How Does CRM Analyze Your Data?
If you are a manager or a CEO or somehow are involved in running a business, you most probably know that leading companies are always looking for new software to implement into their systems in order to help their constantly growing analytics team. But why is that? Well, for two main reasons:
First, in order to improve their performance and the quality of their products or services, companies need to understand their customers’ needs. Only by understanding what the customer wants to buy can a company provide the right product for them.
Second, and this is the more technical part, companies need a system that can build the analytics capabilities that will help them provide these innovative customer experiences.
So, the only way to meaningfully help your company is to use a system or software that enables you to fully understand your clients. But, how? What kind of analytics does a CRM run that can help you and your company in all these ways? That is what we are going to discuss in this article.
KYC and Customer Analytics
A good understanding of customers is essential for running a successful business. KYC or “Know Your Customer” is what actually makes all the difference for many companies. KYC helps them do their best in creating, communicating, and delivering their offerings by tailoring them to their customers’ needs. And that makes customer analytics the most important part of both marketing analytics and the marketing function of a company in general.
But understanding and meeting customers’ needs is easier said than done. In fact, customer analytics is a very broad area. It may include a very wide range of customers; their behavior adds numerous different outcomes and indicators that the business might be interested in. That is why, For the sake of this article, we have decided to focus on one of the most fundamental marketing frameworks: Segmentation, Targeting, and Positioning, also known as the STP framework. The STP is the most logical choice as it applies to all the areas of business and marketing activities.
We will discuss them in more detail in the rest of the article.
Segmentation is the process of dividing a population of potential or existing customers into groups that share similar characteristics. The underlying idea is that, most likely, these groups will have comparable purchase behaviors. Furthermore, these segments would probably respond similarly to different marketing activities. For example, not everyone likes the same brand of chocolate candy bars. Moreover, not everyone can afford the same brand of chocolate. However, based on certain characteristics like income, age, and gender, a CRM divides customers into segments where each segment prefers a certain type of chocolate. It is the same story for the exchange market or cryptocurrency.
But, what characteristics exactly do CRM systems use to perform segmentation? In general, the types of characteristics used for segmentation may be separated into two broad groups, and that is based on whether the CRM is using consumer behavior data or not. Most often, especially in the process of new product development, consumer behavior data is not available. Therefore, the CRM has no choice but to rely mainly on demographic and geographic customer data, things like age, income, education level, and others.
In other cases, a CRM might use psychographic characteristics. For example, some customers have a better-planned buying behavior, while others shop rather impulsively.
The second type of segmentation is when the customers’ consumer behavior data is available for the CRM, which is a much more preferable way; for instance, historical data from purchases, how often clients buy/sell, at what time they buy/sell, what assets they buy/sell, and many more. Using these criteria, a CRM can divide clients into much more representative segments.
Targeting involves evaluating potential profits from each segment and deciding which segments to focus on. The CRM system uses artificial intelligence, which means that it can decide to perform operations on its own. It may decide to offer products to one segment, to all segments, or just to a selected few. The CRM takes into consideration different factors such as segment sizes, expected growth, and competitors’ offerings.
So, in other words, the CRM decides who to offer the product first based on how likely they are to buy your products. For example, somebody who has never purchased anything from you might be targeted before an existing customer solely because they have opened three of your emails.
This stage of the framework is also the point at which the CRM system decides on different ways to promote the products. It can target one segment by sending them an email and another one by notifying an agent to call them.
Positioning refers to the place that a brand occupies in the minds of the customers and how it is distinguished from the products of the competitors and different from the concept of brand awareness. Once the CRM has decided which segments to target, it goes to positioning. At this stage, the important question to answer is what product characteristics do the customers from a certain segment need? Or in other words, what product can be offered to them that would have the characteristics closest to the ones they need? So, we can say that positioning consists of implementing the targeting actions for the product.
But, positioning concerns not only the characteristics that a service should have but also it is about how a service should be presented to the clients and through what channel that is going to be done. In fact, this part of the process is so complicated that it has a framework of its own.
In this article, we talked about how a CRM system analyzes the data you collect from your potential or existing client. This analysis starts when the CRM software puts different clients in various groups based on their behavior (Segmentation). Then, it decides who or which segment to promote the assets (or maybe services) to (Targeting). And finally, the CRM tries to find out what asset (or service) would appeal to the selected segment or client the most so that the client would buy/sell it.