you filled? Those questions about the relevance of certain ads you see on social media? Those “tell us more about you/your interest” kind of questions you get when you first sign up for something? These all are part of Customer Analysis.
But that’s not all. Today, Customer Analysis also includes customer behavior on the platform or while using the services, as well as what the customer says about the product after using it. For example, analyzing the social media comments your customers have left will also be part of your customer analysis.
Now, what is the point of all this? Improvement is one. But just as importantly, it is to know your customers.
Customer Analysis is not just feedback - it is to know your customer well enough to offer products and services that are meant specially for them. Think about how Amazon makes recommendations for you - the same may not be made for a friend of yours! That is because your buying patterns, your interests online, etc. have helped Amazon know how to serve you better. And that is what Customer Analysis has to achieve for you - knowing who your customer is and giving him what he wants. You won’t sell an air-conditioner to an Eskimo, would you?
Obviously, if a business offers you suggestions that are more relevant to you, chances are that you are more likely to buy from them again!
“Get closer than ever to your customers. So close that you tell them what they need well before they realize it themselves.” – Steve Jobs
Customer Analysis has a two-way influence on business: you will see a massive increase in business at reduced expenses! Think about it - how much of your marketing budget do you waste on market segments that will simply never buy your products or services? Now think about how much you would be saving if your marketing efforts were focused only on customer segmentation analysis, thereby figuring out who is more likely to buy from you? That is the power of good customer analytics.
“Okay, but how do I get started?”
There are many components that go into Customer Analysis. But let’s keep things brief and group all the steps together under 4 main steps:
Step 1. Know who you are customers are
Ok so you have a product - but who are the people your product is meant for? This is where you run a customer segmentation analysis: you can segregate your customers by age or generation, geography, financial power and so on.
Step 2: Identify the drivers
Now that you know who your buyers would be, you must run a customer data analysis and understand what the drivers are for them to buy your product or service. Is it utility? Is it social status? Is it entertainment? Again, in each driver, you can have several sub-scenarios as well - for example, if you take ‘utility’, you can have utility at home, while driving, at the workplace and so on.
Step 3: How well-suited is your product or service to fulfill existing needs?
At this stage, you will identify how relevant your products or services are to your existing customers. Remember, that what was relevant a few years ago may not be any more today! So it is important to make sure that your offerings actually fulfill existing needs.
Step 4: Conveying to your customers the usefulness of your product to them.
The above 3 steps will help you decide on the right kind of marketing strategy. You will now know how to show what kind of needs are being fulfilled by your products, what language to use, what stream to use and even which of your products and services to recommend to various segments of customers.
Now let’s imagine - say Bob - decided to do an in-depth customer data analysis for your business. There are a lot of sign-ups, but very few actually convert - and you have asked Bob to find out why. The first thing Bob did is get into an intense phase of research. This involved stuff like having discussions with focus groups, identifying market factors such as location, needs, wants, what competitors are offering and so on. He also looked up existing studies and researches because every bit of information counts!
Now that Bob knows the market better, he started analyzing how the customers react to your products and services.
Bob wants to understand what drives the customers to buy from the company. Upon running a customer segmentation analysis, discussing with existing customers and analyzing feedback, he realizes that the customers find the discounts offered by the loyalty program offered by the company to be super interesting. However, he finds that while the loyalty programs drive a lot of potential customers to the business, only the older crowd seems to buy repeatedly. The younger crowd doesn’t seem to come back as repeat customers.
Now that Bob knows who is and who isn’t buying, he decided to revamp the marketing strategy to focus specifically on the older group of buyers, thereby utilizing the marketing investments to their maximum potential. Bob also has realized that loyalty programs are the biggest factors driving sales, so first-time buyers do indeed see themselves becoming long-time customers. This is yet another insight that the company can leverage - their product itself is great and relevant!
Bob then advised the Marketing and Sales teams to stop wasting resources on trying to sell to younger buyers, thereby massively driving up sales by increasing marketing touch-points with the older crowd instead of with people of all age-groups.
Bob’s insights are taken up at the company level. The product itself is repackaged to appeal to an older segment. The marketing campaigns don’t include jargon or expressions that are meant to appeal to the younger generation, but are redesigned to communicate to the older crowd. The buyers now feel more connected with the company because they are being spoken to in a tone that they relate to.
Now that we have seen how Customer Analysis can help business and how Bob made better Marketing decisions based on research, here are a few more benefits of Customer Analysis:
1. Elevate sales
This is number one on the list because it is the ultimate goal of Customer Analysis. Thanks to your research, you will get a deeper understanding of your customers’ needs that lets you specialize your offerings and recommendations. Besides, you will also be able to keep track of your customers’ experiences, so that you can constantly work on improving them.
As a result, you will notice that your customers will turn into repeat buyers. Customer Analysis will help you identify things that are really working in your favor so you can amplify them, while also identifying things that your customers don’t like about your business so you can mitigate them.
2. Amplified Customer Retention Rate
Let’s face it - customer retention is one of the biggest challenges for all businesses out there. Elevated sales is directly related to increased customer retention.
Retaining customers reduces the cost of customer acquisition. Customer Analysis gives you an insight into what you are or aren’t doing right. This means that knowing what makes your customers happy will give you the advantage of repeatedly giving them that great experience - was it your after-sales support they like? Was it the quality of your products? Was it the appearance and packaging?
Now what is interesting is that there is a roller coaster effect here - the more customers you retain, the more in-depth information you can get for your analysis. This creates a powerful cycle of great experience and insightful feedback - and we don’t need to tell you why that’s a great thing!
3. Superior Profit Margins
We already showed you how Customer Analysis can reduce your investments in marketing while increasing your revenues.
Now think about this - what is the best place to be in for any business? Maximum revenues at minimum investments of course!
But how do you get there has been the biggest question faced by all businesses. Through Customer Analysis, you are doing multiple things at the same time:
Yes, we do agree that this will take time. There are no two ways about it! But that does not mean you should not try - hang in there and be patient.
4. Economical Customer Acquisition Costs
Always remember, marketing to 100 people who have low potential to be your customers is of no value compared to marketing to 10 people who are very likely to actually become your customers.
But the cost for both - the likely group, as well as the unlikely group, would more or less be the same isn’t it? Then why would you spend all that money on marketing to a segment that just isn’t right? You would obviously be doing it because you would perhaps haven’t have read our super-useful piece on Customer Analysis yet!
Now that you have, make the wiser decision and focus more on knowing your customers and market better. We are not saying that you will be spending lesser on Marketing - but that whatever you are spending will give you better results than before.
5. Flawless Customer Journey
And finally - the Holy Grail of every customer experience effort - creating a flawless customer journey. This may not be possible one hundred percent, but you can get pretty close thanks to Customer Analysis.
After all, the challenges and problems that your customers face while buying your products or services will come up as you run your analyses. You can then work on them, improve them and smoothen them out so that your customers can have a much better experience each time they shop with you.
Besides, Customer Analysis can also enable you to make predictive decisions - as such, you can know what each of your customers wants, thereby creating an intensely rewarding experience for them when they are using your software or products.
In today’s competitive world, there is no doubt that businesses can need every bit of help they can get to get an edge over their competitors. Customer Analytics is a powerful tool that can really help you get things going for your business.
Unlike before, personalized customer experiences are extremely important today and a lot of smart businesses are revamping their strategies to make their customers feel unique and special. We really hope that this post has helped you realize why Customer Analysis is so important. Do get in touch with us to let us know what you think!
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