Analyzing the Science Behind Customer Loyalty
Four tools to put the power of Big Data to work when it comes to building a robust and loyal customer base.
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Raise your hand if you've built up an extensive collection of loyalty punch cards through the years. I know I'm guilty. From free t-shirts to free meals, being rewarded with something complimentary from a business you frequent is always awesome. The trouble is I -- like everyone else -- get busy and forget about those punch cards squirreled away; I even sometimes forget the businesses that provided them in the first place. Moral of the story: if you're trying to figure out a strategy to better harvest customer loyalty for your business, this isn't the best tactic.
As a business owner, the most reliable tool in your arsenal for attracting, engaging and retaining customers is the data you aggregate about them. In fact, a recent study from Forbes reports organizations that are taking a data-driven approach have higher levels of customer engagement and market growth in comparison to their old school competitors.
Today's consumer is a whole new breed. With the advent of advanced, real-time technology, consumers have come to expect a more personalized experience from the businesses they buy from -- especially those they turn to most often. This might seem like a tall order -- particularly for smaller businesses that are just starting out -- but when used correctly, incorporating data into your relationships with customers can spur increased loyalty. Here are a few tips to make analytics your ally in retaining multi-dimensional customers:
Think your business is too small to get overwhelmed by customer-related data? Think again. From in-store and online transactions to inventory, marketing and overall service performance, there is a lot for business owners to analyze when it comes to how well they're resonating with customers. While all of the information you aggregate is important to some degree, the reality is you'll have better success -- and save yourself some sanity -- by prioritizing capturing the right type of data and moving the needle on just a few key customer-driven metrics.
For me, service and product satisfaction have always been the most critical components to measure throughout the lifetime of a business. Over the years I've deployed a variety of tactics to gather customer sentiment, but the most tried-and-true method has been surveys. They serve as a catch all for understanding your customers likes, dislikes and general persona. While there is always a debate regarding what question provides the most insight into customer satisfaction, I take my cue from Fred Reichheld, author of The Ultimate Question, and analyze responses regarding how likely my customers are to recommend my business to others.
Advancements in customer facing technology, like point of sale (POS) solutions or online shopping carts make it easy and less cumbersome to capture customer satisfaction information, among other information, following the point of purchase.
Related: 4 Steps to Knowing What Your Customers Want Better Than They Do
Predict and prescribe success.
Increasingly more technology platforms are putting analytics at the forefront and making it easier for business users to access and make data more actionable -- which is huge for businesses with limited resources.
The perfect solution can provide both predictive and prescriptive analytics on your customers based on historical data you and it collected. Both types of analytics serve a purpose when it comes to fostering the loyalty of your customers. Predictive analytics, for starters, forecasts what action a customer will take based on past behavioral data. You can use this intel to analyze customer order histories, for example, gaining a better understanding of trending peak times of purchase and products purchased in order to make more strategic buying decisions that you know align with what your customers want.
Prescriptive analytics take things a step further providing recommended actions for you, or in some cases your customer, to take based on past behavioral and predictive data. Think about Amazon's "Recommendations for You" or Facebook's "Friends You Might Know" calls-to-action. Those are prescriptive analytics at work. This type of insight helps you deliver on the personalized experience your customers crave and provides you with a competitive advantage.
Related: Young Entrepreneurs Are Applying the Power of Big Data to the Real World
Find your customers, round out your omnichannel approach.
Using analytics to determine where customers are interacting with your brand can also set your business a part and drive loyalty in the eyes of today's multi-dimensional consumer. For example, reviewing things like survey responses to determine how a customer prefers to be reached, or analyzing the number of purchases and/or support requests made through a specific channel like mobile compared to other methods will paint a good picture of how best to communicate with your customers.
This information builds the framework for a successful omnichannel strategy, which you'll need in order to keep customers coming back. According to an Aberdeen Group study, companies with extremely strong omnichannel customer engagement retain on average 89 percent of their customers, compared to 33 percent for companies with weak omnichannel customer engagement.
Related: Tweak Your Company Survey to Find Out What the Customer Actually Experiences
We took this approach at our company when determining the best channels to provide customer support. After some research and data analysis, we realized majority of our customers would prefer to text their support requests versus call a support line or email. With that in mind, we implemented text to chat capabilities as an additive to our existing live call center and online chat functionality.
Related: What You Need To KNow About Omni-Channel Marketing
Facing the facts.
Ultimately, when you focus on gathering the right data, making the information actionable and using it to develop an omnichannel strategy, the true understanding your business has for its customers will shine through. It's time to recycle those lame old punch cards and revert your attention to a more practical means for engaging existing loyal customers and generating new ones.