You have a lot of data at your fingertips. So much, in fact, that it might feel like you’re not using it all to its advantage. Maybe you even feel like it’s slipping through your fingers and you can’t quite keep up with it.
The truth is, you don’t have to understand and even utilize all the data you have. Instead, success comes from knowing what data you should be tracking and how to use it to make informed decisions moving forward. When you can identify your key data points and how to improve them, you can begin to increase your revenue month on month.
So how can data really drive sales?
1. Increase Average Order Value With Relevant Upsells
Average Order Value refers to the average amount customers spend on an order when they purchase with you. The higher your AOV, the more revenue you get.
But where does data come into this? The key to increasing AOV is offering the right products at the right touchpoint.
Someone who’s just about to purchase a pair of shoes probably isn’t interested in a plant pot - of course, they might be, but there’s a good chance they’re not. So, if you serve them a recommendation for a plant pot, they’re not going to take you up on that offer.
However, you can use the data you have for each customer and for past purchases from similar customers to determine what kind of upsells or cross-sells customers might want.
From past data, you might learn that people who bought a pair of shoes also bought five pairs of socks and some colorful laces. So, whenever a new customer puts a pair of shoes in their basket and heads immediately to checkout, you can present them with some accessories they might also be interested in.
Apple is a pro at encouraging shoppers to add additional accessories to their order.
2. Increase Customer Retention Rates With Predictive Recommendations
Existing customers spend 33% more than new customers, and increasing your customer retention rate by just 5% can increase profits by a whopping 25-95%.
Get a visual look at your retention rate with Peel.
Encouraging a second purchase is the first step in increasing overall retention rates, and there are a number of ways you can do this:
Serve customers relevant product recommendations based on their previous purchases. For example, if someone purchased a bamboo water bottle, they might be interested in some bamboo tupperware too.
Amazon is a prime example of a big ecommerce brand that uses data to power predictive recommendations. If you’ve ever made a purchase on the site and logged back in at a later date, you’re served a series of recommended products based on the items you bought before.
Data can also be used to offer existing customers an incentive--it could be a coupon with money off, free shipping, or a free gift when they spend over a certain amount. The data you have around a customer’s interests, their purchasing frequency, and average order spend will help you identify what kind of incentive might work best to bring them back.
For example, a customer that has a high AOV with you might be tempted by a money-off voucher, while someone who has a lower AOV might be more tempted by free shipping.
3. Increase Customer Lifetime Value by Assessing Purchase Frequency
Customer Lifetime Value (LTV) is the amount of money the average customer spends over their lifetime with you. The higher the LTV, the more revenue you get--it’s a no-brainer.
Using data to understand the mindset behind customer shopping patterns can help you determine what people buy from you and, more importantly, when they buy from you.
For example, someone who purchases a moisturizer is likely to run out at some point. Data can help you identify how often they come back for more--is it every month? Every six weeks? Every three months? When you know the answer to this, you can send them reminder emails based on their unique shopping habits.
Sephora is on the ball with their replenishment emails.
Customers will keep coming back to you because, let’s face it, who isn’t thankful for a reminder for a product they’re close to running out of? They’ll know that you value them and are interested in keeping them stocked in the products they love. And, as such, their LTV will increase.
4. Add a Sense of Urgency to Increase Units Per Transaction
The more products a person buys in one single order, the more they’ll spend with you. It sounds similar to AOV, but units per transaction measures how many individual products a customer buys when shopping with you rather than the amount they spend (which can be high even if the number of products purchased is low).
Data will give you an insight into the average number of products people tend to buy from you and, to increase revenue, the goal is to increase this number. To do this, you can create a sense of urgency--implement a countdown timer in your product launch emails, or display the number of items left in stock to give customers FOMO (the fear of missing out).
This brand offers customers a limited-time offer for today only.
5. Optimize Inventory to Create a Successful Future
Inventory management is a necessary evil. Understanding what products shift quickly and what has been gathering dust in the warehouse for months is crucial information in creating a better, more lucrative future for your brand.
Data will show you exactly what your most popular products are, how often you need to re-stock, and what products aren’t proving to be a major hit. Using this information, you can make sure your stock is fully replenished when it needs to be to avoid the dreaded “out of stock” sign (and lost customers).
Restocking your most popular products will keep the order process smooth and friction-free, which will bring in more customers and keep existing customers coming back for more.
Are You Using Your Data Effectively?
Data might seem like a complicated beast you struggle to get your head around, but it’s the key to increasing revenue and keeping customers happy. It’s crucial to understand what data is important to your business and how it can influence shoppers to spend more money on more products.
Peel’s advanced dashboard can help you track and measure these data points to determine where there is room for improvement. When you know what needs to be improved, you can put steps in place to help you get there, which will dramatically increase your revenue.