Today’s marketplace is more competitive than ever. To compete with the big boys, small businesses need superior customer service, which is their primary weapon against giant retailers and big businesses like Wal-Mart and Amazon. However, small businesses need to know and understand their customers to offer excellent customer service.
Understanding what customers want and need is one of the most important aspects of running a business. As Peter Drucker said, “how you answer the question, who is the customer, determines how you define your business.”
Small businesses can tailor their products, services, and experiences to meet their needs and preferences by knowing their customers, leading to higher customer satisfaction, increased sales, and revenues. It can also lead to better targeting of their sales and marketing efforts resulting in higher conversion rates and a better return on investment.
An essential technology that can help small businesses know and understand their customers is the Customer Data Platform (CDP).
What is a customer data platform?
One of the important arsenals of marketing tech, a customer data platform is a technology that collects, integrates, and manages customer data from various sources in real time.
According to Forrester Research, “Customer data platforms consolidate and integrate data from these multiple heterogeneous sources into a single, trusted repository that supplies accurate customer data to analytical and operational systems throughout the Marketing technology (Martech) stack.”
The goal of a CDP is to provide a single source of truth about customers, allowing businesses to understand and target their customers more effectively. To do this, the CDP technology centralizes data from multiple sources such as websites, apps, email, social media, and CRMs, and uses advanced analytics and machine learning algorithms to create a comprehensive profile of each customer.
Think of it this way: when making a purchase decision, customers may have come into touch with various marketing channels of the business. The customer may have visited the company website while researching the product on Google. They may have subscribed to the email newsletter. The customer may also check out the social media pages of the company, as well as reviews about the business. A customer data platform collects all the data points from all the interactions of the customer with the different sources and channels – website, email, social, app, etc. – and consolidates them into an easily understandable customer profile.
How CDP can benefit small businesses
CDPs are designed to provide a holistic view of customer behavior and preferences across all touchpoints within a business.
The customer profile that it generates can then be used by the small business to help in their personalized marketing, customer service, and product development decisions. Creating a single customer profile can give small businesses a comprehensive view of customer behavior and preferences.
The more a business knows about the buying behavior of a customer – how they go about researching the products to buy, how they choose products, what background factors are influencing their purchase decisions, what are the frequency patterns, and how they use and dispose of the products – the more the business can personalize communication, and deliver relevant and targeted marketing. If the business knows more about the behavior of the consumers, then they are more likely to present its products in a way that will resonate the most with the audiences. This will also help the business create products that better address the customers’ needs and help maintain customer trust.
This customer profile can also be shared with other platforms, such as Facebook ads, to deliver more relevant and personalized experiences to the customer, leading to increased engagement and loyalty.
More importantly, knowing more about the customers can help small businesses do better customer segmentation. Viewing potential and existing customers as one collective whole is a common mistake of small businesses. Customers have unique perspectives and motivations – e.g., some value quality over price, while others purchase the product monthly. At the same time, some buy it once a year, and some prefer to buy from the store, while others want to shop only online. A CDP system can help separate customers into groups based on common similarities and characteristics. Once customers have been segmented, the small business can create marketing approaches specific to the segmented group to provide them with the brand experiences they’re looking for.
Conclusion
Customer data platforms can help small businesses develop effective and efficient marketing strategies, leading to higher conversion rates and a better return on investment.
