How To Understand Your Customers And Their Needs With The Right Data
Today, data is undoubtedly a leading driver of business success. How well a company is able to leverage insights from the ever-increasing wealth and complexity of available data is, increasingly, a differentiator between market leaders and also-rans.
The potential for data to allow us to better understand and adapt to the changing behaviors of customers is one of its most powerful features. On a societal level, it’s been used to tackle the spread and consequences of the Covid-19 pandemic by allowing us to understand the activities and movement of people. Many of the techniques used for this were first developed by businesses – in finance, companies have become adept at preventing fraud by detecting outlying behavior that can signify something fishy is afoot. In marketing, it’s used to generate the “360-degree customer view” that helps to identify those who are ready to make buying decisions and put products and services firmly in their line of sight. Whether it’s about projecting the spread of pandemics or predicting what people want to buy, data improves our understanding of the world around us, and that includes the wonderfully varied assortment of people that live in it!
Data makes it easier to meet customer needs (and catch tuna)
The basic principle is the more you understand about your customers, the more accurately you can predict what they want. You can also deliver it in the way that is most convenient to them. A great analogy I like to use here is tuna fishing. Originally this was a very hit-and-miss occupation – fleets of boats would go out, with little more information to work with than what spots they’d had success with in the past.
As we developed technologically – first by learning how to navigate via the stars, then by learning how to predict the weather by meteorology, all the way up to the invention of GPS and sonar – our ability to find and catch fish improved. Today, we can monitor the movement of fish using satellites and sensors in the sea. If you’re fishing for tuna commercially, you have to keep on the cutting-edge of this technology arms race. If you don’t, you’ll simply be out-fished by competitors who do and quickly go out of business.
Fishing for customers involves the same principles. If you aren’t continually upgrading your ability to use data to pinpoint their location and understand their behavior, you’ll be overtaken by others who are.
What data do you need to understand your customers?
Transactional and point-of-sales data is an obvious starting point for a lot of businesses. It tells us what people are buying how much they are paying for it and allows us to understand broad consumer trends as well as local preferences. This helps us design products and services that we can be confident people will spend money on. It also lets us optimize prices – pricing our products at a level at which we can be confident they will sell.
Also hugely valuable is customer demographic data. Once we understand what people are buying, we can understand who is buying what. As always, these different types of data are much more useful in combination than either of them are in isolation. Working with personal data brings some risks and responsibilities, of course, and it’s essential to understand the principles of data governance – how to comply with all the necessary regulations and ensure you are deserving of the high level of trust your customers are putting in you if they are letting you have their personal data!
Another source of data that shouldn’t be overlooked is attitudinal data. This is data gathered through market research, at a basic level, or, in more mature data strategies, through methods such as social media sentiment analysis.
