As the digital economy expands and evolves, customers are raising their expectations for the brands they engage with. The power once held by providers of goods and services has shifted to customers, who now demand seamless and highly relevant experiences at every interaction. This shift is compelling organizations to change how they operate. Consequently, a company’s success hinges on its ability to attract new customers while keeping existing ones satisfied through personalized and valued engagements.
Today, customers have more access to content, buying channels, and brand options than ever before. With this abundance of information and choices, organizations can no longer survive by merely doing the minimum to retain customers. Instead, they are adopting strategies focused on optimizing customer experiences and outcomes.
Advancements in technology have moved beyond traditional one-way marketing and generic engagement. Now, data-driven experiences enable organizations to engage with their customers in proactive and intentional ways that were once unimaginable.
It’s all about the data
Providing an exceptional and relevant customer experience is no longer optional; it’s essential. In a market where customers can easily switch brands, organizations must show they understand and value their customers. This begins with data and business applications that utilize it to enhance customer relationships, clarify the customer journey, and deepen the understanding of customer motivations.
For years, business applications were static, limiting organizations to a reactive mode of operation. Traditionally, when customers had issues, service representatives manually entered data into CRM platforms and used multiple disconnected systems to resolve problems. This reactive approach persisted due to a lack of alternative methods.
However, advanced technology is transforming this landscape. Today, nearly every product and service is digitally enhanced, connected to the cloud, and embedded with software. These digital technologies allow organizations to leverage data for proactive actions, such as detecting issues before they arise and anticipating customer needs.
Data has become a competitive advantage. The ability to derive actionable insights helps companies attract new customers, understand feedback, streamline operations, enhance employee productivity, and market more effectively. The constant flow of data from customers, products, employees, and operations can be analyzed to gain a comprehensive view of the organization. Behavioural and transactional data from interactions, such as web searches, social media updates, purchases, support calls, and surveys, provide insights for more intelligent engagements across marketing, sales, and service. These engagements generate additional data, creating a continuous digital feedback loop that refines the customer experience over time.
The impact of customer data in today's economy is undeniable. Organizations that leverage customer behaviour data to generate insights see a 40 percent higher revenue than their competitors. A unified data estate not only enhances understanding and engagement with customers but also drives better business decisions and strategies, such as determining which products or services to discontinue or selecting locations for new storefronts.
Creating a complete view of customers
Digitally transforming the customer experience not only boosts sales but also cultivates deeper, longer-lasting relationships. Over 90 percent of US consumers find personalized marketing appealing, making it crucial for organizations to leverage customer data to stay competitive, strengthen relationships, and build trust.
A recent McKinsey study highlights personalization as a powerful tool for increasing revenue, even for companies without regular direct customer interactions. The study found a strong correlation between the fastest-growing companies and those prioritizing personalization. Among companies with above-average revenue growth, 40 percent of their revenue was attributed to personalized marketing actions or tactics.
Companies like Netflix have mastered this approach, delivering exceptional experiences through a deep understanding of their customers. The streaming giant uses AI and machine learning to analyze viewing patterns and preferences, offering personalized recommendations for each user. As more data is collected, the system becomes smarter and more accurate. Over 75 percent of Netflix viewer activity stems from data-driven recommendations, resulting in an impressively low churn rate of 2.4 percent.
Leveraging data to drive acquisition, conversion, and retention
With comprehensive customer data, organizations gain deeper insights into buyer preferences and can anticipate customer needs. This enables proactive and intelligent engagement through the optimal channels and at the most opportune times.
Enhancing the entire customer journey through data-driven insights also leads to improved business outcomes, including enhanced acquisition rates, increased customer lifetime value, higher revenue, improved retention rates, and strengthened customer loyalty.
