Tag: marketing analytics

6 Uses of Loyalty Program Data

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If your business has a loyalty program, you are probably sitting on a gold mine of customer data. Are you using those data to gain insight into your customers and improve your marketing effectiveness? A survey of retailers in the Netherlands shows that gaining customer knowledge through loyalty program data is crucial to realizing the loyalty enhancement potential of such programs. So if you have not been leveraging your program data, it is important that you start right away. In this article, I will describe six sample uses of loyalty program data.

Use #1: Customer Lifetime Value Analysis

The beginning of loyalty programs is often to make the best customers feel appreciated. But who are these best customers? Loyalty program data can help you answer that question. Based on each customer’s transaction frequency and amount, it is possible to calculate the expected lifetime value for the customer. Refer to this article for how to calculate customer lifetime value. Once you are able to assign a lifetime value to each customer, you can design offers and campaigns to ensure that your best customers’ needs are satisfied.

Use #2: Customer Attrition Risk

Related to customer lifetime value analysis, your loyalty program can also tell you if some of your customers are at risk of leaving you. This knowledge gives you precious lead time to proactively address the problem and retain customers.There are different ways of identifying such risk levels. One popular approach to predicting customer churn (the BG/NBD model) uses simply the number of transactions a customer has made, when the last transaction happened, and how long the customer was observed. This model can be implemented as an EXCEL spreadsheet and through the BTYD package in R. Continue reading “6 Uses of Loyalty Program Data”

Customer Loyalty Dashboard in Google Analytics

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How loyal are your customers? If you business is like most brands, your answer is probably going to be complex and constant in flux. To accurately gauge customer loyalty, you need data from a variety of sources such as customer transaction data, social media data, and customer survey data. But what If you don’t have such data readily available or if you don’t have the analytic capabilities to tackle such data? It is still possible to use common tools to form a crude picture of your customers’ loyalty levels. In this article, I would like to talk about creating a customer loyalty dashboard in Google Analytics.

This article assumes that your website already uses Google Analytics. If you use one of the other web analytics tools instead, the basic ideas should still carry, although the exact terminologies and metric definitions may be different. This recommended dashboard should be applicable to most businesses. But it is particularly relevant to businesses where visits to the website is an important part of how your existing customers interact with you. This may apply, for example, to an online store or an online content provider (e.g., a blog).

Google Analytics Dashboard Brief Overview

(Note: I am keeping this general introduction very brief as I assume that you are more or less familiar with Google Analytics already and may even use the dashboard function. If you are not, a great resource for learning more about Google Analytics is the Google Analytics Academy. If you want to learn about dashboards specifically, check out the “About dashboards” section in Google Analytics Help.)

Google Analytics dashboards allow you to assemble several widgets to create a quick overview of how your website is doing. Since multiple dashboards are possible, you can create individual dashboards around certain themes such as customer loyalty or business growth. To access Google Analytics dashboards, click “CUSTOMIZATION” then “Dashboards” in the left panel. (If you only see a list of icons instead of actual links on the left side of your Google Analytics screen, click on any of the icons will expand to the full menu.) Click the “CREATE” button to create a new dashboard. Select “Blank Canvas” and enter a name for the dashboard in the small window, and click “Create Dashboard”. This creates a blank canvas that you can add different widgets to. Continue reading “Customer Loyalty Dashboard in Google Analytics”

How to Build Customer Habits Through Customer Relationship Management Part 2

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Last week I wrote about how you should design your habit building strategy during the customer acquisition phase. In this Part 2 of the series, I would like to share some research insight on maintaining customer habit in order to reduce customer attrition. I don’t think I need to preach to you about the importance of retaining your customers. But what’s habit got to do with customer retention? Isn’t customer retention about how happy people are with your business? Well, habit has a surprisingly important role in this process.

Declining Habit as Early Warning Signs

There are many reasons why a customer may leave a business, such as no longer having the need for the product, experiencing a negative customer service episode, or seeing a more competitive offering somewhere else. Understandably, businesses devote a lot of energy to keeping their customers, mostly focusing on improving customer experience and delighting customers. These are certainly great things to do, but they are not for everyone and they should not be the only response. Why? Because the harsh reality is that consumers don’t care what they buy most of the time. They might have tried something incidentally, it was good enough, and they ended up sticking to it because it wasn’t important enough for them to try to find “the one”. Even for consumers who cared at the beginning, many eventually fall into a simple habit of buying and consuming a product without a second thought. These are situations where maintaining customer habit is important. In my research, I have seen declining habit as a good early predictor of customer attrition. Depending on the type of product, habit decline is observed from three months to as early as ten months prior to customer leaving the company or becoming inactive. So if you are tracking a customer’s habit and see such a decline, you will have precious time to do something before it is too late.

I should point out two things here. First, it’s not so much the level of habit but the decline in habit strength that spells trouble. So continuous monitoring of customer habit is important. Continue reading “How to Build Customer Habits Through Customer Relationship Management Part 2”