What is customer data worth?
The value of your customer data depends on the type of data you collect and how much a new customer is worth to your business. The tricky part is that many businesses don’t know what this value is, so marketing and advertising decisions are often based on hunches and guessing, meaning opportunities for collecting the right data can be missed. Knowing the true value of your customers can help you become more efficient in your marketing planning and more profitable as a business because you can begin to make smarter, data-driven decisions when it comes to deciding how, when and where to spend your marketing budget.
Calculating customer value
You can do a few simple calculations to work out your average customer value, and from there work out your customer lifetime value. In its simplest form, customer value = Sale price – cost of goods sold. If you’re selling one thing to one customer only once then this formula works. But most businesses want customers to return, so calculating true customer value looks a little more like this:
Customer value = average order value x purchase frequency
Customer Lifetime Value = customer value x your business average lifespan
These calculations can help you decide what your customer data is worth, and how much you can afford to spend on capturing it. Capturing the information a customer is willing to provide to you opens up many different options to communicate with them and build a connection, turning them into a loyal customer.
How do you collect data?
There are several ways to collect data. You can buy it, collect it online through forms on your website or through more traditional methods like asking customers to write their details on a form. The more data you collect, the more options you will give to yourself for communicating with your customer. Names and email addresses are a good way to start, and can be done easily through a simple online form. Collecting a customer’s home or business address allows further types of communication, as does a phone number. But don’t forget customers’ birthdays, anniversaries, and important dates you and the customer have in common. The more you collect the more powerful and personalised your messages will be.
What to do with all this data
Firstly, the obvious channels of email, post and SMS are all great ways to get your message delivered – and they can be even cleverer. Imagine you could automatically send your customer a birthday card on their big day, or wish them many congratulations on an anniversary only you and their close family and friends know about. Imagine sending out a promotional leaflet two weeks before your event, followed up with an email a week later and a SMS on the day…all pre-planned, personalised and automatically done for you.
There’s no need to imagine. This is possible today. You just need the data to get things moving.
To find out more about how we can help you learn even more about your customers, get in touch.