You probably know that “if you build it they’ll come” doesn’t works in today’s competitive start-up environment.
Customers are selective about the brands they engage with, and it’s not enough just to create high-quality products or services.
You know you’ve to build something people want. You know you have to promote your products in a way that appeals to your customers.
Your products or services, marketing communication and customer service must all cater to the needs of your target market in a customer-centric manner.
Professor Peter Fader of the Wharton School defines “customer centricity” as:
“A strategy to fundamentally align a company’s products and services with the wants and needs of its most valuable customers. This strategy has a specific aim: more profits for the long term.” (source)
There’re various approaches to achieving customer-centricity, and they all have the same goal to maximize a customer’s lifetime value and therefore the company’s profit.
The most valuable customers tend to become even more valuable.
According to Deloitte and Touche, customer-centric companies demonstrate increase in sustainable profitability compared to companies that aren’t focused on the customer.
Moreover, each lost customer can cost business owners an average of $289 each year.
81% of companies that focus on customer experience and service outperform their competition.
According to a study by Econsultancy, 58% of respondents consider being “customer-centric” to be the most important characteristic in establishing a truly “digital native” culture.
Customer-centricity is essentially a data-centric approach to marketing in which data collected from individual customers is used to inform product development and marketing decisions.
Customer centricity starts with collecting and analyzing data to understand the customers.
Makes sense so far, right?
You make customers happy by anticipating their needs, catering to their expectation, and designing for their preferences or behaviors. As a result they’re more likely to buy your products or use your services.
But wait! Don’t run out to collect data yet… because you’re going to get a lot more than you bargain for!
You see, getting a boatload of data is easy with today’s technology. But do you know how to best utilize the data to support your startup launch and increase customer lifetime value?
This article will help you effectively utilize your data for customer-centric product development and marketing by answering these questions:
1. What kind of data should a startup focus on collecting?
2. What data collection methodology can be used?
3. How to use the data collected to inform product development and launch strategies?
6 ways on how to leverage customer data for successful startup launch
1. Collect and analyze the right kind of customer data
Getting the right kind of data is crucial to informing the right kind of decision.
Before you start collecting metrics, get a clear picture of your target audience. This will not only allow you to ask the right people the right questions, but also help you find the best way to get in front of them.
Stay agile and objective during the process, capture everything to avoid blind spots and strive for platform neutrality.
There’re many forms of customer data, each of which can inform various stages of product development and marketing process:
1.Demographics include information such as age, gender, income, location, education, occupation etc. This can help inform pricing, packaging, promotional strategies and distribution channels etc.
3. Digital behaviors data can help you adapt and cater to fast-changing consumer preferences in the online world. Do your customers prefer desktop or mobile device? Do they consume their information as text, audio or video? What’s their online purchasing behavior?
Answering these questions can further inform your product distribution and marketing strategies to reach your customers where they’re at and when they’re most likely to make a purchase.
4. Transaction history informs how much your customers buy, how often and how much they spend to help you maximize customer lifetime value and inform your promotion strategies.
5. Third party consumer and business data is collected and validated according to rigorous standards established by objective, blue-ribbon rating companies such as Nielsen and comScore. Such data typically provides greater breadth and depth of information than first-party data collected by an individual business.
Third party data is aggregated by data collection companies and sold to individual businesses.
6. Hard-to-find data from DaaS (Data as a Service) allows businesses to outsource a wide variety of data functions to the cloud. By tapping into and analyzing this ever-growing amount of information, businesses can leverage such insights to inform business decisions and drive business growth.
You can leverage this wealth of data and information to send real-time messaging, personalized recommendations, and highly targeted content to your audience and customers.
2. Use a variety of data collection methods to cover all aspects of research and analysis
Now you know what kind of data is at your disposal, how do you go about collecting them?
Here are a few ways to get customer data from various sources to inform your decision-making:
1.Voice of customer analysis focuses on customer experience, satisfaction and loyalty. It’s a process used to capture stated or unstated requirements or feedback from customers through direct discussions or interviews, focus groups, observations, field reports and complaint logs etc.
2. Customer survey helps understand customer satisfaction, analyze unstructured data, and measure qualitative data such as brand perception.
3. Customer feedback allows a company to provide real-time support and guide immediate actions to optimize business process and improve customer service.
4. Text analysis examines text communications to identify recurring subjects and analyze cluster interaction so a company can proactively prevent problems.
5. Data integration enriches quantitative information with socio demographic details to help understand consumer behaviors and inform product design and development.
Data integration takes various quantitative data into account.
6. Active listening and two-way communication through survey, focus groups, observations, customer service interactions, communities and groups, emails and web forms help gather customer input and comments that are more qualitative in nature.
