How to Earn Positive ROI from Analyzing Your Customer Database

How can you know where there are opportunities for growth if you’re not sure where you stand right now? Analyzing your customer database can reveal opportunities for implementing changes that produce positive results. Plus, establishing a baseline will help you measure ROI as you implement new marketing strategies.

Let’s break down the most important aspects of your database you should look at to better understand your customers and maximize your ROI. Start by asking yourself the following questions.

Is Your Database Clean and Organized?

First, make sure you have a database that’s well populated with accurate, clean data. If you have a mass of messy, unorganized data points, you aren’t ready to analyze your data. You have to clean it up first. 

The initial step is making sure you have all your data in one place. This consolidation can be a major undertaking because many brands have data living in a variety of spaces. For example, nearly two-thirds of retail brands have consumer data spread across more than 50 information systems! 

After bringing your data together, you have to practice good data hygiene. This involves making sure your data is accurate, up-to-date, and usable. You can also make data more useful by organizing it into segments.

How Big Is Your Customer Database?

After your database is clean, you can accurately assess the size of your customer database. This is a helpful baseline to establish.

Make sure you get an accurate count by taking care not to double count customers. Remember that many customers use multiple email addresses, so you may need to remove duplicate data and account for these multiple email accounts to get a single view of each customer.

How Many of Your Customers Are Actually Active?

It’s also important to determine how many of the customers in your database are actually active. The best way to determine whether a customer is active may depend on your business model. For example, you could look at how many customers:

• Have an active subscription
• Have made a purchase in the last year
• Redeem rewards through your loyalty program
• Have visited your e-commerce site in the last quarter

The ratio of active customers to inactive customers can help you understand how well you’re doing with engagement and retention, an area we’ll look at in more detail below. If you have a lot of customers in name only, it’s time to reactivate those lapsed customers through a reactivation strategy.

How Many of Your Customers Stick Around?

You should also take a look at your customer retention. In other words, what percentage of your customers come back after an initial purchase to spend more with your brand?  The inverse of retention is churn, so you can also track churn rates to understand how many of your customers leave vs. stay. 

For some industries, like hospitality and retail, customer engagement and retention is especially challenging. It’s natural to lose some customers, especially in these competitive industries, but if you notice your retention rates are poor, it’s time to implement some customer retention strategies. You want to keep customers engaged throughout their relationship with your brand.

How Much Do Your Customers Spend?

If you want to understand where your revenue comes from, pay attention to how much typical customers spend. More specifically, you can take note of customers’ average transaction value or how much the average customer spends over the course of a quarter or year.

If you notice that most transactions are small, you may find your marketing efforts are best spent on identifying opportunities for upselling and cross-selling or providing incentives like free shipping at a certain price point to drive up spending. Or, if you find most customers only purchase once a year, you may want to focus on better engaging these customers throughout the year.

How Enthusiastic Are Your Customers?

Every company dreams of creating brand loyalists who are truly enthusiastic about the brand and will even act as brand ambassadors to help you acquire new customers. How do you know if you have these sorts of enthusiastic customers—or how happy your average customer is with your brand?

You can use metrics like the net promoter score or customer satisfaction score to learn about your customers’ opinion of your brand. It’s also helpful to track how many customers interact with your social channels if that’s an important aspect of your business.

What’s Your Average Customer’s Lifetime Value?

Customer lifetime value (CLV) is an important metric for businesses to understand how much revenue they can expect from each of their customers over the entire customer lifecycle. 

This number can vary drastically, depending on your industry and your business model. Knowing your average CLV or knowing your CLV for different customer segments helps you identify potential room for improvement and make accurate predictions about future revenue. 

Turn Negative Data into Positive ROI with a CRM & Analytics Partner

Cleaning up your database and answering all the questions in this post is no small task. In fact, it can quickly become overwhelming for many companies. This is why it’s smart to link arms with a partner who can provide the resources, tools, and expertise you need.  

Baesman offers CRM and analytics services to help our clients consolidate and organize their data, track key performance indicators (KPIs), produce insights on your customers, and find opportunities for positive ROI. We can also help make that ROI a reality by executing strategic data-driven marketing campaigns and tracking their success. 

Learn more about our CRM and analytics services here.