Ecommerce data collection is the hamster wheel you never get off. Why? Because consumer buying behavior is constantly changing, data protection regulations keep evolving, and insight from real-time data is increasingly more valuable than from historical data.
Using the past to predict the future is becoming less relevant. Plus, moving forward, privacy restrictions will make it more difficult to collect data. So, if you run an ecommerce business and are looking to collect valuable customer data, you must continuously review your data collection practices and upgrade to more effective ones. It’s an endless cycle.
The good thing is that we’re here to walk you through this process. In addition to sharing seven ways to improve your customer data collection, we’ll also tell you why customer data is important and what type of data you should focus on collecting.
Let’s dive right into it!
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Why Customer Data is Important in Ecommerce
You can’t run an ecommerce business without data. Data tells an accurate story of your customers and offers insight into their spending patterns, shopping habits, and preferences.
Customer data is useful for creating personalized website experiences, delivering messages tailored to specific customer segments, and providing precisely what customers want when they want it.
A McKinsey article on the consumer-data opportunity clearly states that data creates an opportunity for enterprises to improve consumer engagement and better understand the consumer’s pain points and unmet needs.
More precisely, here’s how you can use customer data to your advantage.
Accurately estimate demand
We live in an age where social media virality can surge a product’s demand. Without real-time customer data and the technology to mine it, it will be difficult for an ecommerce business to efficiently deliver when demand patterns rapidly change.
Anticipating these short-term changes in demand means your business can optimize inventory, estimate future sales with a high level of precision, and maintain competitive advantage.
Besides that, drawing insights from customers’ purchase history data can reveal product preferences that can personalize product recommendations and inform supply chain decisions.
Decrease customer churn and cart abandonment
Not every customer who browses your site will make a purchase, and not everyone who makes a purchase will return to buy again. Customer data gives you insight into why customers abandon their carts before checkout or why those who previously bought frequently have stopped buying.
According to the book Marketing Metrics by Neil Bendle, Paul Farris, Phillip Pfeifer, and David Reibstein, you have up to a 70% chance of selling to an existing customer compared to the 5-20% probability of selling to a new prospect. Customers walking away from your business means that revenue and profits will take a hit.
So, if you want to keep your shop running long-term, you need data to identify at-risk customers and develop target communications to reach them or engage with them post-purchase to learn if they’re happy—and what you can do if they’re not.
Build stronger relationships with customers
Ecommerce businesses that want to consistently deliver an excellent customer experience mainly use data for personalization because personalization is a good foundation for strengthening buyer relationships.
Customers need to feel like you hear their complaints and speak directly to them with your messaging. They want to be valued and rewarded for their patronage.
Another McKinsey report states that customers “respond positively when brands demonstrate their investment in the relationship, not just the transaction.”
By analyzing the customer journey, paying attention to complaints, and keeping an open line of communication between your key decision-makers and customer-facing team, you can build complete customer profiles that dictate how to best serve each customer segment.
What data should you be collecting in Ecommerce?
A customer’s journey is often inspired by three key moments that influence their buying behavior:
- A personal moment tied to specific life phases or situations like getting married, moving to a new home, or starting a fitness challenge
- A cultural moment related to what they consume and engage with on social media, like a viral video
- A brand-inspired moment guided by specific brand communications like email promotions or discount offers
Each of these moments serves as an opportunity to connect with potential or existing customers and capture useful data.
However, to leverage customer insights to drive growth, you need to identify the data to collect that is most relevant to your business and can provide long-term benefits for your customers. To do this, you can think about the information you need to effectively serve customers, communicate the value of your products, build relationships, and sell products.
Keeping in mind the three key moments, let’s shed some light on the data that matter.
For a customer buying a product or might buy in the future, psychographic data gives you insight into their personalities and helps you understand the role your brand can play in their lives. The data points capture their interests, opinions, and activities. This enables you to create strategies that appeal to customer clusters that share the same ideas, lifestyles, and motivations.
You can collect this through online quizzes, customer interviews, surveys, virtual focus groups, or social media conversations.
If a customer opts out of your email list or cancels their monthly subscription, behavioral data identifies the “what”, “when” and “where” to determine the “why” of that specific event. So, every important event, from website visits to email signups and completing a purchase, is captured and attributed to a single end-user.
