Forget the 4 Marketing Ps … It’s all about the Customer Analytics
For today’s organizations, marketing has evolved far beyond
the traditional scope of product design, catchy commercials or glossy print
ads. With the flood of consumer data now available at companies’ finger tips,
the utilization of customer analytics has become the new wave of understanding existing
as well as potential customers. Unlike previous generations, today’s consumers
are blasted with massive amounts of information, due to mobile communications
and social media, on everything from the hottest product trends to their
friends’ opinion on the new IPhone. With so many products to choose from, consumers
now have more power in their buying decisions, and are demanding products
tailored to fit their individual needs. Not only are they asking for more
individualized products, they also want companies to market to them in ways
that fit their preferences and lifestyles, whether that’s customer loyalty
programs or mobile discounts.
With an ever-increasingly competitive market and customers
now seeking more individualized products, it is imperative for companies to embrace
new methods to take advantage this changing market. This is where customer
analytics comes into play. Customer analytics is the manner by which data from
consumer behavior is collected, analyzed and thus utilized to create fresh and
innovative marketing campaigns by way of Segmentation (Who are my customers?
Where do my customers come from?) and Predictive Analytics (What are my
customers’ behavioral patterns and why? What will they do next?). Throughout
all organizations, the application of customer analytics can translate into a
better understanding of customer needs and product preferences and thus create
more effective marketing platforms.
Customer Analytics in the
Spotlight: Nordstrom
Originally founded in 1901 as a men’s shoe store, Nordstrom
today is one of the largest upscale fashion retailers in the U.S. totaling over
$8.6 billion in revenues in 2012. Known for its excellence in customer service,
Nordstrom has prided itself on understanding its customers and building
lifelong relationships. During the 2012 Marketing Optimization Summit in San
Francisco, Jack Steck, part of Nordstrom’s Advanced Analytics group, conversed
on Nordstrom’s current use of JMP analytics. For Nordstrom, their use of JMP
(analytics) was to determine what the buying behavior of their customers was
and therefore determining how to “promote
the right products and brands to the right customers, maximizing revenue in the
process”. As discussed by Nordstrom’s Advanced Analytics Group, “Using JMP allowed us to figure out, for
example, which segments of customers are more likely to buy brand Y and first
buying brand X”.
Key Metrics used In
Customer Analytics (citation from “Customer Analytics -- The Genie is in the Detail”)
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Customer Profitability analysis by segments
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Customer life time value analysis
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RFM (Recency, Frequency, Monetary Value) Analysis
§
Customer Loyalty Index
§
Customer Cost Analysis – Acquisition and
Retention Cost
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Customer Churn Analysis
§
Brand Perception Analysis
§
Market Basket Analysis-Affinity Analysis
Benefits of Customer
Analytics (citation from “Customer Analytics -- The Genie is in the Detail”)
§
Identify segments based on profitability
§
Assesses the life time value of the customer
§
Targeted marketing and campaigning
§
Manage better and more personalized customer
relationships
§
Improved customer retention and satisfaction
§
Better utilization of marketing resources and
increased ROI on marketing investments
§
Predict future buying behavior of consumers
based on present and historical data
Sources:
Brandel, Mary. The
Science of Customer Loyalty. Computerworld [serial online]. August 13,
2012; 46(14):24-26. Available from: Business Source Premier, Ipswich, MA.
Accessed January 16, 2013.
Sathyanarayanan, R. Customer Analytics -- The Genie is in the
Detail. Journal of Marketing & Communication [serial online].
January 2012; 7(3):28-33. Available from: Business Source Premier, Ipswich, MA.
Accessed January 15, 2013.
Thompson, Bob. Geeks Rule! Using Big Data Analytics at Nordstrom
and LinkedIn. Customer Think.com. Http://www.customerthink.com/blog/geeks_rule_using_big_data_analytics_at_nordstrom_and_linkedin. Posted March 5, 2012. Accessed January 16, 2013.
Having the focus on your customers is the key. Good article. Get to know your customers is paramount to your businesses success.
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