We've all heard that data is the new oil, right? But exactly how? Here's a small list to get you started on your journey of converting data into profits!
If you’re a C-suite executive looking for low hanging fruits to increase your company’s profits, you can start now with one of the following initiatives.
1. New Customer Acquisition
Have you received that spam call from marketers and wondered why they keep calling you to buy a product you do not need? And why do they keep calling again and again? The objective of any business is to acquire more and more customers, but most of the effort of marketers is wasted by reaching out to the wrong cohort of customers. As if this wasn’t bad enough, they keep reaching out to these customers in the false belief that if you tap a potential customer enough times, she/he will try your product.
But the good news is – there is a smarter way to do this!
Research shows that targeted marketing is more than twice as effective as non-targeted marketing. Just because you are reaching out to a bigger group doesn’t mean you are going to get a more engaged audience.
You can use analytics to understand the conversion rates from different customer cohorts by using a wide variety of parameters. Similarly, you can use data to figure out what type of outreach works best for which customer cohort. This can vastly improve your customer acquisition rates, thereby reducing marketing spend and increasing the number of customers.
2. Increase ACR (Average Customer Revenue)
Very few industries have adopted the concept of revenue per customer to see how the business is performing over a long duration. As long as revenue and profits are growing, this metric takes a backseat. But if your customers are growing at a faster rate than your revenue, then on average each customer is spending less than before, which needless to say can show early signs of trouble.
Luxury goods makers are very good at upscaling customers to more expensive products, thereby constantly increasing their ACR. Businesses like hotels and retail use ARR (Average Revenue per Room) or Sales per Sq. Ft. to measure their performance, a dip in either usually being a cause for concern.
But every business, irrespective of industry, can and should monitor ACR. Analysis of your customer data can enable you to target, up-sell, cross-sell to your existing customers and significantly increase your ACR.
Loyalty analytics, product bundling, pricing optimization are all techniques which leverage AI to achieve increases in ACR.
3. Minimizing Customer Churn and Increasing Engagement
It's quite obvious that it is much more expensive to acquire new customers than to retain existing ones. But did you know that acquiring new customers can cost up to 10 times as much as retaining old customers. Yet, a lot more focus is given to customer acquisition rather than retention. Marketers also believe in the false notion of customer lifecycle where it is presumed that inevitably at some point the customer will leave you. There is nothing further from the truth!
The reason a lot of companies are not able to focus on reducing customer churn is because they are reactive. The company takes notice and gets into action when the customer has already gone and it’s too late.
Today, AI can help you in predicting which customers are likely to leave based on their frequency of purchases, spend patterns, and other behavioral data. Corrective action can then be taken well in time, much before the customer is lost.
If all of the above sounds like Greek or Latin to you, reach out to us at UNCOMPLICATE.AI to simplify AI adoption for your company. It’s time you supercharge your profits using the power of AI.
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