To fully understand customer analytics, consider this: Customers feeling of empowerment is high and they are more connected to the business than ever. They have unlimited access to information like where and what to buy, how much to pay for products, etc. They have high expectations and their purchasing behavior is determined by positive interactions with the company.
With this information, it is easier to predict the behavior of the customers during interactions, what they are doing, their needs as well as how and when to get in touch with them in order to create personalized responses to increase sales and customer loyalty. Customer analytics is thus defined as the process of unlocking customer insights in order to deliver business deals that are anticipated, appropriate and opportunistic.
Importance of customer analytics
- Knowledge of customer behavior enables the company to identify which customers are most likely to respond hence reducing marketing costs.
- Customer attrition is significantly reduced by predicting which customers have a high probability of defecting and in turn develop strategies to retain them.
- Provision of tailored offers and customized products increases customer loyalty and response rates.
- Knowledge of customer behavior enables effective customer segmentation for a better understanding of their needs and wants.
Key customer analytics in use today
- Customer satisfaction analysis: Customers who are happy will come back again for more purchases. This type of analysis determines whether the customers’ needs are being met – in short, it determines whether they are satisfied or dissatisfied with what the company offers.
- Customer lifetime value analytics: This is the process of analyzing the entire relationship with a customer in order to determine his or her value to the business. It determines how long a customer stays a customer, their likelihood of making purchases during that period and their entire value in that timeframe. The main goal is to focus marketing strategies to the best customers in order to increase the customer-business relationship.
- Sales channel analytics: Sales channel analytics analyses all the different ways a product can be distributed to the market and determines the most effective channel for better resource management. Customers may be exposed to a different sales channel so it is crucial to determine whether customers prefer to purchase physically or online.
- Customer segmentation analytics: All customers are not equal. This process identifies sub-groups within the customer base and splits them into segments depending on their purchasing power. This allows the company to customize its marketing and communication efforts.