One of the most important things a company needs to do to grow is understand its customers and their behavior. Now, customers are more connected and aware. They have more choices and a simple marketing plan is not likely enough for a company to attract them towards their product and services. Businesses need to do better. With readily accessible data, companies can now easily understand what their customers need and want. But having data is not enough. The businesses need to analyze the data to gain insights. This methodology is called customer analytics.
What is Customer Analytics?
Simply put, customer analytics is a methodology that gives companies the insights into customer behavior to make better decisions. Businesses can use these insights for various means such as for strategizing their marketing plans, developing or modifying products, targeting customers, deciding costs etc.
Companies can use various tools to conduct customer analytics. A few commonly used are:
- Cohort analysis: This is an analytical technique used to categorize and divide data into groups with common characteristics prior to analysis. In this method, people are divided into groups with similar traits.
- Customer service analytics: It is the process of collecting and analyzing customer feedback to gain insights to better understand their needs and expectations.
- Customer conversion funnel analysis: This method tracks the customers’ journey on a e-commerce website. While customers can visit a website many times, their pathway from choosing to a product to buying it can show how likely to be converted.
Why is it important?
There are numerous ways customer analytics helps a business and almost all of its departments. The most common usage is for targeting customers and building a personalized campaign for them.
It can help the sales team understand how a customer engages with a product, thereby tweaking their strategy accordingly. The company can also determine the cost of its products or services. The customer service team can use the methodology to determine better ways to handle communication, find the most preferred channel and also reduce churn rate.
The product team can modify the product by understanding the customers’ likes and dislikes.
Customer segmentation is a part of customer analytics in which groups customers with similar characteristics into meaningful segments. The process allows companies to target customers better and serve them in a more fitting manner.
Organizations can segment customers based on various traits – demography, age, frequency of product use, or even other factors such as the book they read or the gym the go to.
Businesses usually employ this analytics methodology to gain a better understanding of their customers’ likes and dislikes. Their focus remains on finding out what could be the most valuable for each segment. This allows them to modify their strategy to market their products or services accordingly.