Customer analytics has been one of the hottest buzzwords among executives for years. But have you ever asked yourself these simple questions: What is customer analytics? What do those two words actually mean? Why is it so important?
As you might have anticipated, there is, of course, no easy way to answer those questions.
However, on a basic level, customer analytics can be defined as the process of analyzing and making sense of the flood of data that is accumulating every day from every possible customer touchpoint.
That customer data can then be used to build robust predictive models to determine who a retailer’s best customers are, where more of them can be found, and the value potential those customers have – either in terms of dollars or visits.
The insights derived from customer data provide meaningful and actionable insights that retailers need to guide the execution of their future real estate and marketing strategies.
Put more simply, it’s using the past to predict the future. As the old saying goes, history repeats itself.
Do You Have A Data Problem?
Even though implementing customer analytic solutions is a great idea, it’s not as easy as it sounds.
You see, gathering and analyzing data is a costly, time-consuming, yet necessary investment. Without it, retailers will not be able to use a customer analytics solution to its full potential.
But, the majority of retailers, at least 60%, either don’t have data or they have unreliable data. The average company’s data is only 55% accurate and more than 14 months old, which renders the data essentially useless.
The absence of accurate customer data skews customer profiles, which results in the poor use of analytic solutions, lost opportunities, lost customers and unnecessary costs – effectively costing U.S. businesses $700 billion a year.
In other words, it’s critical that retailers have pure customer data in order to utilize customer analytics to its full potential, instead of costing retailers billions of dollars a year.
Think of it this way – the companies that effectively champion the use of customer analytics are 6.5 times more likely to retain customers, 7.4 times more likely to outperform their competitors on making sales to existing customers, and roughly 19 times more likely to achieve above-average profitability.
Benefits of Using Customer Analytics
While some retailers have barely scratched the surface of customer insights, the retailers who are effectively utilizing customer data and analytics are able to identify the information that is responsible for streamlining operations, enhancing productivity, customizing marketing initiatives to both current and potential customers, determining where to open new locations and improving profitability.
With immense competition for almost all goods, retailers must determine how to stand out among their competitors making customer analytics not just something that’s nice to have, but a necessity.
By implementing a customer analytics initiative, retailers greatly increase their potential to reach the right customers, in the right place, at the right time, and in the most effective way.
Have more questions and want more answers? Don’t hesitate to reach out to us. We’re here to help.