Which marketing media(um) work(s) best for my company? Which customers are my most valuable? Which customers are at risk of defecting? Which prospects are most likely to respond to my latest direct mail campaign? How do I get customers to increase their average spend?
At some point you’ve asked yourself questions like these. And with today’s economic challenges, there has never been a greater need to maximize the return on every marketing dollar.
That’s where marketing analytics comes in. With some statistical methods and data you have collected on your promotions, customers, and transactions, you can easily answer the questions above and tailor your marketing strategy for maximum performance.
Many companies, small and large, can reap enormous benefits from marketing analytics. If, for example, you run a boutique, all kinds of information about your customer become available to you – if you are willing and able to collect it.
Some of the information available to your boutique include:
- Purchase history – the brands your customer buys, the type of apparel he/she buys, the dates on which he/she bought, and the amount of each purchase;
- Demographics – if you collect your customers’ names and addresses, you can get gender and geographic information, and thanks to the Census Bureau, a ZIP code lookup will enable you to make good estimates of income, home ownership and other demographic variables; and
- Psychographics – if certain types of apparel in your store are geared towards certain activities (e.g., a night on the town, recreational sports, etc.) you can get a good gauge of your customers’ interests.
These are just a few examples of the data that can be collected. Let’s see how they can be put into practice.
As the boutique owner, you look at your database and you find that a customer purchases from you once every two months on average, and spends an average of $100 each time. Your goals for this customer might be to shorten his/her purchase cycle and increase his/her purchase amount. So, one month after this customer’s last purchase, you send him/her a letter or other promotion piece offering a discount or some other giveaway if the customer makes a purchase of $150 or more within two weeks.
You might even make your marketing analytics program even more sophisticated by tailoring it to a brand this customer frequently purchases, the area in which he/she lives, or even to a specific occasion, if the customer frequently makes a purchase around the same time each year.
The possibilities of marketing analytics are limitless, but they will be worthless unless you know beforehand what you want marketing analytics to help you accomplish; are able to collect the data you need for the effort; and your analytics efforts generate insights upon which you can act.