“I am your customer. In terms of revenue, I’m an asset to your organization. In terms of time and service, you might see me as an expense. You may know me personally through sales meetings and interviews, or I may just be another transaction on a list. You may like me, you may find me to be a pain, but whatever our relationship may be, you’re leaving money on the table if you don’t know what makes me tick…”
In truth, the customer is always right, and moreover, it’s always right to focus on the customer. Organizations that invest in customer analytics, for example, average a year-over-year increase in customer lifetime value of 7.6%, while those that don’t actually see lifetime value declining by 4.3% year-over-year, according to a recent report by Omer Minkara of the Aberdeen Group. From seemingly intangible metrics like positive social media mentions, to hard numbers like annual company revenue, better customer knowledge measurably correlates to better business results.
Resonating with customers is a hard thing to measure. We may believe our messaging resonates if we’re seeing positive conversion metrics. We may believe that our products resonate if we see enough closed deals. Within such parameters, though, it’s a bit of a jump to assume such activity metrics are directly connected to customer sentiments. However, the connection between better customer knowledge and measurable customer advocacy activity is much less of a leap. In fact, Aberdeen research shows that organizations that invest in customer analytics for better customer knowledge average a 14.6% increase in positive social media mentions year-over-year, verses only a 2.9% increase in those that don’t. In more general terms, this means that organizations who focus on better customer knowledge see better results in terms of support from customers on social channels.
The Cross-Sell / Up-Sell Conversion Divide:
Beyond earning word-of-mouth advocacy, organizations that invest in understanding their customers also see a higher reciprocal investment from their customers in the form of cross-sell and up-sell opportunities. Aberdeen’s research shows that organizations using customer engagement analytics see an 11.6% year-over-year increase in cross-sell & up-sell revenue. Alone, this tactic appears to be a fair competitive advantage, but considering that organizations lacking such analytics actually see a 2.3% decline in cross-sell & up-sell revenue year-over-year, it becomes all the more impactful. Simply put, organizations with better insights on their customers measurably generate more revenue from their customers.
Killing or Being Killed by Cost per Customer Contact:
Up front, higher rates for cross-sell and up-sell revenue is great, but after a deal is won, maintaining and servicing customers has an added cost that can cut into an organization’s bottom line. In these situations, the more effective our marketing efforts are, the more we could actually be costing our organizations in serving too many won customers. Organizations with more insights on their customers, however, are measurably mitigating this cost with an average 5.1% improvement on their cost per customer contact rate. Conversely, companies without these analytics are increasing their cost per customer contact at an average 1.7% year-over-year rate. For organizations with customer analytics, this translates into a virtuous cycle where interactions with customers cost less and less, while the value of those interactions can be more readily gained. Meanwhile, for organizations without analytics, the cycle becomes more vicious as being contacted by customers increases in cost so the value of engaging with customers declines.
Overall, from top funnel social media interactions, to more profitable sales transactions, to post-sale costs of customer satisfaction, it pays to invest in customer analytics.