With behavioral data, you can observe customers’ browsing behavior; What led them to your website? What products did they search for? Or What specific action did they take as they browsed your site? You can also observe their purchase behavior:
- How do they react to discounts and special offers?
- How much do they typically spend during holiday seasons like Cyber Monday, Black Friday, Christmas, and New Year?
- How do they interact with promotional emails?
Basic personal info like name, age, gender, and other contact info can create a simple customer profile or persona. However, this can also include communication preferences, income bracket, marital status, or the number of kids to give you a clearer picture of who your customer is.
7 Ways to Improve Customer Data collection in Ecommerce
With the recent deceleration in ecommerce growth, stricter data privacy regulations, and growing concerns customers have regarding data security, ecommerce businesses are faced with an increased number of obstacles in the data collection process.
While ecommerce data collection is now a tougher nut to crack, there are still frictionless, safe, and incentivized approaches to effectively collecting customer data.
1. Review your data sources
Privacy is a major part of the conversation on ecommerce data collection. Any business looking to collect and utilize customer data must comply with privacy regulations to protect both the business and its customers.
With this in mind, you should look into making the switch from third-party data collection to first-party and zero-party data.
These two data sources—for many reasons—will be dominant in the years to come. They comply with evolving privacy regulations, are cheaper to collect, more accurate, and offer extensive opportunities to strengthen customer relationships.
2. Diversify your collection methods
To account for customers that go through multiple touchpoints before making a purchase, it is essential to set up multiple methods to collect both first-party and zero-party data.
Ideally, the methods you choose should depend on what you want to learn about your customers. But generally, you should try to learn their motivations, interests and pain points. To achieve this, you can include conversational pop-ups, social media polls, post-purchase surveys or quizzes as part of your data collection methods.
When setting these up, avoid asking too many questions that may not be relevant. Keep the process simple and ensure customers feel like it’s worth their time.
3. Be transparent about how data is used
Transparency builds trust. When requesting or collecting information from customers, it is your responsibility to obtain consent and explain what exactly their data will be used for.
Shopify’s ecommerce credibility study shows that consumers want to know how brands use their information. By transparently and ethically collecting data on people, you can foster a sense of trust that makes it easier for them to share information.
4. Actively involve customer-facing teams
Those who frequently interact with customers listen to handle their complaints so that they can resolve issues and process requests. These are priceless in the data collection process.
Create a system for organizing the various types of data that these teams collect and ensure there is a close collaboration among cross-functional teams to enable your business to maximize the potential of customer data.
5. Provide value to encourage data sharing
According to BOF’s article on digital marketing in the age of privacy, over 50% of customers admit that they are “more likely to share data if they receive something in exchange.”
This shows that offering a relatively small reward in exchange for their information can mean a lot to them. A few examples of meaningful incentives are free samples of products, exclusive access to something they would want, prizes, 10% off their next order, or an annual birthday coupon.
You can also consider creating a loyalty or reward program that improves the convenience and experience of shopping with you.
6. Invest in a customer data platform and collection tools
The truth is that regardless of how large and experienced your team is, you can’t do the work of data collection without automation or machine learning tools.
To help you collect, organize and analyze data, look to survey tools, social listening tools, behavior analytics software, and a customer data platform where you can store and utilize the data you collect.
Parnika Sharma, a marketing major at the Schulich School of Business, pointed out that customer data platforms and CRMs can keep data accessible to multiple team members. They make targeting specifically relevant to who the customer is and where they are on their path to a purchase decision.
7. Review and update your collection practices
As we said at the beginning of this article, data collection is an endless cycle—the hamster wheel you never get off.
Make it a common practice within your business to occasionally review your ecommerce data collection practices and ensure that you’re effectively managing your data. Set up continuous monitoring, choose a central location for data storage, and unite your team around how data delivers value for the business.
Make the most out of your customer data
Insights from customer data can provide clarity and focus about what is needed and cut down on doing things that don’t add value.
This process of improving your data collection to understand customers better, meet future demand, and foster loyalty is how your business will continue to thrive in a customer-first data-driven economy.
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