How to create data-driven customer experiences

Leverage data across the customer journey to drive loyalty and engagement

Imagine you are a large clothing retailer, and your busiest stores are in a region experiencing an unusually warm autumn. Your customers are complaining on social media that their favorite lightweight items are out of stock. Sales are down 10% as racks of heavy sweaters and coats sit unsold. Meanwhile, your biggest competitor is reporting sales are up 14% in the same time period. What gives?

These are actual numbers from the fall of 2023 European performance of H&M and rival Zara (parent company Inditex). The big difference between these fashion brands? Zara monitors sales data in real-time, paired with a vertically-integrated supply chain to produce clothing in as little as two weeks. Zara's just-in-time production model means customers always find more relevant styles.

If there’s one thing that you should make a priority in today’s business climate, it’s delivering a superior customer experience (CX). Your customers have more options than ever, and, in many cases, your product or service may be similar in quality or effectiveness when compared to your competitors.

In order to stand out, CX is generally the driving factor of success. A Qualtrics XM Institute study found that 51% of consumers reduce or stop paying a company after a poor customer experience. Customer data that reveals which touchpoints are causing friction is critical for experience leaders to understand. While collecting data is easy enough, organizations struggle to effectively organize and leverage data in real-time.

Whether you're looking to build data maturity to deploy initiatives such as artificial intelligence (AI) transformation, personalization, or overcoming data silos, here are some data-driven approaches you can take to deliver exceptional experiences for your customers.

Harness first-party data for segmentation

Getting a handle on your CX data is a way to ensure that your marketing decisions are based in information rather than gut feeling. There are two main types of customer data:

First-party data is data a company directly collects from its customers and audience through its own channels. This includes data from website analytics, purchase history, CRM systems, email subscriptions, social media interactions, and more. The company that collects the data owns it and has full control over how it’s used, within the limits of data privacy regulations.

Earned data is data a company gathers from external sources where customers or the public are discussing, engaging with, or sharing about the brand voluntarily. This data isn’t directly collected by the brand but is instead “earned” through mentions, reviews, and interactions that take place on third-party platforms. The data resides on the platforms where it’s posted, so the company doesn’t own it outright. Instead, they access it through monitoring tools, sentiment analysis, or social listening platforms.

Customer segmentation tools like Hubspot and Segment help businesses collate CX data from multiple sources and automate the segmentation of customer cohorts. By identifying which audiences share characteristics that align with your offerings, you can optimize journeys with more relevant tactics that best support growth. For example, if you know a majority of your buyers are commuters that live in urban areas, you may want to advertise on billboards and in subways.

Listen to the Voice of the Customer (VoC)

We all know the importance of listening to customer feedback, and VoC is a methodology designed to do just that. What this entails is collecting, collating, and organizing every piece of feedback given about your brand or product. This can range from reviews to support requests to social media feedback.

With VoC insights organized clearly, you can use the data to see how your brand expectations are performing next to reality. It provides a direct look into what customers value, the pain points they encounter, and the improvements they wish to see. There are a number of leading platforms such as Qualtrics and Pisano that compile VOC data and trigger recommended actions based on certain patterns to proactively address issues before they escalate.

Gather web behavior data such as heatmaps

Even in the age of AI-powered search results, the quality of your organization's website is still an essential pillar of your overall CX. Customers look to websites for authoritative information and a cohesive brand experience that reflects a company’s identity.

Heatmap tools such as Mouseflow and Hotjar visually represent where visitors click, scroll, or hover on a webpage, revealing their real-time interactions with a brand's digital touchpoints. Web behavioral data complements VoC feedback by providing quantitative insights that validate or challenge qualitative feedback.

By installing these programs, you can see which sections of your website get the most clicks and use. For example, a lack of conversions on one of your CTA buttons could mean that it's poorly placed or the content isn't resonating. You can also combine heatmap data with traffic data such as Google Analytics results to provide deeper insights.

Analyze company sales and financial data

One of the simplest ways to understand what customers want is to follow the money. By analyzing which products or services drive the most revenue, marketers can understand what resonates with customers and build experiences around these strengths. For instance, if one part of your product suite is consistently popular, marketers can enhance CX by creating tailored promotions, loyalty programs, or making content about the offering more prominent and easily accessible.

On the flip side, sales data can reveal which products or services lag behind. By diving into customer feedback or analyzing purchase trends, marketers can uncover potential barriers and objections (e.g., pricing, usability, lack of awareness) and make targeted adjustments. This may involve optimizing product features, messaging, or bundling to better meet customer expectations.

Consolidate customer data for a 360-degree view

Collecting CX data is just one part of the equation — marketers today must consolidate data to paint a holistic view of the customer journey. Enterprise organizations rely on comprehensive cloud solutions such as ContentSquare and Adobe Customer Journey Analytics to securely protect CX data. These modern platforms deploy a range of AI tools to optimize customer interactions. High-level dashboards allow teams to access meaningful insights faster and unify their efforts around the needs of the customer. What's more, many of these platforms now offer AI copilots. Simply ask a question and insights are surfaced instantly.

Delivering data-driven customer experiences starts with understanding customer needs, and that takes more than a tech stack. This is why it’s important to work with a digital customer experience consultancy like Modus. Together, we help companies turn insights into actionable strategies to take their digital CX to the next level.