A Business-Savy Guide To Customer Analytics and Why It Matters

To create effective marketing campaigns, increase customer satisfaction, or make more sales, your business first needs to develop a strong understanding of who your customers are and why they’re interested in your brand. Performing customer analytics is a great way to learn more about the different types of customers interested in your products or services. It also helps your business make data-driven decisions to help drive growth.

Importance of Customer Analytics in Today’s Business Environment

Customer analytics allows you to identify your target customers and segment them into specific customer profiles based on their needs, behaviors, and other characteristics, which is essential for running a successful business. Customer segmentation is the backbone of effective marketing strategies, product development, and other business decisions. Plus, once you know who your customers are and how they typically behave, you can more easily identify trends in your customer base and even anticipate their future needs.

Benefits of Understanding Customer Behavior

Your business can enhance and personalize marketing campaigns and other outreach efforts based on customer needs or pain points, which may also improve customer satisfaction—reducing customer churn and increasing customer loyalty. Understanding what’s driving customers to your brand will also help you better position your existing products or services and steer the development of new ones to better align with customer demand. All of these factors will positively impact your sales and revenue.

What is Customer Analytics?

Learn more about the needs, behaviors, and expectations of your customers through customer analytics. In this process, you’ll collect and analyze both quantitative data, such as the number of website visits or purchases, and qualitative data like how customers feel about your products and their experience with your brand.

By analyzing different customer data points and customer feedback, your company can develop a more comprehensive customer profile. You’ll gain a better understanding of customer needs, how you can best attract and engage them, and if your products or services satisfy your customers.

Role of Data in Customer Analytics

The customer analytics process typically includes collecting customer data from their interactions or touchpoints with your business—including purchase history, emails, browsing history, ads, webchats, etc.—and using data analytics tools to help analyze and interpret it. Analyzing customer data allows you to spot trends and gain greater insight into your customers’ behaviors, characteristics, and needs. You’ll be able to better target your efforts, resulting in higher return on investment (ROI).

Types of Customer Analytics

There are different types of customer analytics you can choose to evaluate. They include:

Customer Engagement Analytics

This method examines how customers interact with your business. It looks at the ways your customers engage with your brand—whether through your website, social media platforms, marketing emails, customer surveys, etc.—how often they engage, and which interactions seem to resonate with them the most. It also considers customer feedback and experience so your company can learn about challenges or frustrations customers face with your products or services along their customer journey.

Customer Acquisition Analytics

Businesses have to acquire new customers to grow, but the process can be challenging. This form of customer analytics helps you determine how effective your acquisition efforts are by analyzing lead data. It looks at quantitative data such as number of qualified leads, cost per lead, and conversion rate so you can make informed decisions to adjust your strategy.

Segmentation Analytics

This type of customer analytics allows you to segment your customers into specific groups based on specific customer demographics or characteristics, such as their age, gender, income, level of education, where they live, and so on. Understanding customer differences and separately targeting each group can help you optimize marketing and sales strategies for each customer segment. For example, single men in their 20s would have different needs and pain points than women in their 30s with children. They may prefer specific products over others or use different channels to interact with your business.

Customer Satisfaction Analytics

Increasing customer satisfaction can help build brand loyalty and improve customer retention. This type of analysis measures both qualitative and quantitative customer data from customer reviews, CSAT surveys, and more to help you understand how customers feel about your company and its associated services or products.

Customer Lifetime Value (CLV) Analytics

This type of customer analytics helps differentiate your repeat customers from your one-time buyers by evaluating how much your customers spend over the course of their relationship (or lifetime) with your business. By identifying the customers that are giving your company the best return, you can focus your efforts on acquiring and retaining these customers.

Churn Analytics

Your company’s rate of churn, or how quickly you’re losing customers, has short- and long-term impacts on your growth and profitability. By analyzing how often customers return items or cancel subscriptions, you can determine your churn rate. You can then compare your rate to industry averages or your direct competitors and take steps to reduce customer churn by adjusting pricing, offering rewards, or creating loyalty programs to improve customer relationships.

Customer Analytics vs. Traditional Market Research

While customer analytics and traditional market research have the same underlying goal—understanding your customers’ behaviors and using the information to drive business strategies—they differ in both their approach and how they serve your business. Custom analytics evaluates quantitative data from across your business and other sources where customer interactions take place, such as social media. Analytics tools have the power to collect and analyze data automatically, offering big-picture insights about your customer in real time for building a data-driven business culture.

Traditional market research, on the other hand, focuses on a more targeted, in-depth approach to learn more about your customers. It relies on qualitative and quantitative data collected through one-on-one interviews, customer surveys like CSAT, and focus groups for direct insights into your customers’ experiences, preferences, and behaviors.

When To Use Which

Data from the customer analytics process is ideal for staying atop industry trends, identifying patterns of customer behavior, and helping you optimize strategies to improve customer experience and satisfaction to gain an advantage over your competitors. However, if you’re seeking a deeper understanding of what your customers need or which products or services resonate with your target market best, traditional market research can offer a more effective approach.

How To Use Both for Better Insights

When it comes to customer insights, you don’t have to choose one methodology over the other. Instead, consider using both customer analytics and market research strategically. That way, your company will benefit from the advantages they each offer while gaining a comprehensive view of your market and your customers.

5 Key Metrics and KPIs in Customer Analytics

Collecting and analyzing the right data is essential for improving customer experience and maximizing your marketing strategies, which is why Podium is sharing the top customer and marketing metrics to include in your customer analytics research.

• Customer Lifetime Value (CLV): This key performance indicator (KPI) measures the total amount of money your business will generate from a customer over the course of their entire relationship with your business. A higher CLV indicates greater customer loyalty and retention.

• Customer Acquisition Cost (CAC): This marketing metric measures the average cost of acquiring a new customer for your business. CAC includes all the resources used to gain new customers, such as marketing and sales expenditures.

• Customer Retention Rate: Measuring the percentage of customers that stay with your company over a specific period is essential for understanding customer satisfaction and experience and whether or not you need to improve the customer journey.

• Net Promoter Score (NPS): This metric measures customer satisfaction by asking customers how likely they are to recommend your business to others. The NPS provides great insight into how customers feel about your brand and their overall experience interacting with your company.

• Churn Rate: Customer churn happens in every business, but measuring the rate at which your customers leave your brand offers key information about customer satisfaction.

Customer Analytics Tools That Will Help Your Business

There are numerous data analytics tools to help your company analyze customer data. Here are a few to consider:

Kissmetrics

This customer analytics tool helps your business explore customer journey data so you can identify points of friction and where customers are falling off. Kissmetrics enables you to find and fix problems to reduce churn and improve customer satisfaction.

Hotjar

Hotjar is a great option if you’re looking to improve the customer experience of your company’s website. This data analytics tool features heatmap data visualizations for quick insights. It also gathers feedback from website data along with customer surveys like CSAT so you can identify and resolve points of friction in the customer journey.

Totango

This customer analytics software mainly focuses on predicting and reducing customer churn. It also measures metrics like customer health score to improve customer success. Totango’s centralized dashboard allows your business to view data from individual customers and target segments in one place.

Tableau

Tableau offers easy-to-use dashboards ideal for exploring customer data through visualizations like graphs or charts. The data analytics software allows you to segment customers based on purchase history, demographics, and other shared characteristics to quickly evaluate your CLV and customer retention rates.

Google Analytics

Offering both a free and premium version of their website analytics software, Google Analytics features customer segmentation, behavior tracking, traffic analysis, and more. Your business can gain insight into the customer journey and make data-driven decisions to optimize your website and customer experience.

Amplitude

This data analysis platform has an intuitive interface simple enough for everyday users to operate. You can examine different customer segments in-depth and create customizable visualizations and reports. Amplitude also offers predictive analytics to help your business understand how customers will likely behave in the future.

Build a Better Customer Experience With Podium

Customer analytics gives your business better insight into customers’ needs and expectations, giving you the opportunity to make improvements that benefit your customers and your bottom line. To maximize your efforts, consider tools like Podium’s AI Employee.

Podium’s AI Employee answers customer questions and can personalize interactions and product recommendations based on customer data, improving the customer experience and retention. Watch a demo to learn how Podium can help your business grow.