Kelly Liyakasa (@KellyLiyakasa) reports that a common theme at last summer’s eTail East conference in Philadelphia “was delivering personalized offers at scale.” [“Why Data Is the Most Valuable Player in Omnichannel Retail Marketing,” AdExchanger.com, 14 August 2014] She adds, “Retailers are increasingly looking for ways to connect first-party customer data with online strategies. … Another pain point for retailers is understanding the path to conversion.” Elizabeth Dillon, Digital Marketing NOW’s Director of Client Strategy, believes that the most important targeted advertising is marketing aimed at high value customers. “Do you know how much your customers are worth?” she asks. “If not, you could be throwing away significant money on ineffective marketing initiatives.” [“Rethink the Value of Each Customer for Efficient Growth,” Women on Business, 18 March 2013] She continues:
“To maximize your marketing and, ultimately, your revenue, you must understand your customer’s lifetime value (CLV). The traditional calculation for CLV is simple: it’s the lifetime revenue you expect to generate from a customer minus the acquisition cost of that customer. Many businesses conduct their marketing without calculating CLV. Without understanding CLV or analyzing the ROI of customer acquisition, you’re essentially operating in a marketing vacuum. This leaves your probability of success up to chance. Looking only at the immediate return on campaign spends is shortsighted, may attract the wrong types of customers and could distract you from highly profitable customer segments that require a longer purchase cycle. … Most companies that include CLV in their ROI calculations include only the expected transaction value. However, to truly comprehend how CLV-based marketing decisions can transform your business, consider the following additional benefits from a CLV-focused approach:
- Increased Referrals
- Positive Social Media Sharing
- Free PR”
Those three bullet points are often linked. An active “influencer” may be just as important to your business as a repeat customer. Garrett Mehrguth (@gmehrguth) writes, “Marketing is tough. Harnessing the power of word of mouth is even harder. If you can empower your customer then you can drive more sales to your business by marketing through word of mouth.” [“Marketing Through Word of Mouth,” Directive Consulting, 1 June 2014] Mehrguth believes that you can get influencers to talk about your product or service by making them feel special. “People love being remarkable,” he writes. “Let them be remarkable by telling others about your product or service.” To learn more about the importance of pursuing influential people, read my post entitled “Do You Know Who Your ‘Influentials’ Are?” Dillon notes:
“These days, we all hope that our customers will like, share and recommend our products, services and content. … Customer-generated PR is an incredible, effective and free way to raise awareness and excitement among prospects. Most companies don’t include the invaluable PR they’re receiving into their CLV calculations. If customers are connecting you with viable prospects – through their blogs, reviews and online comments – they should be viewed as loyal customers with high CLVs. These customers typically become invaluable sources of referrals, both directly (through word-of-mouth recommendations) and indirectly (as people come to you after reading their positive online mentions.) According to BrightLocal’s Local Consumer Review Survey (2012), 72% of consumers trust online reviews just as much as personal recommendations. These online endorsements can add up to a lot of trust – and increased business – by new customers.”
By now it should be clear that you need the right kind of data to help you determine who constitutes your most valuable customers and influencers. Matt Spiegel (@mspiegel) told eTail East conference participants, “If you aren’t building a story and a history on your customers, how and what they buy, and you’re not using that in outbound marketing, you will be at a disadvantage.” Stephanie Miller, Vice President of member relations and chief listening officer at the Direct Marketing Association, asserts, “Data is like air for marketers: What marketing done today, whether B2C or B2B, is not data-driven? Data has always been a part of marketing, but now that data is big, getting bigger, and more complex (and expensive) to manage, and it’s starting to get the attention of marketing leadership.” [“Data-Driven Marketing Is More Important Than Ever,” Direct Marketing News, 26 March 2013] And Jeff Zwilling, co-founder and CEO of Convertro, adds, “Many in the industry still believe in aggregate data and base decisions on concepts like the advertising outlet that has the biggest audience or the highest click-through rate is the best bang for every company’s ad buck. This is a profit-killing fallacy, and when marketers learn to embrace big data and true granular analysis over gut feelings, they’ll stop falling for it. Armed with big data and the tools capable of pulling insights and recommendations out of it, marketers can be more strategic with their budgets and therefore generate more revenue.” [“Why big data leads to more strategic marketing,” iMedia Connection, 5 February 2013]
Shashi Upadhyay (@shashiSF), founder and CEO of Lattice Engines, notes there is a downside to big data. He writes, “With the volume of data doubling every two years, according to IDC, it is a blessing and a curse in today’s competitive selling environment. You might expect that sales reps have it better than ever with all the information out there of their prospects. The reality, however, is that they are completely overwhelmed.” [“Why Big Data is a Big Deal for Sales,” BusinessNewsDaily, 6 February 2013] As Zwilling noted, there are now tools available that can help marketers embrace data; but, they could be hard to find. Unfortunately, most computing platforms today perform computational analysis on large data sets and provide statistical results; but they don’t address the “how” or “why” of these results. They provide large amounts of statistics to the user instead of simply answering their question directly. Most systems provide neither access to nor results from analyses in plain language. My company, Enterra Solutions®, does provide direct answers in understandable language. Enterra uses natural language so that everyone in an organization can easily access the system and understand the results. Enterra’s Cognitive Reasoning Platform™ (CRP) is unique in that it combines mathematical computation and symbolic reasoning in a single platform. This enables the capability to find non-obvious insights and provide actionable recommendations within the rapidly decreasing decision cycle faced by most business executives. The CRP could also be used to help companies discover their most valuable customers. Upadhyay asserts:
“High-powered analytics allow reps to extract insights from this massive amount of data where perhaps only 0.01 percent of it is actually useful. It not only helps reps find a way to manage information, but also to gain meaning or insight from it so they can predict the right customer to sell to at the right time with the right message. It comes down to the old sales saying about never selling ice to an Eskimo in winter. With Big Data, sales reps might actually show up selling something useful — like a heater.”
Dillon concludes, “By RETHINKING the true value of your customer – looking beyond the dollar amount of their direct transactions with you – you can better identify the customers that are truly fueling your growth. From this, you can create more efficient, effective marketing campaigns to grow your company exponentially.” The larger the data sets that must be analyzed and the more variables that must be included to identify high value targets the more important it is to utilize technology that can handle that complexity in a timely and effective manner.
