Here are five ways you can use data to leverage consumer power:
1. Give consumers what they want. Your goal is to extract the consumer’s maximum willingness to pay, which requires delighting him with the right product at the right time. Big data ensures that you’re delivering on all accounts because it tells you exactly what the consumer wants and when he wants it.
2. Price the product appropriately. Data allows you to price products based on consumer preferences. It isn’t enough to provide the products consumers want. You need to provide them at the right price. You can use data to pinpoint the best price for your product.
Take Starbucks, for example. Last year, it raised coffee prices by 1 percent. While this increase seems insignificant, it actually increased profit margins by 11 percent. The trick is value-based pricing. Through customer analysis, the company was able to create targeted price increases that reflected the maximum price consumers were willing to pay. This way, the price increase wouldn’t alienate its customers.
3. Craft custom messages. The ability to better understand consumers allows you to tailor your messaging so it resonates with them at a higher level. In fact, 40 percent of consumers prefer doing business with companies that cater to their preferences. Use demographics and psychographics to craft personalized offers that will direct consumers to your products at the right time, at the right price point, and in the right channel.
4. Reduce your inventory. Manufacturers no longer need to carry huge inventories because cash registers can send signals back to the plant and optimize the production mix and timing. Efficient demand predictions and logistics also reduce inventories and wait times, making you much more responsive.
5. Engage with your advocates. Engaging the consumer as an active referral partner, support technician, and promoter is the key to leveraging his power. You can’t rely on passive word of mouth; instead, you have to actively encourage and foster engagement. You need to track who’s participating in the forums and turn them into brand advocates.
However, doing this involves more than offering a referral bonus or creating user forums — you have to recognize the work they’ve done. Creating or utilizing forums that facilitate user-to-user help allows you to engage with your promoters and track their interactions.
Your ability to understand consumers and target them with premium, tailored, convenient, and even high-priced products determines your market share. Once you’ve converted an average consumer into a loyal customer, he can become a brand advocate, allowing you to leverage his power to persuade other consumers to do business with you.