Marketers collect data for a variety of variables, attempting to understand their customers. Data about revenue, industry, wallet, interests, adoption, the experience they’re having, the engagement level, and their prospects for growth. Together, variables in these categories lead to one simple, and rather obvious, conclusion; customers are not equal. This presents challenges, of course. To help provide better guidance around that confounding reality you’d think the metric, Customer Lifetime Value (LTV), would be a strategy that marketers might look to employ. After all, LTV is intended as a means to allow for more-accurate prioritization of customers, based on their potential value to the vendor that they have over their lifetime. Knowing this critical piece of information provides the opportunity for the vendor to deliver precise and appropriate levels of attention that match a customer’s potential contributions to the vendor’s profit.
Hear Out Uncle Actuary
Sadly, though, LTV isn’t very sexy. LTV is the guest at a party who everyone bores of quickly. It is the actuary uncle who corners you at a family wedding with earnest, logical arguments for why you need to think differently about spending and saving. Buy value, not sizzle, he says. Invest in quality and for the long-term, he intones, because you need to be serious about shaping the kind of life you want to have when you’re old. You nod in agreement but deep down you’re thinking it’s too much work. Your eyes wander the hall. Where’s the bar? You know he’s right but the subject makes your brain hurt.
Know Yourself & Your Customer
Marketers, it is hard, but listening to Uncle Actuary is also a smart business move. Knowing where you, as a company, want to be in two or five years (let alone thirty or forty) is important in understanding how to make the most intelligent decisions of how to spend today’s limited time and budget. Knowing where you want to be as a business in the future means you need to develop a strategy for keeping and growing your highest value customers of today. Knowing their value over time will assist you in making the right decisions about how to keep your best customers, especially the ones who might eventually become authentic advocates for your company.
Utilize Customer Behavioral Insights
This recent brief from Bain and Company delves into the business case for why marketers need to focus on LTV but I want to call out only one of their tactics:
“Knowing someone’s shopping history, location, media preferences and at least some of [their] expressed views would be enough information to, for instance, push marketing messages to certain websites on [their] cellphone during [their] morning train commute. If the customer follows influential reviewers, those reviewers could merit a pitch by the company.”
They argue that using informed hypotheses, based on first knowing who your customers are and knowing how much they are worth to you, and then learning how best to connect with them, becomes critical to identifying which marketing levers to pull for each — OMC solutions, of course, can help you with this.
Okay, I sense there is still concern out there. Still hard, right? Because you don’t have control over all the data that your company collects about the customer. If you work in most large enterprise companies that statement is almost certainly true but that’s why it’s important you read this piece on collaboration from MIT Sloan Management Review. They state that “Digitization demands a focus on cooperation and collaboration that is unprecedented for most enterprises.”
Digitize Around the Customer
I’ll return to a theme I touched on in previous posts. There is no choice. If companies are to survive they must digitize. To digitize successfully around the customer (attaining, making them successful, and growing them) means knowing them throughout their life with your company, regardless of which team does the touching. A customer’s lifetime with a company can be measured and that measurement can be used to your advantage, as a marketer, but only if you collaborate with other teams to get at the right data that completes the picture of that life.
Whether you decide on implementing a LTV or look elsewhere for data collection, you’ll need to be prepared to sell it! Look to these Eight Questions to Ask as You Introduce a Data Management Strategy to maximize your marketing!
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