Reaping the data dividend
How much does it cost you to acquire a customer and is it worth it? If you can’t answer these questions about your growing business, then it’s possible that you’re not spending your marketing budget in the most effective and efficient way. Get smarter with your use of data and you may be able to acquire customers faster and cheaper.
Step one is to understand how to track the impact of any given piece of marketing activity – which metrics you will monitor and how.
For the first part of that challenge, think about which metrics might be most appropriate. The data won’t always be perfect, but it should be measurable and meaningful. For online advertising, for example, you might look at the number of people clicking through from your results and how many of those go on to make an enquiry or purchase. Advertising through other channels, such as TV, is more challenging, but you will still be able to track spikes in activity following a campaign or a particular spot. It’s not just the volume of response that matters but also, critically, quality. What do people do when they respond to your marketing – above all, do they become customers?
Freely available tools such as Google Analytics can be extremely powerful, if used to their potential. Google analytics will let you build a detailed picture of the impact of each separate piece of your marketing activity. It will tell you how many potential customers engaged with your marketing, how many then investigated your products and services, and how many became customers. You’ll also get detail of how the size of the first group was whittled down at each stage of the journey towards buying.
Armed with this data, you can begin to approach each stage of customer acquisition much more scientifically. Over time, you’ll better understand which marketing activities most effectively achieve your goals; you can constantly fine-tune and experiment to maximise impact – and to avoid unnecessary spending.
Step two of getting smarter with data can prove even more powerful. As you acquire customers and they buy your products, you can start to build a detailed picture of what your customers look like and how long they engage with your brand or product to understand who is likely to make higher-value purchases or buy from you more often.
What you’re doing here is assessing the lifetime value of your customers – how much they will spend with you over time. You can then segment this data in any way you see fit, building an ever more detailed picture of what your ideal customer looks like and how different groups of customers behave.
Combining this lifetime data with your efforts to track the impact of marketing activity can help you really move the needle: now you know which customer groups you most want to reach when investing money on marketing; you can track how effectively you’re targeting each of those segments each time you do something; and you can learn from that process to do better next time.
For businesses who get this right, the results can be dramatic. Once you know what your customers are worth and how much it will cost to acquire them, every commitment to marketing becomes a calculated investment in growth rather than an exercise in hoping for the best. And as your customer numbers increase – and your databank becomes more detailed – the effect is multiplied. The data really will deliver.