Customer acquisition and retention, especially in the direct-to-consumer (or B2C) sector, is hard work. Moreover, it requires a continuous effort to constantly motivate customers to choose you above thousands of alternative options.
Most B2C retailers have a database of customer information as well. However, very few do anything substantial with it. This is a source of rich data for you to perform sophisticated analysis and gain valuable insight. Data, in fact, that can help you understand your customers and what motivates them to purchase.
Once you understand your customers and their distinct characteristics you can segment them into groups. In turn, you’ll start to build a customer journey, taking new one-off purchasers and converting them into long-term repeat buyers. Therefore, it’s paramount that you know everything you possibly can about them.
In order to get from data capture to marketing action, you need to interpret, analyse and understand your customer data. After a customer’s name and address, the most important information to record is their purchase history. This is known as transaction analysis.
WHY IS TRANSACTION ANALYSIS IMPORTANT?
By analysing transactional data, and cross-referencing it against other variables, you can identify patterns. Particularly in behaviour and correlations with other variables. Such variable, moreover, can offer insight into how, where and when to communicate with customers.
Propensity modelling calculates a customer’s propensity to buy, in short. Above all, it helps you understand the ‘touchpoints’ you need to engage them with to increase their propensity to purchase.
In essence, you can increase your ROI, campaign responses and conversion rates by:
- targeting customers with a higher propensity to purchase, and;
- sending them sales propositions at the right time.
Customer Journey Mapping
Transaction analysis allows direct to consumer retailers to segment their customers based on their value to the business. This helps define a ‘customer journey’ and direct to consumer retailers can use this information to move a customer from low value and disengaged, to high value and fully engaged.
Due to the different characteristics of customers within your various customer segments, you cannot communicate with them all in the same way. Someone who is at the beginning of their customer journey needs to be communicated to very differently to someone who is a regular buyer.
Only by analysing transactional data will you gain these insights and improve your campaign performance and ROI.
CAN I COMPETE WITHOUT TRANSACTIONAL ANALYSIS?
Well, not really. Direct to consumer retailers around the world, from SME’s to multinationals, are all switching on to the commercial power of data-driven marketing. If you do not adopt techniques such as transactional analysis you may see your business decline.
Without transaction analysis, direct to consumer retailers would have no way of knowing who their most valuable customers are, or their least profitable/loss-making. There would be no way to determine the success or failure of direct mail campaigns either, except a simple revenue vs campaign cost measure, which isn’t sophisticated enough.
With transaction analysis, you can determine a campaign’s success and fine-tune it for further improvements. You can also identify your best and worst customers and all the other segments in between, enabling you to target your customers more effectively and at a lower cost.
Measuring and analysing your own customer data provides a wealth of powerful insights to help you drive greater value for your organisation. But…
WHAT IF YOU COULD SEE YOUR COMPETITOR’S DATA?
Well, you can! Analytical services do exist that allow direct to consumer retailers to access a ‘competitor universe’.
OK, so you cannot dive into the database and grab all of your competitor’s customer records. But you can get a notification if your customer is buying a similar product from a competitor.
You can see the customers who are still buying the products you offer, just not from you. You can see where they are going and what they are buying from your competitors. This provides you with a wonderful opportunity to win those customers back with incentivised promotions. You don’t need to convince them to start buying a particular product again, you just need to convince them to buy it from you.
Similarly, accessing universe databases can help you identify prospects who are buying your products, but not from you. Armed with this information you can create acquisition campaigns to bring those customers to your store and away from your competitors.
Finally, by taking your customer location map, you can cross-reference it against a competitive universe to find prospects who live near your outlets but purchase the products you offer from your competitors. With this information, you can devise appropriate communications messages to prise them away from the competition.
If you would like to know more about Transaction Analysis contact us today.