There’s so much data available now to business owners and marketing managers that making the best use of it can seem overwhelming. In fact, recent studies show that marketers aren’t making full use of the data available to them, which amounts to leaving money on the table. It takes time to learn to use analytics to grow revenue, strengthen customer loyalty and win new customers. More importantly, it takes time for marketers and business owners without a data background to develop the habit of looking to the data to help solve problems and develop campaigns. Here are some ways your company’s customer insights can deliver better returns on your marketing efforts.
Create more effective, less expensive campaigns
The more precisely you can identify and target your audience, the more efficient your campaigns will be. By using your customer data to determine who’s most likely to respond to your offers and who will spend more when responding, you can achieve better returns with smaller spends. This seems straightforward enough, but according to a recent CMO article, just 35 percent of advertisers surveyed said they use data to grow revenue, even though revenue growth was a priority for most of the survey participants. Again, it’s a matter of realizing how data can support that goal.
Data allows marketers and SMB owners to look at their complete audience rather than making informed guesses based on audience samples. Todd Wasserman’s CMO article notes that this can improve consumer identification accuracy by as much as 60 percent. That’s a huge increase. Let’s consider how that can translate into revenue gains, using the hypothetical example of a diner.
Let’s say there are 12,000 households in the diner’s area, and in past campaigns, the diner mailed offers directly to each one, with a response rate of 1 percent. Now, using customer data to see exactly which households visit the diner and to identify similar households in the area, the mailing list is refined to 8,400 target households. Because the offer only reaches the ideal audience, the response rate rises to 1.4 percent. The cost of marketing drops, as does the cost per customer, while the customer lifetime value increases and return on marketing rises. This carefully targeted approach isn’t limited to direct mail; it can apply to most traditional and digital marketing initiatives.
Data analysis can take loyalty programs far beyond the typical punch card or email coupon blast. By analyzing the preferences of your program members and the times when they’re most likely to buy, you can craft more appealing offers and time them for optimal response.
For example, let’s say our diner runs one general loyalty-program offer per quarter, with a quarter-percent response rate and a $15 average sale per customer. By replacing one general offer with four targeted offers that each have a higher probability of redemption, the diner’s response rate rises to 0.30 percent and a $20 average sale per customer. By using readily available information, the diner’s loyalty program achieves a higher response rate, increased sales per customer, a lower offer cost per redemption and an increase in promotional sales value and lift.
Use local-level insights at each location
Your data can help you customize offers at each store in a multi-location chain. For example, you can combine your customer insights with social listening and social media check-ins to create local offers for your audience that they can see on their phones and use in your stores. This is another way to reduce costs per customer while increasing response rates and sales. Detailed data also allows you to serve local tastes and preferences by adjusting your hours of operation, signage, decor, pricing and other in-store elements by location.
Select the best channels for your campaigns
Combining customer insights with social listening and social media data can help you select the campaign channels your audience prefers. Again, you can localize this information for more effect. For example, a multi-city chain of pet stores might analyze its data and decide that while Facebook is the best channel for some locations’ campaigns, one or two locations have a customer base that diligently reads the free local weekly paper or listens to a particular radio station during the workday. Tailoring your campaigns to your audience’s channel preferences gives you reach that is more accurate and helps you spend campaign funds wisely.
All of these data-driven approaches to marketing can reduce costs, increase sales and generate lift. How much? Again, data can provide the answers. With a complete picture of your customer data, you can track your return on marketing and customer long-term value over time to generate month-over-month and year-over-year comparisons to guide your overall marketing strategy. The data is out there. It’s just waiting for business owners and marketers to make the best use of it.