According to a recent study conducted by McKinsey Company, businesses that make leveraging customer behavioral analytics a priority are far more profitable than those that use the data to a lesser extent or not at all.
The study pointed to Amazon, Google, and Netflix, all leaders in their respective industries, as an example. These companies, and others like them, increased sales growth by an average of 85 percent and profit margins by an average of 25 percent by using data that was already available to them.
The Importance of Customer Behavior Data and How to Start Using It
Before the digital revolution, companies relied heavily on customer demographics to determine how to market to them. Factors such as age, income level, race, gender, and educational background only tell a company who their customers are. Behavioral analysis goes well beyond demographic marketing to look at the actions customers take. This provides far more insight into what they may purchase in the future than any demographic data ever could.
Amazon and Netflix have each experienced significant success with their recommendation engines. These systems, powered by artificial intelligence, make recommendations to customers based on their past purchases as well as what other customers have bought that relates to the item the customer is considering or recently purchased. This drives 35 and 75 percent of sales, respectively.
As effective as personalization is, it’s just one piece of the puzzle when it comes to understanding and responding to customer behavior. Companies must also carefully consider their current customer acquisition practices, retention rates, and their rate of growth and expansion to provide the best possible service to customers.
Increase Sales by Knowing a Customer’s Intentions
In marketing, a customer has reached the point of micro-intent when he or she realizes the need to obtain information, travel somewhere, purchase an item, or increase knowledge. The ability to target customers at the precise time they are having a micro-intent moment is essential for driving more sales.
Why is micro-intent so important? According to a Web Marketing Pros survey, marketers who rely only on demographic marketing can miss as much as 70 percent of potential customers using a mobile device to find what they need. The same study reported that approximately half of all people conducting a search on their smartphone buy from a different company than they intended because the first one didn’t provide enough information. The key to success in today’s marketing world is to consider a customer’s intentions far more than his or her demographics.
Marketers who can present customers with a video to solve their problem right now or who provide useful information in a smartphone search are going to come out ahead. It’s a classic case of identity vs. intention in which intention always wins.
Integrated Marketing and Analytics Data
Using new data integrations such as the one between Salesforce Marketing Cloud and Google Analytics, businesses are discovering how to know their customers like never before. With these tools, marketers can obtain crucial customer insights and preferences along with data and artificial intelligence. The ability to see this information in real time provides a much more in-depth understanding of the customer journey and where individual companies fit into it.