The secret to intelligent growth: Know your customers
How do you keep your customers coming back? By gathering meaningful insights about them. Columnist Jordan Elkind outlines three ways to use customer intelligence to increase retention.
As a marketer, you are more accountable for driving growth than ever before. As part of your growth strategy, you put acquisition programs in place to bring in new customers and often offer promotions to keep them coming back.
However, as e-commerce brands reach the saturation point and digital advertising formats mature, the cost per acquisition is increasing. At the same time, a variety of factors — such as Amazon’s dominance in the market and instant price availability — are eroding traditional brand loyalty. This means that while it’s becoming costlier to acquire customers, the expected return from each new consumer is decreasing.
This is a losing formula — one that means that marketers need to rethink their growth strategies. The only way for marketers to “bend the curve” of these customer economics in their favor is to focus on customer retention to maximize the value of each customer relationship.
Increasing retention rates by five percent can increase profits by up to 95 percent, according to a report from Bain & Co. The key to increasing the customer retention rate is leveraging customer intelligence to gather meaningful insights about your customers.
Here are three steps to using customer intelligence to help keep customers coming back:
Invest to know your customers
You have a CRM, an ESP and multiple other acronymed tools that make up your tech stack. There is valuable data in each of these tools, but there’s no tool where all of this disparate data is consolidated.
To best understand the needs of your customers, you need to have a central hub where all customer data is stored and organized. This hub should integrate with your marketing technology tools and bring together data from each of them.
While most marketing teams have invested significantly in their tech stack, this is the missing piece that ties them together, giving them a singular view of their customer data.
This step is crucial in empowering your team to drive value for both your company and your customers. Once you have it in place, you can begin surfacing insights that will drive profitable growth for your company.
Segment by affinities and lifecycle stage
Once your customer data is in one place, you should use a customer intelligence tool to begin analyzing the data and group your customers into meaningful segments. You can’t truly get the most from customer relationships if you treat everyone in your customer base the same.
Today’s advanced analytics technologies let you predict the affinities your customers will have for products. Not everyone is interested in the new green pants that the merchandising team needs to push. So, rather than blasting the whole database with an email for green pants, identify customers who have a high likelihood of purchasing these pants, and focus your green-pants messages on them instead.
You should also consider that each customer is at a different stage in her relationship with your brand — and those stages change daily. Use predictive analytics to determine where each customer is in their life cycle and when they are about to change.
These insights ensure your messages are relevant and effective at improving repurchase rates and reducing churn.
Identify your most profitable customers
One of the most valuable ways to segment your customers is by lifetime value. Taking this one step further, customer intelligence tools let you predict who will be a high-value customer before they actually make it to VIP status.
An existing customer spends 67 percent more than a new one, according to BIA/Kelsey. Your goal is to enhance the loyalty of all customers. But a large amount of your customer retention efforts should be geared towards your high-value customers, and the earlier you can identify them, the bigger impact you will have.
As a marketer, your goal is to put customers at the forefront of your decision-making while continuing to grow your business. Yet the economics of acquiring new customers have made sustainable growth an increasing challenge. It’s more imperative than ever to know your customers and to have a strong customer retention net in place.
By utilizing the latest technologies to surface insights about your customers, you unlock opportunities hidden in your data to create profitable growth opportunities. Instead of a constant push to acquire more customers, you can move to a much more nuanced understanding of your most important segments and craft marketing programs that drive retention and improve repeat purchase rates.