February 26, 2024

Know your Customer

In today's competitive landscape, unlocking success means understanding customers deeply and using data to drive long-term customer value. Here we delve into the variety of different types of data that you can use to forge lasting connections and long-term customer loyalty.
Know your Customer

Using data to drive Long Term Customer value

Customer retention has always been cheaper than customer acquisition - once you’ve spent all that money to acquire customers, the game is on to drive repeat purchase and drive the overall ROI on your CAC. The more you can drive loyalty through your customer base, the better your long-term customer value is going to be and the more profitable your sales.  

Retention and loyalty are driven by all sorts of things. Brand relationship, value product, cross sell opportunity in your product base, ongoing need, customer life stage – the list goes on. The best place to start is always in understanding as much about your customers and what makes them tick as possible and then using that data to spot patterns.

Transaction & Marketing Data

You already hold a lot of that data internally across your transaction and marketing systems. Recency, frequency and value of purchase gives you a simple starter segmentation to identify your best customers, your dormant customers and everything in between to allow you to target them with appropriate messaging to drive the behaviours you want. Understanding things like propensity to repurchase score should hopefully help you better target the message with the right product at the right time to increase that repurchase rate and drive basket value.  

Operations & Financial Data

Connect in your Operational systems and you can see even more about your customers. Take for example, returns behaviours. Customers can look exceptional when looking at basket value alone. If they’re returning 90% of their purchases however, their shine dulls rapidly. Being able to identify customers who are driving your costs up as well as the ones who are driving your profit and link them back to their marketing acquisition source can again have a big impact on who you target and where you spend your budgets. If you can connect your product margin data to your transactions, you can see which customers are driving the most towards the bottom line.

External Data sources

Finally, the best kept secret in data land? Open data… This is FREE data openly available from government and national agencies that you can append to your customer data to understand more about them. Did you know you can get free Socio-Demographic segmentation from the Office of National Statistics for example? Other data freely available are things like house size and type, number of rooms, life stage, energy consumption and wifi speed.  

The type of products you sell will obviously drive the type of open data you might be interested in. For example – people in inner city flats are not going to want your 8-seater outdoor sofa set target them the tiny bistro set for their balcony instead! Indicators of affluence can help shape your messaging to drive significant donation outcomes if you’re a charity. Whether data is hugely important to the product mix in an outbound email for outdoor apparel brands. What do you wish you knew about your customers? Is it out there in an open data list somewhere?

Ultimately you need to define what YOUR best customer looks like, where they came from and how you measure their loyalty/value. Is it purely spend based? Interaction with the brand? Length of relationship? What data points do you use to measure this and how do you create a segmentation around this definition? Getting all your data in a centralised location to track and segment your customer base is key to building out and automating your personalisation strategy to drive long term value. Whilst being able to track your most valuable customers back to their acquisition source(s) is invaluable in supporting strategies to attract more customers like them.  

If you’d like to talk to us about anything in this post, get in touch with us at hello@thedatarefinery or click to request a demo below. We love chatting about data driven marketing strategies and would love to hear about yours!  

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