We at ROMI Analytics value your time, so we want to let you know that this article will cover the basic questions analytics can answer for any sized business. Today we will focus on customer acquisition, or bringing more customers through the door. Our audience is the person who is curious about analytics, but hasn’t had the chance to learn a lot about it.
1. Bring in more customers to your business,
2. Help you keep the ones you have,
3. Win back ones you have lost,
4. Show you how to best allocate your discounts and promotions,
5. Show you what messages are more likely to be successful.
Today we will look at the first one. Please check back for posts on the remaining topics.
1. Customer Acquisition, or bringing more customers in: In order to stay in business, you must being in new customers. But how can analytics help you acquire new customers? At the simplest level, we can look at your existing customers. We will profile them so that we see what they look like in terms of their age, education, income, and family and lifestyle characteristics. Some companies gather this information, some don’t. If you do not capture this information, don’t worry: it can be appended to any customer address you have in your database.
We will find discover your customers have the following characteristics:
1. 50% of your customers are married,
2. 35% earn over $50,000, and
3. 40% have a bachelor’s degree.
This is useful, but we can go one step further. Say you draw your customers primarily from 4 ZIP codes around your location.
Say the 4 ZIP codes looks like this:
1. 25% of your customers are married,
2. 70% earn over $50,000, and
3. 60% have a bachelor’s degree.
This tells you that your customers are half as likely to be married, twice as likely to earn over $50,000 and 50% more likely to have a bachelor’s degree. You now know what customers you appeal to. So what can you do?
1. Look at your 4 ZIP codes. Which ones fit your customer profile? This could be an opportunity for you to do some advertising, such as paid search or display advertising. Paid search allows you to bid on key words, and when someone searches for key words, you ad is promoted. You can set a dollar amount, and also set up very limited areas so you know people are around your business. Display advertising are some of the banners that pop up when you are surfing.
2. Another way to get more customers is to buy a direct mail or email list. Once you know your customer profile, you can buy a direct mail or email list from many different companies. Both, however, have some drawbacks. Direct mail lists, and the subsequent mailing, can be expensive for small businesses. And email lists, though cheaper, are a lot less accurate because folks don’t keep their email address updated, or have multiple email addresses, or both.
3. Social Media. Facebook and other social media sites allow you to execute campaigns based on your typical customer profile. One thing to keep in mind is that depending on your business, different social media sites are more or less effective. For example, Pinterest would help little with our business because there are not a lot of interesting images to share. If you had a luxury resort, however, Pinterest could be a good bet for you.
So here are three quick applications of analytics. For a small budget, I would recommend a customer profile, and then find geographies within your trade area that match that profile. Then you can take out some ads in those areas. Direct mail / email campaigns should be reserved for companies with larger budgets and sophisticated customer profiles. Lastly, social media is a good bet because many sites can align your profile with their members. And you always need to target your message as much as possible.
There are more sophisticated customer acquisition methods, such as response models, which look for differences between folks who responded to a campaign, and who did not. These use advanced statistical techniques, and we hope you can join us on a future post for more on this!