Are your customer insights a source of competitive advantage?

My prior post talked about the value of customer data.  Your next question will naturally be, “so how do I leverage what I know about my customers to my advantage?”  There are many ways to transform insights into  increased market share.  The lists below are examples but by no means the only things you can do.  However, I would suggest that you see your customer data and its application as a source of intellectual property, something to be guarded and leveraged wisely.

It can enable you to increase revenue by:

  • Identifying those likely to buy in the near term
  • Separating those customers who need an offer to get them to buy versus those who would buy regardless
  • Determining the right accessories or ancillary purchases to promote based on a customer’s purchase
  • Highlighting the “next best” products based on your customers’ purchase patterns

It will also help you retain your customers by:

  • Understanding the customer journey and the experiences that matter
  • Identifying those likely to defect
  • Ranking your customers by their lifetime value so you can reward your best customers

Lastly, it can also help you reduce your costs by:

  • Enabling you to conquest smartly, targeting those that look like your best customers
  • Determining the best conquest sources and communications

Are you leveraging your customers’ data to increase your market share?

The value of a loyalty program

As I mentioned in my prior post, loyalty programs are a valuable tool.  They can help retain customers and companies can win greater share of wallet as a result.  If a customer can buy the same goods or services from multiple sellers, a loyalty program encourages customers to consolidate their purchases.  It might also create additional demand.  For example, a reward certificate can spur an incremental trip or customers may splurge in order to meet a spending threshold.

Another benefit of loyalty programs is the insight into customer behavior.  This has far reaching benefits.  Take the example of a retailer.  This customer insight can help both marketing and merchandising.  Using the data collected, a retailer can segment their customers based on past behavior so that they can tailor their messages and offers appropriately.  For example, marketers can use this information to personalize product promotions, cross-sell products and identify new customers that have the potential to become to best customers.

Further, this data will provide insight into what products bring new customers into the store, what products drive repeat purchases and what products are typically purchased together. Merchandisers can use this information to plan promotions and make buying decisions.

To be valuable, the data must drive actionable insights and be used to continually improve the loyalty program.  I will write about using data to evaluate the health of a loyalty program in my next post.