Customer Analytics: What It Is & How to Track Metrics
Gone are the days when it only took fair pricing and quality service for a business to satisfy customers. Modern customers expect businesses to understand their needs and buying behaviors, providing personalized interactions and a consistent experience across channels.
To understand these needs and behaviors, you need the right data. Customer analytics allows you to take a deeper look into customer behavior, to understand why they do what they do and to make better-informed, data-driven business decisions.
Let’s dive into what customer analytics is, how to track your metrics, and the best practices for implementing this process.
What is customer analytics?
Customer analytics refers to collecting, organizing, and analyzing customer data across various channels in order to generate actionable insights into customer behavior. Techniques used in the customer analytics process include predictive modeling, customer segmentation, information management, and data visualization.
Using customer analytics, businesses capture and analyze customer data.. This process helps them create strategies to identify, attract, and keep high-value customers and improve the overall customer experience.
The importance of customer analytics
Analyzing customer data gives businesses a holistic view of their customers, setting the foundation for successful sales, product, and marketing strategies.
A good customer analytics platform can help your business in several ways:
- Increasing customer engagement, sales, and revenue
- Promoting higher customer satisfaction
- Improving brand awareness
- Increasing customer retention
- Lowering lead generation and acquisition costs
Customer analytics helps you understand who each customer is as an individual. By collecting data as customers move through each stage of the customer journey, you can identify how customers discover your products, the features they like best, where they find value, and what might cause them to leave.
Example of customer analytics
Amazon, inarguably the largest ecommerce company in the world, collects and analyzes a wealth of big data to gain insight into customer wants and likes and create better customer experiences.
The more Amazon knows about a customer, the better they can predict what that customer wants to buy. Whether a customer purchases a product, places it in their cart, or just browses product details, Amazon collects and uses that data to create a complete picture of the customer and figure out what they want. Using this data and information from other sources, such as shipping details and customer feedback, Amazon can fine-tune its product recommendations to persuade customers to buy.
Customer analytics also allows Amazon to use look-alike modeling to make product recommendations based on customers with similar buying habits.
Types of customer analytics
Let’s look at how different types of customer analytics can add value to your business.
Customer journey analytics
Being aware of all the ways a customer interacts with your business is important. But the customer journey is complex, with several stages and multiple touch points.
Customer journey analytics focuses on the most important metrics for evaluating the customer journey. It analyzes data sets from different customer interactions—such as shopping cart abandonment rates, previous purchases , or product page browsing data—to identify patterns that provide insight into future customer behavior.
Customer experience analytics
Customer experience analytics gives insight into how your customers feel when they interact with your brand. Data is analyzed from sources such as support tickets, email, live chat, and customer satisfaction feedback.
This form of analytics focuses on customer support and customer onboarding metrics, including first response time (FRT), time to resolution (TTR), user adoption, and time to value (TTV). These are used to measure the performance of your customer success and support teams and determine whether customers are being served promptly and satisfactorily.
Customer engagement analytics
Organizations can use customer engagement analytics in two ways:
- To measure the engagement of existing customers with your products or services (by tracking usage metrics)
- To understand and influence new prospects as they engage with your brand
Analyzing customer data in this way can help you improve your customer engagement by decreasing response times, delivering customized marketing messages, and boosting overall customer experience initiatives.
Customer loyalty and retention analytics
Exceptional experiences with your business lead to loyal customers. Customer loyalty and retention analytics helps you understand why customers come back to buy your products or services time and time again. It gives you insight into how loyal your customers are by highlighting information such as how many of your customers are repeat buyers and what percentage of customers churn. This type of analytics is particularly useful for identifying current or potential issues with your current marketing strategies.
Customer lifetime analytics
Knowing who your best customers are is crucial to creating long-term strategies that encourage them to keep buying. Customer lifetime analytics shows you how much revenue you can expect from an individual customer throughout the lifetime of their relationship with the business.
Using customer lifetime value (CLTV) metrics, you can gain crucial insights into which customers are most likely to repurchase, drive the most revenue, and become loyal brand advocates. This helps you optimize your marketing and sales strategies to target your most valuable customers.
Voice of customer analytics
What customers say about your business is important—both negative and positive feedback can help you understand customer expectations. Voice of customer analytics captures customer opinions, preferences, and expectations so you can understand what your customers are saying about your business.
It uses data collected from surveys, social media, customer support sessions, product reviews, and other customer feedback to get into the minds of your customers. This is a great way to discover new trends, win back dissatisfied customers, and improve your business practices to stay ahead of the competition.
How to implement customer analytics
Follow these five steps to implement customer analytics in your business:
1. Decide what data you want to collect
The first step to implementing customer analytics is identifying the data sets you want to collect. To do this you can ask questions such as the following:
- Who are our customers?
- What is their age range?
- What are their demographics?
- What touchpoints do they prefer at the various stages of their journey?
- How do they like to communicate with the business?
Use customer journey mapping to identify the best channels and touchpoints for more relevant data collection.
2. Capture the data
Collect a lot of data from multiple sources. These can include your website, online and in-store interactions, internet browsing, email marketing, social media interactions, marketing tools, customer relationship management (CRM) tools, and third-party data.
3. Store, clean, and organize the data
Unorganized data makes it more difficult to get accurate, actionable insights. Organize and clean the data you’ve captured to remove irrelevant, outdated, and duplicate data.
Consider merging customer data from all your sources into a central repository such as a customer data platform (CDP). Besides unifying all your customer data into a single trusted location, a CDP helps you structure it in a way that eliminates the occurrence of inaccurate results.
4. Track metrics and analyze the data
Tracking key customer analytics metrics such as net promoter score (NPS), customer satisfaction (CSAT), and CLV helps you to understand how your marketing campaigns are performing and whether your business is moving toward its strategic goals.
Analytics tools backed by artificial intelligence (AI) and machine learning (ML) technologies extract useful insights to help you make sense of your data. These tools combine various data types such as demographics, social media data, and customer purchase history to identify trends and patterns.
5. Turn insights into action
Once you understand the actions of your customers and why they take them, you can better predict their future behaviors. This kind of insight drives more customer-centric decision-making, helping you combat issues such as poor customer retention and high churn rates, and allowing you to create marketing strategies that offer relevant customer experiences.
Customer analytics best practices
Here are a few best practices to help you make the most out of your customer analytics.
- Organize your data. To gain the most clarity, consolidate your data into a single customer view to create comprehensive unified profiles of customers or segments.
- Make use of technology. Use advanced analytics tools with AI and machine learning to identify trends and recommend the next best steps.
- Listen to your customers. Their opinions (and complaints) can reveal useful information about their preferences and lifestyles.
- Analyze omnichannel customer interactions. Look at data from several relevant sources to understand how your product is catering to different customers in various ways.
- Prioritize customer retention. Identify your at-risk customers, and take action to reduce churn, increase customer retention, and extend customer lifetime value.
Get to know your customers with Simon Data’s CDP
Customer analytics plays a big role in understanding your customers, their preferences, and their choices. In-depth insights on a customer’s journey, experience, engagement, and loyalty can help you build closer connections, improve retention, and create marketing campaigns that drive business growth and success.
With Simon’s CDP, marketers can build and personalize cross-channel experiences using customer attributes, demographic, psychographic and behavioral data – like where your customers are coming from, what they say about your business, the channels they engage with most, and which products they love most.
Our seamless integration with many marketing tools and data sources enables you to create a unified view of your customer, and optimize your marketing efforts to increase revenue. Request a customized demo to find out how our customer data management solutions can help you better understand your customers.