How well do you know your customers? You might recognize a face or two, but beyond that, most merchants, especially those with multiple locations, don’t know much about their regulars and VIPs.
It’s an unfortunate reality, but more and more merchants are looking for modern, digital ways to understand their customer base and drive more revenue.
Businesses that leverage behavioral data from customers outperform their competition by 85% in sales growth and 25% in gross margin, according to research from McKinsey Analytics.
Bottom line: Data is revenue.
Now you’re probably wondering, how you can capture and use customer data easily, right? Great question. Here are four ways you can use data to understand your customers better:
1. Identify and reward your best customers
Almost 80% of your revenue comes from just a fifth of your customers. Think about that for a second. That means the lion’s share of the money you make comes from a small, loyal group of customers. That’s a group of customers worth knowing.
You need to capture customer data to identify these VIP customers. Armed with data like average check size, visit frequency, and lifetime value, merchants can quickly see who their best customers are.
Of course, identifying your most valuable customers is just the first step. Now, you can send targeted messages that keep customers coming back for more.
For example, in an effort to thank your best customers, you might offer 20% off their next purchase as a token of your appreciation. You might give VIPs an extended happy hour, an invitation to an after-hours sale, or first crack at a new product.
When you make VIP customers feel special with personalized promotions, research shows their spending increases by 17%.
Data gives you a chance to connect with your best customers and build a solid (and profitable) relationship.
2. Segment customers based on their preferences
Your VIP group is just one segment of your customer base. You likely have several niche groups of customers. With data, you can identify common trends, buying habits, and behaviors that will help you get a clear picture of your customers.
Of course, you need pretty detailed customer information to make this possible. Ideally, you need access to item-level data so you can see what your customers are buying, when, and how much.
Data for a fast-casual restaurant, for example, might show a group of lunch customers who order a bunch of appetizers as their meal, or a group of dinner-goers who always order chocolate cake for dessert.
Knowing these pieces of information, enables the easy segmentation of your customers, or breaking them into similar groups. With customers segmented, automatically by the platform you can send relevant messages to each group.
The appetizer-loving group gets a $2 off promotion towards a lunch entrée with the purchase of any appetizer. The offer is relevant to the group but also encourages them to buy something new.
Data-driven segments give merchants a smart way to communicate with personalized groups of customers to encourage repeat business in the future.
3. Automatically winback customers who stray
Customers come and go. Typically, retailers see about 5-7% of their customers churn, or leave, each year.
Customers stop returning for a lot of different reasons, but what if you could identify a customer who was about to leave? How valuable would that information be? Very. With the right data-based tools, you can do just that.
By automatically capturing customer buying habits and visit frequency, merchants can see a slow down in activity and take action.
Let’s say Ruth visits her local sandwich shop once a week for lunch, but she’s been MIA all month. Merchants can automatically send a promotion to any customer, like Ruth, who starts coming in less frequently.
The promotion might say something like, “We’ve missed you. Stop in for a sandwich and get chips and a drink for free.”
The decline in visits automatically triggers the promotion, so the merchant doesn’t have to do a thing. Data works for the merchant here. It identifies a customer who has left and brings them back with a compelling offer driving incremental ROI for the business.
These winback strategies are proven to drive 49% of lapsed customers back to stores. (Impressive, right?)
4. Collect feedback from real customers in real time
Data isn’t just quantitative it’s qualitative too. In other words, not all data is rooted in numbers. In some cases, data comes by way of feedback.
Seventy percent of merchants that deliver best-in-class customer experiences use customer feedback. These merchants don’t just collect feedback from a survey once in a while, they ask for feedback on a regular basis – and actually, use it to improve their company.
While your feedback options are endless, a one-question survey automatically delivered to a customer after a purchase is one of the most effective options. The question is simple: How likely are you to refer us to a friend? The answer instantly tells merchants how satisfied a customer is.
With the right tools, merchants can review and respond personally and privately to that feedback in real time.
Let’s say Dave, a coffee shop regular, gives his local shop a 9 every morning he stops in, but one day, Dave gets less-than-great service and drops his rating to a 6. The merchant gets an alert about this change in score and is able to reach out to Dave personally with an apology and a 10% off coupon for his next drink. Dave comes back, redeems his coupon, and gives the shop their typical 9 rating.
Talk about effective data. The merchant was able to identify a problem with a specific customer and take action immediately saving the customer and getting him to return.
Wrap up
What sophisticated, data-centered tool can help you capture data, engage customers, and measure your success? An automated customer engagement platform.
With a customer engagement platform like Thanx, merchants can capture robust data and use it to retain customers and drive incremental revenue in real time. It’s the modern way to get to know your customers and grow your revenue at the same time. Learn more about Thanx and what it can do for your business today by scheduling a demo.
