Cheers to happy and safe Fourth of July! For our celebration, we're sharing this Tableau visualization about the growth of our United States.
Contemporary Analysis (CAN) is recognized nationally as a leader in the data science field and is regularly asked to "Spread the Good Word of Predictive Analytics" by presenting on various topics at conferences around the US. In fact, CAN has presented at six conferences in the past 14 months, including:
Customer segmentation analysis is essential. No company has just one type of customer. Customer segmentation analysis allows you and your data to capture this reality. Capturing reality is a pre-requisite to using data to make decisions. Each customer segment needs to be understood, marketed to, and tracked. Download our case study.
It is time to stop thinking about your "customer" and start thinking about your "customers". Don't let your marketing and customer metrics, hide valuable facts and insight in aggregated data and averages. The next level of marketing analytics is to calculate and track metrics for each customer segment. Customer segmentation provides you a window through which to understand why people do what they do. This gives you enormous power when trying to improve customer lifetime value, increase customer loyalty, reduce the cost of customer acquisition.
I recently had to make a deposit and fix a small issue with my bank account. I think my community bank has maybe 5 locations in the entire midwest, which means that everyone is cheery and I can always expect christmas lights in the winter and maybe cookies on the table when I walk in there. The staff are attentive and wonderful and always call me sir. "Is there anything else we can do for you, sir?"
Yes. Yes, local community banks, there is something you can do. But it's less for me and more for you.
The smiles are great and sometimes I consider visiting the bank if for no other reason than to be surrounded by people who's job seems to be to boost my self esteem at all costs and make me forget the cruel, harsh realities of this world. It is icing on an otherwise mundane task of paying the bank a visit.
But do you think this is why customers are staying with you?
While many business make substantial investments to improve customer acquisition, they often fail to invest in improving their customer lifetime value. Customer lifetime value is the average monthly net profit per customer divided by the monthly churn rate. Learn how to calculate customer lifetime value here. Companies can increase customer lifetime value by making investments to improve customer loyalty, crossing selling, and up-selling.
Improving customer loyalty, reducing customer churn, allows you to increase net new sales. Net new sales = # of New Customers - Customer Churn. Your sales and marketing teams work hard to bring in new customers, and customer churn erodes their efforts. Fortunately, improving customer loyalty and reducing customer churn, increases the return on investment from customer acquisition, improving your customer lifetime value.
To reduce customer churn, you need to know each of your customers. You need to know who is most likely to leave and why. Knowing who is most likely to leave allows you to contact them before they leave. Knowing why people leave, allows you to fix your systems. The who is a short-term fix, the why is a long-term fix. For small companies, knowing the who and why might be obvious. However, for companies with thousands or millions of customers this becomes very difficult.
Let's look at the impact of increasing customer loyalty on revenue.
Since 2008, we have been helping our customers learn how to get more sales from their current customers. One of the quickest, easiest, and most profitable ways to start is using the data you already have. Using data from your accounting and CRM system it is possible to determine which of your current customers can be made more profitable, more loyal, and which are the most likely to buy more from you. Learn more, Download our Case Study.
Contemporary Analysis specializes in using predictive analytics to forecast consumer behavior. Using a statistical technique called multinomial logistic regression, we can use patterns in your past data to predict future events.
While it is important to focus on new client acquisition, it is equally and perhaps more important to focus on improving your relationships with your current customers. This will help you improve your customer lifetime value. Customer lifetime value is the amount of net profit you receive from each customer. As a general rule, the average customer lifetime value needs to be 3 to 5 times the average cost to acquire a customer.
Improving customer lifetime value will help you have a sustainable and profitable business. To stay in business, the net profit from each customer has to be more than the cost to acquire each customer.
Customer Lifetime Value is the average net profit that can be attributed to a company's entire relationship with a customer.
To CAN, servicing smart means helping create a smart customer experience. Its not just us though. More and more companies are realizing customers value a great customer experience and that they are no longer making decisions based solely on "is it cheap?".
To succeed in this new world, companies have to do things to make their company stand out. They have to make their company the one that customers want to do business with again and again. A good place to get started improving your customer experience is creating a set of standards for your customer service.