Tips and Tricks · 9 min read

How to use data analytics to improve customer experience

The Fullstory Education Team
Posted September 23, 2023
How to use data analytics to improve customer experience

What is customer experience analytics?

Customer experience analytics is the process of studying and understanding how customers interact with a business at different stages. It uses advanced technologies like machine learning and data mining to collect and analyze customer data, like their actions, preferences, and feedback.

By uncovering hidden patterns and predicting future behaviors, businesses can personalize the customer experience and improve overall satisfaction.

What data does customer analytics use?

Customer experience analytics involves an extensive array of data types to provide a comprehensive view of customer interactions, behaviors, and satisfaction. This data is often collected from various channels and touchpoints within a business, such as websites, mobile apps, social media platforms, customer service interactions, and in-store visits.

Here's a closer look at the data typically used in customer experience analytics:

Direct feedback 

Types of direct feedback

This type of data is solicited directly from the customers. It includes responses to surveys, reviews, complaints, suggestions, and other forms of feedback. Key metrics often include:

  • Net Promoter Score (NPS): This measures customers' willingness to recommend a company's products or services to others.

  • Customer Satisfaction (CSAT): CSAT assesses the degree to which a product or service has met or exceeded customer expectations.

  • Customer Effort Score (CES): This gauges the ease with which customers can get their issues resolved or needs met.

  • Voice of Customer (VOC): VOC programs aim to capture customers' expectations, preferences, and dislikes.

  • Behavioral data: Behavioral data refers to information about how customers interact and behave across different touchpoints. This data includes website browsing history, purchase history, social media engagement, and customer service interactions.

  • Transactional data: Transactional data refers to information regarding customers' purchases and interactions with a company. It includes details like the frequency of purchases, timing, the amount spent, and the specific products or services bought.

  • Demographic data: This type of data includes basic information about the customer, such as age, gender, location, occupation, and income level.

  • Psychographic data: This involves more subjective characteristics of customers, such as their interests, attitudes, values, lifestyle, and personality traits.

These data types come together to form a holistic view of the customer, which is critical for analyzing and improving the overall customer experience.

What is the role of analytics in customer experience?

Analytics plays a critical role in shaping the customer experience. It empowers businesses with actionable insights to make more informed decisions and more effective strategic actions, enhancing every aspect of the customer journey. Proper analytics can help facilitate several other improvements:

  1. Understanding customer behavior — Analytics helps businesses understand how customers interact with their products, services, or platforms, enabling them to identify patterns and trends.

  2. Segmenting customers — It aids in segmenting customers into distinct groups based on their behaviors, preferences, or demographics, facilitating targeted and personalized marketing.

  3. Predicting customer behavior — Analytics allows businesses to anticipate customer behavior and preferences using predictive models, aiding in proactive decision-making.

  4. Optimizing customer experience — By identifying areas of friction in the customer journey, analytics assists businesses in streamlining their processes, improving customer satisfaction and loyalty.

  5. Generating insights for product development — The insights from analytics can inform product development, helping businesses to innovate in ways that meet customer needs and expectations.

What it comes down to is that the role of analytics in the customer experience is truly transformative. It has the tremendous power to turn raw data into collated, organized, and valuable insights for enhancing customer satisfaction, fostering engagement, and driving loyalty. 

Why is customer experience analytics important?

Customer experience analytics is essential for businesses that want to prioritize their customers. It helps companies understand their customers' journeys, allowing them to customize experiences to meet individual preferences. By analyzing customer behavior, businesses can personalize and target their offerings better.

Plus, customer experience analytics helps identify pain points in the customer journey. This enables businesses to proactively resolve issues, leading to higher customer satisfaction and less customer churn. Predictive analytics also plays a role by forecasting future customer behavior, assisting in strategic planning.

Overall, customer experience analytics is a crucial factor in driving customer loyalty, boosting conversion rates, and fostering business growth.

How do you use customer experience analytics?

Implementing customer experience analytics in your business strategy involves a structured approach. When strategically applied, it can not only enhance customer satisfaction but drive increased business success. Take a look.

Personalize experiences

Use analytics to understand individual customer preferences, behavior, and past interactions. This knowledge allows you to tailor experiences to each customer, improving engagement and satisfaction.

Reduce customer churn

Analytics can help identify signals of customer dissatisfaction or disengagement. By catching these early, you can take proactive steps to retain these customers, reducing churn.

Increase repurchase rates

By analyzing purchase history and customer behavior, you can identify opportunities to upsell or cross-sell, or target customers with offers relevant to their preferences, thereby boosting repurchase rates.

