Many experts think that massive collection and analysis of data is the way to retain customers, but in reality, data’s not enough. And while the field of analytics is continuously growing, only 31 percent of CEOs , according to one study, said they felt confident that their organizations were in the top tier of data analytics users.
What's all this data for? Most companies use it to evaluate performance and optimize programs, but many struggle to determine which data subset is most valuable for understanding consumers and pushing them through the conversion funnel.
Some companies simply decide that large data sets are the most valuable ones. But a mass of unexamined data can harm an organization more than it benefits. What’s most important is collecting the right data and analyzing it effectively.
Surveying the lay of the land
Unless you first understand what data you should focus on, you're going to find it difficult to identify a problem or its solution. If an organization isn’t sure which interactions influence it customers most, it could face endless troubleshooting while looking for the changes that will optimize conversions and retention.
Not knowing which data points to focus on may also prompt many to rely on "vanity" metrics, such as likes and page views. These metrics provide numbers but offer little valuable information. An increase in visits means only that more eyes ran across a page; it says nothing about engagement. That's why startups focusing on vanity metrics risk increasing marketing spend and possibly decreasing ROI.
Companies may also experience analysis paralysis when they collect data and assume that actionable insights will magically follow. This can be a big time and money waster for startups on strict budgets with few resources.
How to collect and conquer
Instead of collecting every piece of data they can, startups should focus on a few key data sets.
Purchase behavior is one of the most important pieces of data to examine. By looking at what customers purchase online, companies can identify what’s truly valuable and meaningful to them. This helps cut through the noise of research and troubleshooting, and it allows companies to focus on what customers have already spent their time and money on.
To further understand customers, companies should also examine which touchpoints customers engaged with or which merchandising messages they received. Companies can then customize experiences for customers and optimize engagement, conversions and retention.
Understanding more about customers’ online lives can help increase ROI and identify opportunities to grow, but it’s not enough. The data collected about customers should be tied to their clickstream behavior to provide a full picture of their on-site activity.
Making consumer behavior your secret weapon
It takes careful analysis of data to identify which behaviors can most impact the business and determine ways to engage and sell to customers. Two of the most important data sets to analyze, according to successful startup founders, are real-time customer behavior and web activity .