There’s no guaranteed way to attract new customers but the power of analytics can help you target the most likely people.
No company in the consumer industry can grow solely by retaining customers. In a fast-moving marketplace, where brand loyalty is no longer the force it was, and with consumers enjoying more choice than ever before, brands and retailers need to acquire customers to flourish.
It’s true that this can be expensive. Companies must build brand awareness through research, advertising and marketing. Some of these campaigns will succeed, some won’t. But it would be misleading to assign the entire cost of such investments to customer acquisition. In his influential book How Brands Grow, Professor Byron Sharp of the Ehrenberg- Bass Institute at the University of South Australia argues that the prime purpose of marketing is to make sure the consumer remembers the brand when they’re in the store. If they don’t remember you, they’re not going to buy you. So these campaigns don’t just reach out to new customers, they jog the memories of people who have already bought a product.
So let’s not fixate on calculating the cost of acquiring each customer down to the last fraction of a cent. It is far more productive to use analytics to understand which marketing techniques work and which don’t and react accordingly. With faster, richer, more measurable feedback from customers, it is easier for companies to, for example, modify special offers when necessary. In an age when consumer preferences can fluctuate wildly and quickly, analytics also make it much simpler – and faster – to model new patterns of customer behavior.
Analytics can help brands gain much deeper insight into their customers – and use that data to inform their marketing strategies. Companies can segment their customers at a micro-level – by demographics, spend, location, channel, responsiveness to incentives and social media network – and use that profit to directly target those who resemble their best existing customers, improving their conversion rates. For other brands and retailers, their analytical focus is to understand what customers aren’t buying and why – and feed that back into their sales and marketing strategies.
The secret to successful analytics has less to do with data or technology than with managers who have the creativity, flexibility and insight to understand how to get the most out of it. Companies that get it right can resolve the conundrum that has haunted marketing departments for almost a century – in the famous words of the pioneering American retailer John Wanamaker: “Half the money I spend on advertising is wasted, the trouble is I don’t know which half.”