Ways data can be used to improve CX

There are countless ways in which the data gathered from customers can be used to boost the overall customer experience. Here are four of the biggest ways businesses can enhance their customers’ experience using data analytics. 

Track customer behavior

Analytics can monitor how customers interact with your business across multiple touchpoints. This can provide insights into what is working well and what needs improvement, allowing you to optimize the customer journey.

Design a satisfactory data-driven customer experience

Data allows you to build a more customer-focused design by understanding what customers truly value. By identifying and addressing pain points, you can improve customer satisfaction.

Create a loyal customer base

Personalization driven by accurate customer analytics can cultivate a deeper connection with your customers. Personalized experiences can increase customer satisfaction and, in turn, customer loyalty.

Take advantage of predictive analytics

Predictive analytics can forecast future customer behaviors and trends. This enables you to proactively adjust your strategies to meet evolving customer needs and preferences.

How to perform a customer data analysis

There are six basic steps to performing a customer data analysis, which are repeated in iterations to create more valuable insights:

1. Define your objectives

The first step is to outline what you hope to achieve with your data analysis. Are you trying to increase customer retention, improve the customer journey, or predict future customer behavior? These objectives will influence how your analysis will progress.

2. Collect customer data

Then you’ll need to gather the relevant data across various customer touchpoints like social media, customer feedback, transaction history, and website interactions. Ensure you comply with all relevant data privacy regulations.

3. Organize the data

The data you collect will need to be organized and collated so that it can begin to make sense. This helps structure the data into a mat that makes it easy to analyze. This may involve data cleaning and data transformation processes.

4. Analyze customer data

For the actual analysis, you’ll need to use statistical methods, predictive modeling, or even advanced AI algorithms to analyze the data. The goal is to identify patterns, trends, and insights that can inform your business strategy.

5. Create a data-driven strategy

Now, based on the insights you’ve gained from the data analysis, develop strategies to enhance customer experiences, such as personalized marketing campaigns, improved customer service, or better product recommendations.

6. Iterate

Finally, comes the iteration. You’ll need to regularly repeat this process to ensure your strategies stay relevant and effective as customer behaviors and overall market trends continue to evolve.

Customer data analytics tools

Many CX applications are available that will perform some degree of data analytics effectively. We’ve chosen a few leaders to highlight here so that you can make your customer experience improvement quest as quick and effective as possible.

FullStory logo over a blue background

Fullstory

Fullstory is a powerful behavioral data platform that helps businesses analyze, measure, and improve their online customer experience.

Features

Some of Fullstory's most-used and powerful features include the ability to replay a session, interactive heatmaps, conversion funnels and funnel analysis, and advanced search capabilities. Fullstory even has a “rage click” detection feature that helps bring attention to areas of the customer experience that cause frustration. 

Pros of Fullstory

  • Fullstory's high-fidelity session replay gives a true view of what your customers experience on your site.

  • Robust segmentation capabilities allow for targeted analysis.

  • It is user-friendly and provides excellent data visualization.

Cons of Fullstory

  • There can be a learning curve when getting acquainted with all of Fullstory's features.

  • While session replays are insightful, they can take time time to analyze, even with the ability to skip idle time.

Google Analytics logo over a blue background

Google Analytics

Google Analytics is a comprehensive web analytics tool that tracks and reports website traffic. It provides valuable insights into user behavior, such as which pages are most popular, where visitors are coming from, and how long they are staying on the site. Google Analytics is widely regarded as the “gold standard” in free analytics, and it is used by businesses of all sizes to track their website performance.

Features

Google Analytics has analytics, audience segmentation, acquisition reports, behavior reports, and conversion tracking. It also allows for integration with other Google products.

LogRocket logo

LogRocket

LogRocket is a frontend application monitoring solution that allows developers to troubleshoot issues in their web applications by recording user interactions and renderings of every page. This allows developers to see what users are doing and how their application is behaving in real time. LogRocket also provides error reporting so developers can quickly identify and fix issues.

Features

LogRocket provides session replay, performance monitoring, and error reports. It is beneficial for debugging front-end issues.

Mixpanel logo over a purple background

Mixpanel

Mixpanel is a user analytics platform that provides insights into user interactions with web and mobile applications. It has event tracking, helping business to understand user behavior.

Features

Mixpanel offers event tracking, funnel analysis, user segmentation, and retention analysis. However, compared to some other platforms like Fullstory, it may lack in-depth knowledge when it comes to providing a holistic understanding of the customer journey.

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The Fullstory Education TeamExperts

About the author

Our team of experts is committed to introducing people to important topics surrounding analytics, digital experience intelligence, product development, and more.

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