As you establish a two-way communication with your customers, also use this as an opportunity to further your relationship and build loyalty.
3. Use customer data for MVP development and testing
After gaining insights from data analysis, it’s time to put your findings to test.
“Proof is in the pudding” – one of the best ways to validate a product idea is to develop a MVP (minimum viable product.)
Example of an MVP – Buffer’s initial landing page.
1. When developing an MVP based on customer insights, design the process so you can test and collect data that is actionable, accessible and auditable to inform the next phase of development.
The process of developing and refining an MVP needs to be iterative, systematic and relatively fast.
Data collected with these studies can further inform product development and improvement.
Example of a pre-order page, which allows a business to test the viability of a product before going into production.
4. Create relevant marketing communication that speaks to the customers
To spread the word about your product or service, you need to craft marketing communications that can “get through” to your target market.
If you’ve done the homework to define your target audience and collect the right kind of data about them, you should by now have a very good grasp of what makes them tick.
Here are a few ways to further leverage that knowledge to support your marketing and promotional strategies:
1. 75 percentof U.S. customers appreciate when companies customize messaging and offers to fit their preferences.
According to this study, segmentation, personalization, recommendations, and the inclusion of custom database fields in email copy leads to 360% higher conversion than a generic email message with only a personalized salutation.
Using customer data for segmentation and targeting helps personalize your marketing message and automation so you can add value and become relevant in the eyes of your customers.
2. Without going into complicated details about your product, you can highlight the particular features of your products that are unique and most relevant to your customers. This helps you simplify your messaging while making it more impactful.
3. Your business operates in real-time, so should your reactions to the customers’ needs and experience. Use real-time data to provide timely response so you can generate optimal user experience and business results.
4. 86 percent of consumers are willing to pay up to 25 percent more for a better customer experience. Use consumer data to optimize customer journey with personalization.
TOM’s Shoes’ brand story resonates with its ideal customers’ value.
Example of a data-driven story by GE Healthcare.
5. Be one step ahead of your customers
Customers like surprises and delights. They want to know that you are coming up with new solutions on their behalf. You can create a more engaging and outstanding customer experience by anticipating their needs and challenges. Here’s how:
1.Instead of rehashing the same old like your competitors, provide creative and synergistic solutions based on your customers’ problems, the context and hidden opportunities. Most customers appreciate out-of-the-box thinking with a different perspective that puts their best interest first.
2. By knowing what your customers want and need, you can manage expectations to reduce negative experiences, which can cause customers to switch brand and lead to poor word-of-mouth.
3. A great way to delight customers is to under-promise and over-deliver. Use consumer data to understand their expectations and what matter to them most, so you can over-deliver on the right thing.
E.g. if your piece of deliverable can affect the timeline of a clients’ project, then delivery time is a critical factor. You can promise to deliver the piece in four days and if you manage to do so in two, your client will be impressed. If something comes up and delays the process, you’ll have a built-in safety net and still deliver within expectation.
6. Improve customer experience to build trust and loyalty
Bad customer experiences cost US businesses $41 billion a year. Managing customer experience could be one of the most effective ways to drive customer satisfaction, customer retention and customer loyalty.
Poor customer experience has negative impact beyond losing just one customer. On the flip side, good customer experience can lead to great word-of-mouth marketing.
1.By understanding the factors that inform your customers’ decision-making process, you can take into account their interests, address their preferences and devise a solution that not only benefits your company but also best serves your customers.
2. Consumer data can help you understand the customer journey. This will in turn inform when and where your market will most likely need support, so you can create content or make sure your team is available to assist.
Customer experience is critical to a company’s customer retention and revenue.
3. 62 percent of B2B and 52 percent of B2C customers purchase more after a good experience; 66 percent of B2B and 52 percent of B2C customers stop buying after a bad experience. (source)
Improving customer experience can raise customer satisfaction, which increases customer lifetime value. Using consumer data to refine your customer experience can help you drive retention and revenue.
Research has found that a 5% increase in customer retention can increase profit from 25% to 95%.
To ensure the success of your startup, it is imperative that you pay attention to customer data and use it to inform your product development and marketing communication.
Keep in mind that a product or strategy devised based on customer data is only the first step in this iterative process.
As you interpret the customer data at an early stage of development, you might have to make some assumptions and hypotheses as to how it applies to your particular customer segment or product.
Don’t neglect to validate these assumptions by putting them to test in the “real world” – e.g. with focus group, by recruiting beta users, or running A/B tests – to ensure that they’re correct and applicable to your business.
Remain open-minded and flexible in this iterative process as you put your product in front of your target market so you can have a two-way conversation with your customers, collect feedback and make improvements.
Over to you – how do you use customer data in your startup to inform product development, launch and marketing? Share you experience in the comments below: