The Importance of Customer Analytics and Why It’s Important to Customer Retention
Had enough of customer analytics? Definitely not. Companies have spent tons of money doing market research, but with technology that constantly changes consumer behavior and research methods, you should keep up with the pace. Marketers have long been aware of the importance of consumer orientation, for achieving marketing objectives largely hinges on knowing, serving and influencing consumers. As such companies have always taken action to understand their consumer base by interviewing, fielding questionnaires and analyzing secondary materials, at the end of the day, the information companies gain through research helps them develop their products and services.
According to CASRO (Council of American Survey Research Organization), spending on market research in the United States has reached $6.7 billion in 2011. If you look at global spending, the number was close to $18.9 billion. This was the money mainly paid to market research firms for collecting data from consumers via phone interviews and online paid surveys. In a broader sense of market research, the global expenditure in 2011 came to $33.5 billion, as reported by ESOMAR (European Society for Opinion and Market Research).
Although such numbers in 2012 are not yet published, we could infer that in addition to the economic recovery, two key events — the US presidential election and the London Summer Olympic Games — were expected to drive a large portion of spending on market research activity during 2012. In spite of the increased investment of market research, it is still worth stressing the importance of customer analytics, because consumer behaviors are highly dynamic in today’s rapidly changing world. In the past, consumers received most of their information about products and services from print media and unidirectional television advertising, and their shopping primarily took place in brick-and-mortar stores.
While this still applies to a large segment of purchases today, e-commerce and interactive media are bringing about great changes in the way consumers shop. For instance, price-sensitive people can easily compare the offers from different e-commerce businesses through several clicks; word-of-mouth recommendations are not limited to friends in real life; peer pressure on social media websites can also have powerful effect on purchases. Apart from information technology, the thinking, feelings and actions of individual consumers, targeted groups, and society at large are changing due to many physical and social-psychological factors in the environment. Climate issues and concerns for health are leading a going-green lifestyle; an increasing mix of Generation X, Y, and Z results in a diverse range of values pursued in consumption; the economic and political situations also influence consumers’ preferences during a specific period of time. Customers are now armed with more information, given more choices than ever, and becoming more demanding and less loyal.
Meanwhile, it’s quite difficult and inefficient to keep informed of every trend by traditional market research methods, let alone offering quick responses to better serve consumers. Given the shift in how consumers shop, it is crucial to shift how we research their wants and needs. Thankfully, today’s technology enables companies to employ powerful analytical tools. Empowered by the data that is gathered about modern consumers’ online activates, tech-savvy marketers can better understand and engage customers’ needs today and anticipate their priorities tomorrow.