Every day, there is talk about fresh platforms and technology that businesses can leverage to reach customers. With a myriad of options, it’s no wonder executives are often left scratching their heads as to where to allocate valuable resources.
The most important thing decision makers need to do is ask themselves three questions: (1) who are our ideal customers, (2) how do we grow our share of wallet and (3) how can we profitably retain our customers for the long term.
To answer these questions, businesses can follow the strategies below, all of which can ultimately be accomplished by leveraging analytics to acquire, grow, and retain customers.
1) Customer Acquisition—The acquisition cost of some customers exceeds their lifetime value. Potential customers must be segmented by revenue and margin priority and sorted by propensity to buy. The analysis of historical buying patterns can assist in leveraging behavioral segmentation in addition to demographic and psychographic profiling. This will enable the development of compelling offers and impactful messaging to sell the right product to the right customer and at the right price.
2) Customer Growth—It’s easier to increase wallet share than market share. Not only is it less effort to sell to existing customers than create new ones, existing customers are likely to pay more. Virtually all companies have a goldmine of data from which they can develop recommendation engines similar to Amazon’s collaborative filters which recommend products “Frequently Bought Together.” Data mining and machine learning algorithms can analyze purchase patterns and suggest future purchases with a high win probability, often increasing sales to existing customers by 30 percent or more.
3) Customer Retention—Identifying customers before they churn is a critical key to customer retention. Analytics can be used to predict “at risk” customers even before they begin looking at alternatives. The risk profile established can be used to determine the optimal account strategy and sales efforts can be focused by integrating priority attributes with scheduling logic. Clever algorithms can suggest intervention tactics related to product and price tailored to any individual customer.
These advanced analytics and Revenue Management capabilities will allow for maximum value capture. By presenting your customers with relevant offers and impactful messages aimed at the right price and at the right time, you can expect to acquire and grow your customer base, and also retain them for the long term driving organic revenue growth.