One of the biggest challenges for businesses in the age of e-commerce is establishing and maintaining customer loyalty. Long gone are the days when people were limited to the stores close to them physically. With the internet, consumers have access to a huge number of options in just a click. Because of that, it’s easier than ever before for consumers to switch products, companies or brands because of something they don’t like. Not only do the numerous options make it easy to switch, but it’s also easier to switch because psychologically there’s not an attachment. If everything is done electronically, there’s nothing physical to be attached to. For businesses to make it in the digital age, especially small businesses, they’ve got to figure out how to reduce churn by keeping the customers they currently have.
Studies have shown that nearly 60 percent of small business revenue comes from repeat customers. That’s a huge number. Not only does a large part of the revenue come from repeat customers, but it’s also much cheaper to keep current customers than find new ones. Estimates show that it can take anywhere from five to six times the cost of a repeat customer to gain a new customer. How can companies retain their current customers and make new customers?
There’s no reason for businesses, of any size, to not use big data, especially when you consider the numerous big data platform options big data in the cloud providers are offering. Big data in the cloud is especially important for small business because it’s affordable, scalable, flexible and extremely effective. Most importantly, big data gathers extremely valuable information on customers which illuminates traits, habits and characteristics making the picture of departing customers much more clear. With this kind of data companies can be much more efficient in enacting changes that will improve customer loyalty.
In the past, companies have had limited data with which to work. This has made dealing with departing customers, in some respects, easier. Companies had few resources from which to identify the reason behind a customer’s departure. Those few options made it easier for companies to pinpoint the reason behind a customers leaving, or so they thought. In reality, the decision to leave is generally much more complex than a single data point and because of that companies were missing out on vital information. With big data it’s more complicated to pinpoint the exact reason, but it gives a better idea of the reasons and situations that have led a customer to leave. It’s the data that allows companies to really discover what is happening and how they can change it.
One of the reasons that big data gives such good insights is because it because it provides access to both structured and unstructured data from customers. Unstructured data is especially important because it shows how customers interact on social media, what they buy and browse and how they have interacted with the company. In a sense, companies can see what makes their customers tick. That information is vital to providing an unique and memorable customer experience for the buyer. It’s that kind of experience that will bring them back time and again. With the unstructured data, companies can also see how their customers are interacting with competitors and what things competitors are doing that are enticing their customers.
Another important factor in reducing churn, and one that has gained speed in recent years, is a customer loyalty program. There’s a reason these kinds of programs are popping up all over the place — they’re effective. If customers have an incentive to shop somewhere, not just because they like the store or product, but because they’ll get extra rewards or cheaper prices then why not do it? It’s effective, but it presents companies with questions like: what rewards do we offer? To whom do you offer them? How often do you offer them? Big data is extremely important here in establishing a rewards program that’s effective at allowing the companies and the customer to come away winners.
With big data, companies big and small can find success at helping current customers remain loyal and reducing churn. It’s a huge money saver for companies, and it benefits the consumer too.