The notion of “Customer Lifetime Value” is a concept and calculation that helps CMOs determine the dollar value associated with the long-term relationship of any customer, determining just how much that customer relationship is worth. Used by marketing managers and C-level executives, customer lifetime value is a prediction of the net profit associated with the entire relationship with a customer. The notion is an important one because it encourages firms to shift their focus from customer acquisition to the long-term health of their customer relationships.
Why Should CMOs Care?
More and more CMOs are retooling their efforts to more ardently optimize customer lifetime value, but it can be an uphill battle. According to Ernst & Young, the world’s third largest professional advisory firm, just 25 percent of U.S. consumers consider brand loyalty as something that impacts their buying behavior. Research from Nielsen, the global marketing research firm, found that 78 percent of consumers are not loyal to any particular brand. As a result, it is becoming more and more important for businesses to communicate with their customers in a more orchestrated and personalized way in order to build brand loyalty and customer lifetime value.
With so many communication channels and marketing tools available it can be difficult to know which strategies and tactics to adopt, and easy to slip back into more comfortable and traditional approaches to marketing and customer communications. But a new report from Forrester Research argues that marketing campaigns must be reinvented. Instead of relying on big-gun campaigns, leading brands are adopting a marketing orchestration approach across multiple channels with campaigns and communications that get results in new and more profitable ways.
A Post-Campaign Era
Forrester calls marketing orchestration “the appropriate approach for the Post-Campaign Era” and many iconic brands are leading the way. Companies like Allstate, FedEx, OfficeMax, and many others are moving beyond single-channel marketing with the goal to provide every consumer with a highly personalized experience that maps to each individual’s journey with the company from discovery to purchase to re-purchase. Engaging customers with relevant messaging and meaningful content is not only what customers expect, it’s what they demand, and a requirement to compete in today’s marketplace.
Marketers can no longer afford to retain a campaign-centric instead of a customer-centric mindset. The benefit of marketing orchestration is that it focuses not on delivering standalone campaigns, but instead on optimizing a set of related cross-channel interactions that, when added together, make up an individualized customer experience. Leading brands are adopting this approach and orchestrating marketing across all touch points – social, mobile, online, in print, in advertising – since customers are no longer interacting in a sequential or linear way. It’s multi-channel, multi-device and much more interactive than ever before.
Multi-Channel and Mobile
Most consumers today use at least three devices, one of which is mobile. It’s hard to deny that we live in an age of mobile computing: 58 percent of American adults use a smartphone, over 40 percent own a tablet, and mobile computing grew by over 80 percent just last year alone. Indeed, there are more smartphones out there in the world than there are personal computers. As a result, Forrester predicts that already half of all online adults on the planet are “always-addressable,” meaning they own and use at least three web-connected devices, go online multiple times per day, and go online from multiple physical locations. These numbers will only increase over the next few years and for marketers the message is clear: Orchestrating your message across these technical and social channels is essential in order to compete.
How can you better orchestrate your message across the customer lifecycle? Here are three tactics and best practices for maximum results.
1. Establish a Single Identity – Marketing orchestration can deliver a superior and more individualized customer experience while returning higher revenue, increased loyalty and greater internal efficiency to the marketer. But a key component is establishing a single identity for customers that spans across interactions. This means using cookies, sign-ons, email addresses, mobile IDs and other techniques, and then merging these multiple instances into one identity. A single, cloud-based customer communication tool helps make message orchestration easier by providing a single platform to manage all of your customer communications no matter what form they take. Online, mobile, social, print – each are a critical component of the entire marketing ecosystem.
2. Leverage Customer-Facing Communications – Marketers must work quickly to evolve from single-channel marketing campaigns with customers treated as groups, to single-channel campaign automation based on customer events and actions. One way to do that is through the many customer-facing communications that you already send. Renewals, acknowledgements, statements, and a host of other every day documents are on the front line of how companies retain customers and build relationships. Customer-facing communications are opened and read by 90 percent of recipients. What other form of marketing communication can claim that kind of customer open rate?
3. Integrate and Orchestrate – Today’s marketing landscape is multi-channel and digitally-driven, so it is important to manage all interactions from all channels, including both internal and third-party sources. Campaign management across multiple channels is one of the most difficult areas to execute for marketers and brand managers. Multiple constituents from creative, agency, copyright to internal marketing staff all impact time to market. It is important to integrate these resources and activities into a cohesive campaign management approach. This enables more real-time and adaptive marketing platforms and solutions that work as a powerful market differentiator.
It is easy to conceptualize these principles, but the danger is falling back on traditional campaign approaches that simply amp up the volume and not customer lifetime value. Rather than increase the level of noise by increasing investments in mass and untargeted media, marketing orchestration keeps focused on a total messaging strategy designed for each customer. As a result, companies of all sizes and types find value by reevaluating and reworking their existing communication processes with a different view of customer-facing communications and message orchestration across the customer lifecycle.