In today’s digital age, consumers have continuous access to the companies they love, at their fingertips. In return, brands now have more data on their customers than ever. Despite the fact that consumer data is getting more in-depth every day, only 30% of companies report having a well-articulated strategy for acting on consumer data. Are you one of them, or is your competitor?
What is consumer data used for?
Data is essential to understanding why customers act the way they do. It enables companies to explain and predict their own successes and failures. With data, you can provide personalized experiences and improve marketing ROI by understanding how and where consumers interact with your brand.
Marketing has evolved past relying on focus groups and demographic segmentation alone; it is now necessary to meet your customers where they are—not by pandering to them as a demographic, but rather by understanding them as an individual. In the future, brands will have to adapt and learn how to do this at scale so that every individual customer feels understood.
How can data be used to improve marketing?
#1: Collect first-party data to address changing consumer behavior
According to a survey by the Harvard Business Review, only 23% of companies believe their organization understands why their customers act the way they do. This is despite the fact that we have more access to consumer data than any other point in history.
Making inferences about the consumer based on first-party data (purchase history, products viewed, etc.) can help companies predict what drives purchases and deliver relevant experiences at scale. 83% of consumers are willing to share their data to enable a personalized experience, as long as businesses are transparent about how they are going to use it and give customers control over what data is being collected.
Let’s say you have a hair and beauty company that sells shampoo. Based on first-party data, you know that a certain customer has bought the same shampoo three times in a row, one month apart. To make sure they continue their loyalty, you could email them an offer at the same time next month, with a discount on their fourth purchase. This is a perfect example of an easy way to act on first-party data and deliver personalized shopping experiences that keep customers coming back.
The influx of consumer data tells the story of every previous purchase, but it can also be used to write the trajectory of the next customer interaction with your brand. Organizations that leverage customer behavioral insights outperform peers by 85% in sales growth and by more than 25% in gross margin.
#2: Use historical, real-time, and contextual data to deliver predictive personalization
The previous example with the hair care company employed historical data (purchase history), but that’s not the only type of consumer data that is available to companies today. Many apps and websites can also collect contextual and real-time data that paints a bigger picture of consumer behavior, and allows you to predict and provide for where they’ll be next.
Understanding your customers’ needs and predicting when they’ll need it will increase sales alongside brand visibility. It can also increase conversions by garnering more trust in your brand. Lastly, predictive personalization can also impact retention by providing recommendations at exactly the right time. For example, the hair care company from example #1 could increase their rate of repeat purchases with precisely timed push notifications that, based on anomalies in the local weather, remind users to restock on anti-frizz products before humidity hits.
Using consumer data to predict the needs of your customers gives you a competitive edge over those who do not employ personalized marketing experiences. 91% of consumers are more likely to shop with brands who recognize, remember, and provide them with relevant offers and recommendations.
Personalization is no longer a luxury—it’s a consumer expectation. Instead of asking yourself how it can be done, ask yourself whether it can be done at scale. With detailed consumer data, anything is possible.
#3: Invest in AI technology to improve marketing ROI
According to Drift and the Marketing AI Institute, 51% of B2C marketers say that AI is critically important or very important to their marketing success over the next twelve months. Here’s why you should be one of them.
With the constant flow of information from customers that are interacting with your brand and products, recognize that investing in manpower to make sense of data is limiting. Companies that use data science to make sense of consumer behavior often have an issue of scale: how can your small but nimble marketing team find patterns in all of the consumer data available, and enable personalization for every customer?
The answer involves getting creative with how you define your workforce. Enterprises that have an AI strategy are 1.7 times more likely to achieve their goals than those that lack such a vision. AI tools can help you analyze and act on data quickly to create hyper-personalized customer experiences that drive purchases and retention.
It’s no longer enough to notice how consumer behavior is changing. With data being able to tell more and more in-depth stories about your audience, the next step is to act on the data you have to provide personalized customer experiences and increase trust in your brand. And with AI solutions powering personalization for top brands across all industries, being overwhelmed by consumer data is no longer an excuse.