By Cameron Graham (TechnologyAdvice)
Big data has become the buzzword of this decade, with more and more companies openly admitting to collecting information about customers. Most consumers can handle parting with their personal information if they receive a relevant and personalized experience in return. This means companies who gather data and use it wisely experience better sales and higher revenue. Well, if they do their research correctly, that is.
Not sure if you’re using your internal data correctly? Here are a few ways to tell.
Personal and Relevant Experiences
Buyers really do want personalized service, from an email greeting them by name to suggestions tailored according to their past purchases. The only way you can create these experiences is by knowing important things about each and every customer. The information you collect can be used in many different ways, including:
Greeting customers by name on your website
Specialized offers and discounts
Targeted ads on third-party sites (also known as re-targeting)
This all sounds amazing, of course, but how should you go about collecting the information?
Collecting the Data
Where you really hit the information mother lode is through forms on your website. Why would buyers want to fill out forms? Well, most don’t, which is why you have to offer something in return for their responses. In some cases, this is highly specialized content that helps buyers solve their pain points (such as evergreen guides, or video walkthroughs). In other cases, the offer might be a discount for your services or products.
It’s important to ease into the process, too. If you ask too much too soon, you’ll scare potential buyers away, and they might not return. Start with a simple request for their name and email address so you can contact them after their offer has been delivered. The next time they visit, gather a little more information, such as their job title or industry. Like any relationship, you want to ease into familiarity. Trying to collect too much too fast can appear (and be) intrusive.
Another way to gather information is to ask how purchases might be used. Amazon is a master of gathering such data with seemingly innocuous questions, such as “Will this purchase be a gift?” Answer yes and Amazon knows not to attribute that purchase to your customer-profile. Answer no and the company understands the purchase was for you, and assumes you have an interest in related products.
While customer information is great for personalizing shopping experiences, it’s far from the only thing such data can be used for. Any information you gather can also be used to segment your contact list for targeted marketing and email. An automated marketing program will make sure only those who fit specific criteria receive the information.
It can help to segment customers based on information they have freely provided, not information you’ve scraped from their social profiles or through tracking efforts. This helps your users feel in control of their information, and develops trust between them and your brand.
Figuring out exactly how the data your customers have provided can be used to segment them can be a complex task. Many companies choose to implement business intelligence software to help them sort through such data and identify patterns in customer behavior and purchasing.
Raising Customer Lifetime Value
When you begin to truly understand your customers, you’ll get special insight on how to raise their lifetime value (LTV). For example, Starbucks has determined each customer has an LTV of almost $15,000. Yes, you read that correctly.
The reasons that Starbucks can put such a precise number on their customers is largely due to their robust data collection efforts. Beyond simply tracking online accounts and in-store purchase, they have an extremely popular loyalty program which provides rich data on the habits of their most loyal customers. Using business analytics tools, Starbuck’s is able to not only identify their most successful products and promotions, but test different marketing strategies (using segmented customer lists) and raise the overall LTV of their customers.
Importance of Transparency
No matter what your collection policies are, consumers may still be wary about sharing with you, especially at first. According to a recent MarketingCharts survey, however, 77 percent of users say they’re much more comfortable with companies asking questions if they know how their information will be used. That’s why transparency is exceptionally important.
After you tell them what you’ll do with the data, follow through. Don’t abuse their trust by sending spammy emails, calling incessantly, or sharing their information with a third party.
If you can honor the unspoken agreement between your company and the consumer, you’ll be privy to all the information you need to create personalized marketing and purchasing experiences for your buyers. That data is your company’s best friend, because it helps you become a valuable resource. Once you’ve established yourself as a trustworthy and reputable site, you’ll be well on your way to repeat business.
Cameron Graham is an editorial coordinator at TechnologyAdvice. He covers emerging trends and business intelligence software, among other things. Connect with him on Google+.