Leverage Customer Data For Business Success

Post written by

Christopher Miglino

CEO and Founder of SRAX.

Organizations collect an abundant amount of information about their customers every day, from purchase history and returns to inquiries and payment history, in addition to demographic data. With the increase in online activity such as banking, the on-demand economy and shopping, companies can track their customers’ movements throughout the internet and personalize content based on predictive analytics, leading to purchase recommendations. Companies also use the data collected to improve operations across customer experience, marketing and product initiatives. Data collection can also be leveraged directly and indirectly into new revenue streams: indirectly with better knowledge of customer needs and directly by selling the data via data brokers.

There are multiple steps and players in the data marketplace encompassing suppliers, vendors, product managers and consumers who all have a role in the manufacturing, distribution, sales and purchase of the products. This marketplace has come to be known as the “data ecosystem.” Data is the fodder for decisions and the more the seller knows about the buyer, the better the system works for marketing purposes. Data needs to be accurate and represent all parties’ interests, including the business's and the customers'.

Understand The Data Ecosystem

The data ecosystem consists of companies that analyze and deliver data for a fee to advertisers, retailers and others interested in consumer behavior. Data brokers gather data from a variety of sources, including public records, over which they have no control. The accuracy of the data coming from these third-party aggregators is questionable because the conclusions derived are based on algorithms, actions and unverified information. When marketers receive accurate data, they are able to better deliver something of value, be it content, products or services, in return for the information. One of the major issues with the ecosystem is that the power is concentrated in a few hands. Facebook and Google accounted for 74.5% of the ad market in the second quarter of 2017, wielding tremendous power in the centralized data ecosystem via the massive amount of data advertisers can glean and use to target customers from data collected by these behemoths.

The data system is also a large business. It's estimated that American companies alone spent over $19 billion acquiring and analyzing consumer data in 2018. Once gathered, the information is used for audience segmentation, target marketing and other endeavors, and there is consumer data privacy in place that marketers need to be aware of. For example, the Federal Trade Commission has developed a framework for the collection and use of data by data brokers with the goal of transparency and consumer understanding.

Ensure The Consumer Benefits Fiscally

It is evident that there is a lot of money being passed through the ecosystem, with one major exception. While the member of the ecosystem derives value from customer data, they provide consumers with little value in return. Moreover, the consumer has little to no visibility into who is responsible for the ads they see, the data that was used to target them and the data that the delivery of the ad produces. When a consumer reaps the benefits of becoming an active member of the data ecosystem, in turn, the marketer benefits. Consumers control which data is shared and who has access to it, and they are compensated for the value of their digital identity. Marketers gain a deeper understanding of the consumer, access to accurate consumer-verified data, permission to market to the consumer and higher return on investment.

Improve Marketing Strategy

Marketers can collect data from customers in a variety of passive or active means. Surveys are active, as the customer must respond to data. More passive means of gathering data include tracking and observation of customer behavior, either with or without their consent. All actions conducted over the web are conducive to tracking from keyword searches on Google, movies viewed and location data to the photos liked and posts retweeted. While Facebook, Twitter and other social media sites may be free to users, they are not really “free” because consumers are paying in data, which is being used for marketing purposes and may be also sold to partner companies. The more information a seller has about customers, especially frequent ones, the better they're able to target the person with content and goods that are likely to be of interest.

Boost Engagement With ‘High-Value’ Customers

The definition of a high-value customer varies by business. In general, it constitutes customers who are frequent, repeat shoppers, purchase a high average-order value and recommend the business to other customers. Valuable data about these customers include the amount and frequency of purchases, cookies and browser history. Marketers can use these data points to provide VIP service such as pushing high-value customers to the front of the call queue or the user interface may be updated based on customer feedback.

Christopher Miglino Christopher Miglino Forbes Councils Member

CEO and Founder of SRAX.
