Since the coronavirus pandemic, the entertainment industry faces reinvention with the loss of theaters and a critical need to compete with streaming services. Manufacturers once focused on the wholesale market are transforming to direct-to-consumer businesses, and retailers find digital marketing isn’t just the first priority. It’s their only option.

These comprehensive changes to the marketplace may have been expected, but their sudden arrival is challenging to navigate. However, the shift toward a primary digital focus also introduces new opportunities. Companies now understand there’s value in owning the customer relationship, which enables them to analyze user behavior to better serve their needs.

But the cloud storage platforms and software-as-service applications of today generate massive amounts of data across new silos. Managing these technical demands is the entry-level requirement to keeping pace with your competitors. However, through a modernized, thoughtful approach to your organization and its infrastructure, you’ll be ready to manage an evolution whose time has come.

Consumer data analytics allows for a 360-view of your business

While access to customer behavior is critical, today’s successful businesses must also use that data properly to generate a complete picture of product performance. Tracking your customers’ clickstream illustrates the content that is attracting user interest, and app usage data identifies your best customers. Through these data insights, you can tailor your user experience to expand that target audience.

When viewed holistically, customer behavior also points to your organization’s financial performance. Through data analytics, you can track which marketing initiatives are attracting the customers and which may be underperforming.

For example, if your organization offers a subscription-based service, you can determine which advertisements, discounts, or content offerings drive new sign-ups. In e-commerce, you can track where users drop off during the checkout process. With those kinds of insights, you can conduct A/B testing of your page design in an effort to raise conversion rates.

The vital information gained in each of these scenarios requires a modern, cloud-based analytics platform to be effective. But with the right technology and organizational mindset, your business will claim a competitive advantage.

Customer lifetime value: The holy grail of user analytics

Whatever your industry, no business runs on the pursuit of a single purchase from a given customer. Direct-to-consumer retailers want repeat purchases, streaming services want ongoing subscribers, and SaaS vendors want consistent usage leading to upsell opportunities. Customer acquisition is a goal. But retention is the ultimate prize.

3 pitfalls to avoid when calculating your customer’s lifetime value

Understanding the lifetime value of your customer is crucial to understanding your marketing efforts and your bottom line. Here’s how to ensure these insights are accurate.

However, the drive to deliver both for your business always comes at a cost. By analyzing customer data, businesses are able to determine how much revenue to expect over the expected lifetime of a customer. And through factoring in the marketing expenditures over that span, your business learns how much money it’s truly making in sales.

The ability to measure customer acquisition costs against their lifetime of activity illustrates the unit economics of your business. In the race to stay competitive through digital marketing and sales promotions, many direct-to-consumer customers spend more money to gain subscribers than those customers generate. With effective customer data analytics in place, you’re able to avoid this unsustainable outcome.

Through cohort analysis, your business knows which promotions effectively attract new customers and how that expenditure impacted your profit margin. Plus, your business is able to determine the effectiveness of their marketing initiatives. As distinct populations arrive from channels like Google AdWords or social media platforms, you can determine the quality of customer generated by each. Similarly, if a streaming service learns that a series drives new but short-lived subscribers, companies can surface similar programming to boost retention.

By knowing the aspects of your business that deliver more lifetime value customers, you also learn which efforts generate results and which need optimization. Customer data eliminates the guesswork around what your audience wants and how well your organization is providing it.

The demands of modern business require breaking with the past

The growth of the digital marketplace expands the possibilities for companies looking to establish direct relationships with consumers. Even in the forward-thinking app business, companies lost vital customer data because storefronts like the Apple Store functioned as a gatekeeper. Now, these entertainment apps can own the customer relationship from the point of purchase through launching standalone services of their own.

Once companies migrate to a web-based or application-based platform, they all recognize the critical need to draw insights from their customer’s journey. But this wealth of data comes with its own technical challenges. Organizations may be led by the most data-literate of executives, but their existing storage and analytics efforts are quickly overwhelmed by the velocity, variety, and sheer volume of information.

Every minute a customer spends in your application, their decisions create potentially hundreds of events. Along with generating a massive increase in data, its variety has also changed to unstructured or semi-structured formats from disparate sources. User behavior provides vital insights, but retaining and analyzing this data presents an enormous challenge.

As your digital business grows, previously effective strategies like on-premises physical storage (on-prem) and Excel spreadsheets will prove inadequate. In the absence of proper training, your IT team won’t have the skills to solve these growing problems.

In addition to the expertise needed to migrate your data to a cloud-based storage system with a modern data stack, your organization needs a change in mindset to effectively compete at a digital pace. Traditional thinking around data and its architecture simply won’t cut it in this new world, which is where the right data partner comes in.

With our level of experience, we have the expertise to drive success on a modernization project that will draw a complete picture of your business and its customers.

Digital businesses can’t compete without understanding their customers

For many businesses, our current digitally dominated, direct-to-consumer marketplace may not have been expected so soon. But the behavior patterns that laid the groundwork for its arrival have been in place for years. Now, with a long-anticipated future already here, your business must adapt quickly to remain competitive.

Your organization may need to undergo a comprehensive shift in mindset to adapt to the demands of modern, data-driven business. Advances like cloud-based storage and business intelligence software require new skills for IT teams, and then these systems require customization. The path toward using data to drive consumer marketing may be difficult, but many of your competitors are already there.

Fortunately, regardless of your industry, these aren’t the sort of systemic changes you need to undertake alone. We have experience implementing new cloud architectures and data programs when time is of the essence. The sooner your customer data is captured and analyzed, the sooner your organization can transform those insights to revenue. DAS42 has been there, and we know how to see these projects to completion. Contact us when you’re ready to find out more.