Econsultancy published a blog entitled “20 Things a Retailer Really Should Know About Their Customers,” which emphasized the fact that most retailers simply don’t know enough about their customers to have a truly effective retail real estate and marketing strategy – a point that couldn’t be more right.
Customer data and insight are essential when shaping retail strategies, but all too often, key decisions are based on guesswork – following the latest trends, copying the competition or implementing a solution that isn’t aligned with company objectives and customer behavior.
When the author of the Econsultancy blog conducted a survey at a recent conference he attended, the results confirmed the above statement.
Knowing your customers in each of the areas, highlighted by the questions below, is crucial when defining your customer strategy, setting business goals, optimizing your marketing activity and refining your strategies on a continuous basis at a granular level.
If you’re a retailer, ask yourself these questions… see how many times you say “yes.”
1. I know where my customers live
2. I understand what life stage my customers are at
3. I broadly understand their interests and habits
4. I understand the personal values of my customers and how these influence their purchasing decisions
5. I know the channels my customers prefer to be contacted through and how often they want to hear from us
6. I know the type of content my customers respond best to and tailor strategies accordingly
7. I know what my customers like about my store… and the things they don’t
8. I understand why my customers sometimes prefer to buy from my competitors
9. I understand how price-conscious my customers are
10. I know who my most valuable customers are and, as such, treat them differently
11. I know the incentives that appeal most to different customer segments and shape loyalty programs accordingly
12. I know the products that first time customers tend to buy
13. I know what the time lag is between first interaction and sale
14. I know how much I can afford to spend in acquiring a new customer
15. I know how much my customers spend per transaction
16. I know why my customers return products
17. I know what my customer retention rate is and the revenue I am losing by not retaining customers
18. I know the lifetime value of my customers
19. I know if my customers have recommended me online
20. I measure customer satisfaction using Net Promoter Score or a similar metric
The findings showed that the respondents didn’t have an adequate understanding of their customers. This lack of insight will invariably result in missed opportunities, wasteful spending and dissatisfied customers.
Among the results, a few things really stood out.
Only 23% knew which channels their customers preferred to be contacted through and 16% knew what incentives appeal most to their customers – suggesting that retailers aren’t aligning their incentives to customer needs, values and behaviors.
But, the biggest surprise relates to retailers’ lack of understanding regarding the personal values of their customers and how those values influence purchasing decisions – just 32% knew this.
Furthermore, only 39% knew the lifetime value of a customer, 41% knew who their most valuable customers were and 29% knew what their customer retention rate was and the revenue they lost by not retaining those customers.
Without the proper insight into these areas, it becomes nearly impossible to optimize marketing programs and ensure that other activities drive a positive return.
Why Understanding Your Customers Is Important
Marketing budgets are not endless. Consequently, focusing resources on the channels that are most aligned with the behaviors of your customers is necessary to ensure that your budget delivers the greatest ROI.
Because when a retailer is able to deliver an experience that meets their customers’ expectations, customers are happy. And when customers are happy, they spend more and become more loyal.
But… and this is a big but… if a retailer gets it wrong, that customer will be only too willing to take their business elsewhere.
Therefore, to win and retain customers, it’s imperative to ask ‘will this work for my customers?’ before making any decision.
The goal is to have a real understanding of what your customers want and how they behave as opposed to what you think they want and how you think they behave.
Knowing who your customers are isn’t just something that’s nice to have. In today’s retail environment, it’s a necessity.
With countless ways to invest your marketing budget, how do you decide the best way to spend money to drive awareness, acquisition, retention and loyalty?
The answer is simple: customer insight.
Putting your customer at the center of your organization’s strategy has never been more important – but in order to do this, you need to build a detailed picture of who your customers are.
And achieving the type of understanding that reveals the specific values, behaviors, needs and expectations of your customers is nearly impossible without the proper analytic solution.
So, if you ask yourself, “how does my organization use customer data and insight to shape key decisions?’ and don’t know the answer, help isn’t too far away.
Buxton’s predictive models help retailers identify who their best customers are, where more of them can be found and the value potential that customers have – either in terms of dollars or visits – and deliver the insights needed to guide the execution of real estate and marketing strategies that are customized to your customers’ needs.
The bottom line is: don’t follow the crowd – take the guesswork out of decision making and instead shape all your strategies based on what your customers actually want.
Interested in learning more about your customers? Let’s talk.