The first time using customer data to guide marketing, sales, or customer loyalty activities can often feel like being thrown in the deep end without a life preserver. The sheer volume of data companies have and the endless possibilities it holds can quickly become overwhelming.
Take for example how an omni-channel retailer receives sales across its online platforms and brick-and-mortar stores. Any one of their customers could visit multiple locations and make purchases from multiple devices, providing that retailer with a tangled web of information ranging from website bounce rates and email opens to store visits and transaction histories. Another example is airlines, where the range of possible data points begins from the moment the customer first searches a potential flight to the purchases they make at their final destination. The thousands of data points companies have at their fingertips can paint an enlightening picture of the customer’s preferences and behavior — if they know how to use them.
What concrete steps should organizations take to make the best use of their customer data? These five steps can help any team begin their journey to customer-centricity and maximize value from their best customers:
1. Establish a baseline with historical spend
You can’t rely entirely on past performance to predict future customer behavior, but historical data is a useful starting point when building out a customer data strategy. The most popular metric to use is “Last 12 Month Revenue,” because it offers a useful time period to serve as a baseline for future performance. Once you’ve established that data as your standard, you can then measure any customer segment over that period to see what percentage of overall revenue they represent.
2. Use revenue driver trees to determine the “why” behind the numbers
Overall metrics like “Last 12 Month Revenue” and “Revenue Per Customer” offer a clear picture of how much is being spent and when, but they don’t give any insight into the “why” behind the purchase. Revenue trees can help get inside the mind of the customer by combing through numbers and providing behavioral comparisons across segments. A revenue driver tree makes it possible to break purchasing behaviors down into specific categories like average spend per order or items per order, which you can then use to determine why top-line numbers are increasing or decreasing.
3. Explore value drivers beyond purchasing data
A customer is more than just their wallet or credit card — your understanding of a high-value customer and what motivates them could involve a broad range of data points that have nothing to do with purchases and revenues. Once you’ve established key baselines and customer segments, widen your field of view to include any touchpoints from the moment they discover your brand to their purchase and even beyond. Influential moments, such as an effective marketing email or a negative service experience, can make the difference between a typical customer and a high-value one, so capturing those moments in all their forms is vital to gaining a true 360 degree view of each customer.
4. Divide and organize your data points
Building a customer-centric organization involves a constant push and pull between trying to integrate more data and not being overwhelmed by the sheer amount of information. After exploring non-revenue-based value drivers, categorize the relevant metrics (both revenue-based and otherwise) into three groups that describe the customer experience: breadth, depth, and velocity. Breadth refers to the range of engagement a customer has with a brand, and can include the channels on which they make purchases, whether or not they use the company’s app, and whether they purchase across multiple product categories. Depth refers to the intensity of the customer’s engagement with the brand, examining factors like the tier of their loyalty membership, any surveys or reviews, or the number of physical stores they’ve visited. Finally, velocity looks at the speed at which they’re expanding their relationship with the brand. How quickly do they turn into a repeat customer, and how many days do they typically go between purchases? These three categories will make it easier for you to make sense of your growing datasets and draw impactful insights.
5. Make “perfect” an aspiration, not a requirement
As your customer-centric organization evolves and matures, it’s important to remember that there’s no one correct answer. While you will always be able to refine your operations to derive stronger insights or gain a richer picture of your customer, the desire for perfection shouldn’t keep you from taking your first steps. Simply starting to collect, organize, and analyze customer data will make a difference for your organization’s success, and following these five pieces of advice will put you in a strong position for long-term customer-centricity.
To learn more about how to find your most valuable customers and keep them satisfied, download our most recent Playbook. “Putting High Value Customers at the Center” offers infographics, useful examples, and rich insights to help any organization become more customer-centric.