And now it's time for a breakdown
Our last post focused on the hidden value of data trapped in silos. Today we’ll cover the steps B2B and B2C companies can take right now to break this data free in pursuit of improved profitability.
The past 18 months threw many companies for a loop. Many attempted to simply ride out the storm. Others were forced to pivot. Then there were those that sadly had to close their doors after decades in business.
Making moves on the fly is never easy. Especially when flying blind.
It wasn’t just jolts to supply chains, pricing pressures, and materials shortages that disrupted businesses. Consumer behavior changed overnight.
No matter the industry, every business is operating in a new climate. What was true yesterday may not be true today.
Like, which of my customers are profitable? Which are costing me money? Which are in danger of churn and worth saving. Which ultimately need to be cut loose?
At BRIDGE, we’ve recently been engaging with customers eager to find answers to these very questions. This work typically builds on existing engagements powered by personally identifiable information (PII)-based digital ad campaigns. Except now, the full C-suite is involved as revelations are made about how business strategies can evolve quickly to meet a new moment.
Sound interesting? Here are five steps to plan for if you believe this is an exercise that can positively impact your business:
Step 1: See if your data is up to snuff. Give us your customer file and let us match it against our database to determine whether it is accurate, timely, and complete. On average, we find that 25% of customer info is out of date. Even if email data is accurate, having outdated physical address information can result in emails not being delivered given the role IP address location data plays in determining whether a message will make it to an inbox. In some cases, identity graph links are broken. Date of birth, household income, interests, or product consumption data may be bad. More often than not, we find customers are surprised to find that their data is not as pristine as they thought.
Step 2: Figure out where you’re losing money. Here, we establish criteria for defining your best customers. Loyalty, relationship longevity, and overall profitability typically factor in prominently here. We look at the overall cost of servicing, customer management costs, return costs, damage – whatever those profitability thorns may be. Then we stack rank from best to worst. (Harsh, but that’s just reality.) We’re looking not just for which customers are unprofitable, but importantly, why.
Step 3: Profitability or bust. It’s fine to have unprofitable customers. After all, it costs 13x more to acquire a customer than to keep one. What’s not fine is for customers to remain unprofitable. We dive into the data to determine why you are losing money on certain customers to understand what steps can be taken to make them profitable. Perhaps you’re not charging enough. Maybe they should be serviced via a different channel. There are many levers that can be pulled. We saw a case recently where a business was able to overcome profitability issues on 60% of customers. The goal is ultimately to get to a win for you and a win for your customers, or you’ve got to cut the cord. Not to worry. Chances are your customer will go be unprofitable for a competitor instead.
Step 4: Find the lookalikes. Once you’ve determined who your profitable customers are, find more of them. Here, we cross-reference your data against our opted-in list of consumers to discover audiences with a high propensity to become new customers with the right marketing approach. Sometimes there are greenfield opportunities, but in many cases, you’ll need to win these customers from a competitor. The right analytics will point to the best way to do this. We’ve seen anywhere from 5-20x the number of customers discovered via this approach.
Step 5: Identify customer behavior patterns. Amid all this opportunity is a reality that your work on this front is never done. You are always working to prevent churn, identify which customers are unprofitable, which have had experiences that could lead to problems – the list goes on. Lines of communication via surveys, feedback, and other forms of marketing communications can help reduce surprises in your business and help you develop tried and true practices to overcome recurring challenges. This is especially worthwhile in cases where you may be working through intermediaries and opportunities exist around better training, education, improved servicing tools, and more.
Data equals information when processed and analyzed correctly. That information helps uncover patterns, trends, and missing puzzle pieces to give you a complete, accurate picture of your audience.
At this moment and for the foreseeable future, data is more important than ever. Today, it is disruptive and can provide competitive advantages. Eventually, it will be table stakes.
How much more profitable can your business become in the meantime? Get in touch to find out.