Driving Customer Intimacy with Data and Analytics
Data and Analytics (D&A) is deriving insights using data to proactively measure business performance and improve decision-making. Today D&A is increasingly considered the next frontier for innovation and productivity in business.
But how can an enterprise build a culture where D&A can be leveraged for improved business performance and outcomes? While the service culture helps to build the culture of D&A, the service culture at the core is measuring and improving business performance by putting the customer at the center of the business. But how do you achieve this? How do you measure and improve customer intimacy with D&A? While there are many methods, below are three key steps for enterprises to leverage D&A to measure and improve customer intimacy.
Step 1: Understand your firm’s value proposition
Before you serve the market or customer, you should have a good understanding of what you have to offer to the market. A value proposition summarizes why a customer would choose your product or service for a given price. The value proposition is a clear and compelling description of how your business addresses the needs of the market. Technically, value or customer-perceived value is the difference between the customer’s evaluation of the benefits and cost of giving one product or service when compared with other alternatives in the market. Typically, there are four dimensions in the customer value proposition namely: functional value, monetary value, social value and psychological value. However, the four aspects of value are not equally important to all customers and their importance usually depends on the customer type and the type of product or service needed by the customer.
Step 2: Define your Ideal Client Profile (ICP)
For whom is the value proposition targeting? ICP is the customer most likely to benefit from the firm’s product or service. ICP is basically a fictional entity that represents the most profitable or ideal client for the firm. While customers are very important to every company, not all customers are equal as customers have their own preferences, priorities and strategies. Hence it is important to identify profitable customers and nurture their trust and loyalty with great service using D&A. To figure out your ICP, engage with your existing customers and capture their needs and wants. In addition, KPIs such as CAC (Customer Acquisition Cost), CLTV (Customer Lifetime Value), etc., can help in further refining the ICP.
Step 3: Understand the specific needs and wants of the ICP
Ultimately, it is the need that drives the customer’s buying decisions. Hence proper understanding of the ICP’s needs along with the wants is key to customer intimacy. Typically, customer requirements, i.e., needs and wants can of two categories: product needs (such as functionality, reliability, usability and more) and service needs (empathy, fairness, accessibility and so on). Here, D&A can be leveraged to capture customer data (geography, firmography, demography, psychography, attitudes and more), transactional data (such as contracts, orders, shipments and invoices), customer feedback with NPS (Net Promoter Score), mapping the customer journey, creating means-end analysis and empathy maps and more. While knowing the customer’s needs is valuable, anticipating the customer’s wants can lead to increased growth, innovation and retention.
However, the data pertaining to customers’ needs and wants is often voluminous, distributed and varied. A holistic view of customers, i.e., Customer360 involves consolidating different types of data related to the customer journey. This data integration technique includes consolidating zero-party data (data of the potential partners), first-party data (data the company collects and owns), second-party data (the firm’s data managed by the partners) and third-party data (data sourced from data marketplaces or exchanges). They say the primary purpose of a business is to create, grow and retain a customer. This means, keeping customers longer, growing them into bigger customers, making them more profitable, serving them more efficiently and acquiring more profitable customers. All this makes understanding the customers the primary job of any business.
In this regard, the three steps discussed here will help the enterprise understand the customers better using data and analytics (D&A). This will enable the enterprise to become competitive and improve the odds of enhancing customer profitability for long-term growth.
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