Leveraging Data to Better Understand Customers and Market Opportunities

Most people associate Apple with iPhones and MacBooks, or Nike with performance shoes and sports attire, but businesses are more than a collection of the products and services they sell. They are a portfolio of customers. These customers make purchase decisions based on differing opinions, expectations and experiences, but collectively they define the market for the company’s products and services, and represent the best opportunity for insights, sales and success.

It’s critical for any business to study and understand both existing customers and prospects — trends, behaviors and attitudes — in order to serve customer needs, reach out to potential customers in meaningful ways, and innovate products and services that solve new customer problems.

There is, of course, no ability to understand customers and their purchase behavior without the data, which can interpret and understand past behavior. This data is the bedrock for how businesses and brands can make better decisions and take action to influence customer growth. There are multiple reasons why data, both in-house customer data and external sources of data, should be leveraged as a critical part of your company’s digital transformation journey:

Data helps businesses target and communicate with existing customers –

 It’s generally more expensive to acquire new customers than to retain existing ones. In fact, there are some studies that suggest the cost to acquire a new customer is five times the cost to retain a new one; this will depend on the category in which you compete. Importantly, you can use the insights from your sales and marketing data to more effectively hold onto existing customers long term. But not all customers are alike; data is key to identifying the key differences in your customer groups — who buys what and how often, for example — in order to communicate with these groups in a way that’s meaningful and relevant.

Data helps businesses target new customers –

 While it’s important to retain your existing customer base, you still need to add new customers to ensure your business grows over time. Data is crucial to your ability to market your products and services more effectively by delivering messages that resonate with new audiences. One way to effectively target new customers is to use existing customer data and create a model for your ideal customer — one that can be used for targeting, promotion and outreach. It’s too expensive and inefficient to target everyone, of course. So if, for example, you know that your most loyal and/or profitable customers are between the ages of 24 to 36 and live in urban areas — only a small fraction of the data you’d gather for such an exercise — it’s possible to find and target prospects with the same characteristics.

Data helps businesses identify new product/service opportunities – 

Using third-party data will help you to identify new customer opportunities as well. For example, through an analysis of your competitors and their customers, you may discover other products or services which are solving the same customer problems that you are, but in new and different ways. The data you collect about customer behavior patterns and overall market conditions will help you discover new opportunities as they arise. If you were to learn, for example, that your best customers are more likely than average to shop online, or work remotely, then you’d be in a position to tailor your product and service offerings to meet the unique needs that arise from these conditions. In this case, you’d have insight into how these customers are likely to interact with your brand, and innovate accordingly.

A local pizza restaurant, for example, will view other restaurants as its main competitors, but it may be the case that your best customers are increasingly purchasing pizza kits at the local grocer for the home, in which case you’d move forward to offer your own branded pizza kits for takeout. Data from competitive analysis will help you to adapt and expand your own solutions in order to remain relevant to existing customers and meaningful to new customers.

Data helps businesses track the performance of their effort – 

You can track a wide range of metrics which will help you evaluate the success of your campaigns and ongoing communications. Having the data to define your best customers provides you with the ability to measure these audiences in such areas as:

– Tracking where these customers live, lifestyle and purchase behaviors and other trends

– Measuring their awareness and favorability of your products and services. Concept testing new products, interest and likelihood to purchase.

– Website performance metrics, social media engagement or email open rates.

– Sales team goals including sales revenue, lead-time response or revenue percentage from current versus new customers.

Data provides you with objectivity – 

Using data alleviates your reliance on purely instinctive and emotional decisions and fosters planning based on real-world performance metrics and industry trends. Use of data will help you achieve companywide buy-in for future plans, since it’s more difficult to question or object to a given strategy when it’s backed up by hard data. Data also ensures that your group remains aligned on strategies and tactics necessary to achieve company goals. Looking at actual trends in the industry makes it simpler to predict future opportunities for growth. Lastly, it helps you evaluate past performance in order to understand what has worked and what has not.

Leveraging data to understand customers as well as opportunities to attract and retain customers is a critical part of any digital transformation process. But it’s important to take it slow at first — less is more. There is a seemingly limitless amount of data that a business can collect and analyze, and it’s important to only focus on the most critical areas which are aligned with key business goals.

ThriveDX recognizes the value and challenges of leveraging data to reach, connect with and engage both existing customers as well as prospects. Knowledge of and training on the right tools is a critical first step. Check out our offerings that can help you leverage customer data in your organization today.