Enhance Acquisition
By understanding customers at a granular level, organizations can tailor content to resonate with individual customer segments, attracting qualified leads who are genuinely interested in their offerings. Leveraging customer data allows organizations to target the right customers with personalized offers, significantly increasing conversion rates, focusing on high-value customers, guiding strategic marketing investments, and building trust. Research indicates that companies employing individually targeted offerings experience revenue growth between 5 to 15 percent compared to those that do not.
Unlock New Revenue Opportunities
The objective now extends beyond single transactions to securing repeat purchases and increasing customer lifetime value. By augmenting internal customer data with third-party data and leveraging AI, organizations can make informed, targeted recommendations for products or services that customers are more likely to respond to. This approach can substantially drive additional revenue.
In fact, customers who receive personalized and relevant offers are 2.6 times more likely to make a purchase compared to those who do not receive personalized offers.
Strengthen Retention and Loyalty
Competition in today's market is intense, with abundant alternatives available for every product and service. Customers can easily switch to competitors if they feel undervalued. Given that acquiring a new customer costs five times more than retaining an existing one, leveraging customer data to deliver exceptional experiences and service is critical for enhancing retention. However, while 44 percent of businesses prioritize customer acquisition, only 18 percent focus on customer retention.
Considering that it costs five times more to attract a new customer than to retain an existing one, using customer data to deliver exceptional experiences is paramount to strengthening retention.
Empowering service employees with comprehensive, 360-degree customer profiles enables them to offer intelligent service, make personalized recommendations, and swiftly resolve issues. AI-powered analytics can predict customers likely to churn and initiate targeted offers to encourage them to stay.
Why is this still hard to do?
Business leaders are increasingly aware of the need to transform into customer-data-driven organizations swiftly. However, many companies still struggle to meet customer expectations for personalized experiences. A significant 72 percent of customers engage only with personalized messaging, and 61 percent have ceased business with companies due to inadequate personalization.
Despite the potential wealth of customer data being collected, simply gathering it does not guarantee accessibility or actionability. Data from various organizational channels—such as sales, marketing interactions, and customer service calls—is often fragmented across disparate systems, hindering efforts to consolidate it into a unified, reliable source.
Compounding this challenge is the difficulty in efficiently ingesting, processing, and interpreting large volumes of data at scale to respond quickly and effectively. Although cloud infrastructure and machine learning can facilitate these processes, ensuring data security and compliance remains crucial. Achieving a comprehensive customer view requires real-time synthesis of data enriched with machine learning insights, demanding a robust data infrastructure and specialized expertise, often at considerable cost.
How Microsoft can help you connect with customers
Understanding the customer journey through data is increasingly challenging as online identities become more fragmented. Marketers now rely on data enrichment through partnerships to reach new customers effectively. Organizations without a robust data strategy may face higher marketing and sales costs—potentially 10 to 20 percent more—to achieve comparable returns.
What sets Microsoft apart? You don't need to be a corporate giant to leverage customer data effectively. Microsoft offers solutions to connect with customers on your terms, predict customer intent for timely content delivery, and create cohesive experiences across all touch-points.
The new Microsoft Customer Experience Platform integrates transactional, behavioural, and demographic data, providing a holistic customer view that fuels personalized experiences. This shift from reactive to proactive marketing drives revenue growth and cultivates deeper customer relationships.
Microsoft Dynamics 365 Marketing empowers marketers to design and deliver personalized content through optimal channels and times. Powered by AI and user-friendly, it builds customer trust and fosters loyalty.
Additionally, Microsoft Dynamics 365 Customer Insights unifies B2C and B2B customer data, delivering real-time AI-powered insights into customer behaviour across digital and cross-channel interactions. Microsoft Dynamics Customer Voice complements this suite by enabling comprehensive multichannel feedback collection and analysis through personalized surveys.
Built on secure and compliant Microsoft Azure SaaS applications, the Microsoft Customer Experience Platform ensures organizations retain control over their data and benefit from generated insights. This comprehensive solution opens new possibilities in marketing and customer engagement, tailored to meet evolving business needs.