Data-driven marketers have long understood and proactively implemented a customer-centric philosophy inside their organizations. Not surprisingly, these organizations outperform the market, have higher profitability, longer-term customers, and advocates all throughout their customer base.
Their success stems from understanding customers’ current and future needs as well as their lifetime value to the company, then focusing product/service/marketing efforts on those high-value segments that drive profitability. That’s it.
Here are the components of the strategy:
Effectively mine the right customer data
Companies collect a staggering volume of data, but some aren’t entirely sure how to employ it to their benefit. Customer-centric companies are less interested in big data but more interested in the right data that can be analyzed for customer insights.
You convert customer data into actionable insights by understanding it and attempting to predict behavior through three types of research:
· Exploratory research includes secondary data from existing resources, such as the Internet, books, and public libraries. It can be quantitative or qualitative, and it is often used when little is known about a problem.
· Descriptive research answers who, what, where, when, and how. Researchers can get information about consumers’ behavior, perceptions, and attitudes from gathered data.
· Causal research is aimed at solving the question of why. It informs decision-makers about the relationship between variables. A simple example would be that some analysts would conduct a causal research project to understand whether actual photos are better than line art at causing more favorable customer attitudes and perceptions of quality and credibility.
Know your customer’s lifetime value (CLV)
A recent study found that 66% of marketing leaders don’t know how much their customers are worth; yet companies have a potential 17% increase in sales when they identify and maximize top value customers. Those numbers are very telling. CLV (Customer Lifetime Value) is a prediction of all the value a business will derive from their entire relationship with a customer.
The Pareto Principle states that roughly 80% of the effects come from 20% of the causes. When applied to your business, it means that 80% of your revenue can be attributed to 20% of your customers. While the exact percentages may vary; what matters is that some customers are worth far more to your business than others.
Identifying your ideal customers can be extremely valuable to your business and can help you to optimize sales and marketing efforts. Thus, taking CLV into account can shift how you think about strategic customer acquisition. Rather than seeking customer volume, optimize your acquisition spending for maximum financial benefit from key customers.
Know your customer acquisition costs (CAC)
Most manufacturers devote a substantial amount of time and money to new customer acquisition before they see a full return on their investment. Examining just how many months of revenue from a customer are needed to recover these costs becomes vitally important to your organization meeting its marketing objectives.
The key insight is that it may take much longer than you think for your organization to recover CAC and move towards deeper profitability. These insights can alter your organization’s strategy and provide the impetus to make course corrections to marketing strategy and tactics, thus optimizing your[ efforts.
Determine customer attributes and profile; use them to segment customers
As you know, customers are not monolithic. Although they may buy the same product or service, the way they choose, purchase, and ultimately consume will be different – markedly different. By understanding how your customers are different, you can obtain great data on the customers that you really want to attract and do business with.
Your best customers are loyal, long-term in their commitment, and have high lifetime value. Doesn’t it make sense to focus on these customers rather than ones who are not committed to your product, will flee as soon as an inexpensive option is available, and have low lifetime value?
Understand and predict customer behavior and the preferences
Markets change. Industries change. People change. What was once new is now old, what was once old is new again, and dynamic change can happen quickly. Your company may have a firm understanding as to what your clients want right now, but what about the future?
Don’t assume your customer will retain the same attitude towards any product or service as when they first purchased it. Insightful research and predictive analytics can help bridge the knowledge gap between guessing and knowing what the customer truly desires. When in doubt, just ask your customers what they think their future needs will be; they’ll tell you!
Engage customers in one-to-one dialogue
If you aren’t actively engaging with customers outside of your company’s walls, you could be at risk of developing the wrong product, or worse, developing marketing strategies that no one cares about. Creating a customer-centric business is all about asking the right questions to the right people and then acting on the information gathered.
The act of interviewing customers not only builds intimacy, it also develops a long-term rapport that is vital to innovation and providing services the customer actually desires. These conversations also help to identify emerging problems and opportunities before they manifest themselves.
Sure, customer interviews are not scalable and can be logistically challenging. Consider hiring a third-party customer analytics firm who can assist you, because there is no substitute for a good customer interview.
Apply lessons learned to deliver a consistent experience across products and markets
Companies’ data-maturity levels often depend on their views of customers. But regardless of where yours is on the spectrum, you have valuable customer data assets that could be put to better and more active use, and learning from that customer data is tantamount to success.
That means aligning your sales, marketing, and customer-facing teams around the same data. Dashboards and monthly meetings go a long way towards integrating it into a useful format. Conduct annual data mapping exercises. Using the data from your VOC programs, identify the metrics central to customer retention and gather input on who is responsible for achieving those metrics. Map the metrics to the departments responsible and share a monthly dashboard tracking them. Be transparent!
Follow these steps to transform your product-centric company into a customer-centric one.