Importance of Customer Data and Market Research for Your E-commerce Business

In E-commerce, continuous improvement is vital for your business; success. Continuous improvement entails gathering customer data and doing market research to find out aspects of your business that require improvement.

For an E-commerce business, gathering customer data is vital for market research. There are many reasons for online businesses to get customer data and carry out market research. 

Data-driven e-commerce businesses have a significant competitive advantage over their competition. 

Types of Customer Data

There are four fundamental types of customer data. 

  1. Basic Data-This entails the customer’s personal information such as name, age, gender, location, contact information, etc.
  2. Behavioral Data-Behavioral data entails the customer’s experience with the product or service you offer. Examples of such data are free trial sign-ups, deactivations, product or service downgrades, etc.
  3. Interaction Data-Interaction data pinpoint the customer’s journey, including page views, social shares, downloads, inquiries, etc.
  4. Additional Data-Additional data pinpoint the customer’s opinion about your service or product. Additional data includes product reviews, online comments, ratings, etc.

Analyzing these data types helps businesses make data-driven decisions that improve their overall market share and, in turn, business revenues.

Importance of Customer Data and Market Research

In this article, we look at the importance of customer data and market research in e-commerce businesses.

1. Know Potential Clients

When starting an ecommerce business, you must know your clients. This is possible through gathering customer data and segmenting the customers into groups based on their personalities or attributes.

Knowing your clients will also give a clear depiction of whether your product or service will succeed in that market. Customer information will help you know whether your goods are needed and, if so, who needs them.

However, collecting customer data to understand their personalities can be risky without enough data security measures. Customer data leaks can dent your business’s image and ruin the trust customers have in you. To ensure this does not happen, you can embrace the use of an Australian web proxy.

The web proxy will offer data security features such as IP masking and removal of IP authorizations. The web proxy will also help you run your dedicated customer information server. An advantage of the web proxy is that it has an intuitive dashboard that you can use to monitor and control every aspect of its functioning.

2. Targeted Marketing

Marketing is vital for any e-commerce business. Marketing entails the process of getting your product or services known to clients and leads to an increase in your revenue. To increase the success rate of your marketing, you have to ensure that the marketing option you are using is targeted.

Targeted marketing entails designing your ads, or content marketing posts to reach a specific client demographic. If, for instance, you are selling men’s clothing, you can use customer data to modify your marketing post. The modification will help reach more men whose age qualifies as the wearers of the clothes you sell. 

Targeted marketing helps businesses pinpoint specific target demographics, rather than spending a lot of money on general advertising. Targeted marketing helps businesses save money that would have been spent on general advertising which yields lower results.

3. Reduce Business Risk

Importance of Customer Data and Market Research for Your E commerce Business1

A report by the US Bureau of Labor and Statistics revealed that 20% of businesses fail within the first two years. A keen look at the reasons why these businesses fail reveals that they took risks without doing enough market research.

Business decisions such as the introduction of new products or changing product packaging can ruin a business’ sales. With customer data and market research, a business can run a test with a small subsection of their clients to predict the overall success or failure rate of the move. 

Considering additional customer data can also offer good product improvement ideas directly from the clients. When a business takes in customers’ opinions and uses them to improve their products or services, customers appreciate the business. This increases overall customer satisfaction and loyalty.

4. Knowledge of Your Competition

The competitive nature of businesses looking to gain more customers is present in all markets. Before you get into a specific market, it is vital to know your competition. This is done by running well-detailed market research.

Knowing your competition reveals your business’s strongholds or weak points when compared to your competition. Business strongholds can comprise factors such as lower pricing, better product quality, etc. These same factors can also be your business’s weak points.

A mistake made by most businesses is gaining your competition’s knowledge and not using it to improve your business. If, for instance, your competitors offer their products at a lower price without compromising on product or service quality, you should use this to better your business. Look into your business processes, such as manufacturing and distribution, that you can optimize to reduce your product or service charge without affecting your business revenues.

5. Selling Strategy

Customer data is important for businesses to know the best ways and platforms to use for sales. Using customer data to know the best sales strategy is beneficial, especially to new businesses or those entering a new market.

A business can use customer data such as age to know the platforms the demographic will use. If a business is selling products targeted at teenagers, it should adopt the use of e-commerce integrations on social media applications such as Instagram

The business sales strategy can also help you stay up to date with the best sales strategy for your business. By continuously analyzing customer data, you can note changes in their personalities and evolve your sales strategy to adapt to these changes.


As a business owner, it is easy to get tempted into thinking that you know what is best for your customers. This is often untrue in most cases. Take advantage of customer data and market research to know what your clients need and how they need it. This will help increase your business’ sales. Your business will also benefit from the organic marketing offered by satisfied clients through client referrals. 

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