Using Data to Engage Consumers, Drive Revenue and Reduce Waste
Editor's Note: While this piece is directed at retailers, the use of data to create memorable customer experiences while driving revenue and decreasing waste is just as important for marketers.
Intelligently using data is key for midsized online retailers to succeed in today’s hyper-competitive market, while at the same time offering the curated experiences that modern shoppers demand. What follows are three simple ways to leverage data to effectively engage consumers at every stage of the purchasing journey.
Target Your Advertising Spend
Traditionally, retailers have pursued a mass-market approach to reach as many potential buyers as possible. However, one of the advantages of online retail is that brands can collect a great deal of information about how consumers live, browse and buy. This enables marketers to target potential customers on a micro or niche level by age, income, job description and personal interests.
By grouping purchasers into distinct buyer profiles, retailers can create marketing segments that closely match the the demographic they're trying to reach, allowing for a granular approach, which leads to increased conversions. Targeting your advertising spend at individuals who are similar to your existing customers is a savvy way to increase sales because you're focusing your efforts on reaching the type of individual that has already shown a propensity to buy your product.
A consumer profile, simply put, is a way of defining a customer categorically by things such as demographics, socioeconomic status, product usage, psychographics, geography and interests. Profiles are created using data that each brand gathers about existing customers. Once these profiles are created, brands can purchase lists of potential shoppers that share the same characteristics as existing customers.
Leveraging consumer profiles can also be a very effective way to enter new markets. Even if you don’t have emails or lists from a specific region, you can use profiles from existing customers to find potential new purchasers to engage with. Companies that genuinely understand their existing customers — what they're interested in and the characteristics they share — are in a stronger position to enter new markets with healthy sales.
Instead of a mass-market, “spray-and-pray” approach to marketing, retailers should leverage the data at their fingertips to categorize their ideal customer into tight-knit consumer profiles. After doing so, brands should then hypertarget advertising dollars to reach potential buyers that share similar qualities with existing customers.
Create Curated Customer Experiences
Acquiring a new customer is only one piece of the puzzle; retention via curated shopping experiences comes next. From product recommendations to individualized coupons and discount offers, retailers must look to implement tactics that engender loyalty and drive repeat business.
Already, retailers creating customized experiences for shoppers are seeing revenues increase between 6 percent to 10 percent, two times to three times faster than those that do not, according to a 2017 study by The Boston Consulting Group.
Using data allows for smarter price and discount offerings tailored to the individual and personalized for maximizing revenue. Demographics, lifestyle, loyalty data, shopper value and prior purchases are all data points critical to the success of one’s customer analytics program. Retailers need to ensure they're collecting this information.
Brands can use their existing data to better retain customers. This is done by providing discount offers and a customer experience that’s tailored to that unique individual. This is a ongoing process, as retailers must constantly refine their offerings based on every interaction with, and purchase made by, their customers.
Data drives predictive analytics, which can be used to anticipate consumer demand, ensuring that production runs closely resemble actual future buying behavior, reducing both waste and inventory costs.
Predictive analytics enable companies to forecast a purchaser’s buying preferences with precision like never before. Thanks to the explosion of social media, all those tweets, likes, shares and pins point precisely at the specific types of fabrics, designs and styles that consumers are talking about and interested in purchasing. These social media indicators can be quantified and turned into predictive models that can shed light on the types of products that your customers actually want.
This data can then be used to forecast trends more accurately than before, as they're based on real-time customer input, not just a designer's gut feeling. By leveraging data science, brands can minimize the risk of a new design being a total flop and test the concept before incurring the expense of manufacturing, shipping, marketing and everything else that comes with bringing a product to market.
In all parts of the customer journey, data is playing an increasingly important role: from identifying new consumers to building loyalty with existing customers and ensuring your business is set up for long-term financial success. Data helps you understand and improve business processes so you can reduce wasted money and time.
Jan Nugent is the CEO and co-founder of Branded Online, a company that specializes in end-to-end e-commerce for apparel, beauty and lifestyle brands.