Dennis Hecht, Chief Intelligence Officer, Rooster Strategic Solutions
Recently I’ve seen a new AT&T television campaign that promises something for everybody. “Everyone gets our best deal on all smart phones,” says Lily, the perky AT&T spokesperson. “New customers get our best deals. Existing customers, they also get our best deals. Everyone gets the deals.”
Is this a good idea? Without knowing the specific goals of their campaign it’s hard to judge. But as marketers, we know that retaining a customer is both cheaper and easier than finding a new one, so why would we treat them all the same? In other words, why are we content with running what are essentially awareness campaigns, or targeting a blanket demographic, such as 500-plus-acre growers, and hoping for the best?
There’s a better way. In the first two installments of this series, we discussed the importance of creating a Customer Data Platform (CDP) and how to begin turning this data into shoppers. Now you can use your CDP to better understand where your customers are in their purchase lifecycles and how you should interact with them as they move further down the funnel. And, contrary to where most marketers tend to focus, it pays to start at the bottom of the funnel than at the top.
Are they customers? When it’s time to segment customers, this is the first question you should ask. It’s also one of the easiest questions to answer, although I’m amazed at how many companies create marketing plans without looking at transaction data first. If it’s easier to retain customers than grow new ones – and it is – shouldn’t we know which of the names in our CDP have purchased something from us?
Are they buying one product or many? This is another easy question to answer and can lead to upsell and cross-sell opportunities that ensure you’re capturing as much share of wallet as you should. I remember diving into an ag company’s transaction data and discovering that 75 percent of their customers bought one product, despite the company offering more than 200 SKUs. This led them to launch a cross-sell campaign to encourage each of their current customers to purchase one additional product. That’s easy market share growth!
How are they engaging? Specifically, what are the activities they took that led them to purchase your product or service? Different people take different journeys. Some people engage 3 times before they purchase, some might need 7 touches. By running multiple campaigns and reflecting between each to see who converts and when, you can begin to identify correlations of different engagement activities tied to purchases. In effect, you can create a new, more actionable marketing funnel that shows how like groups of people engage and what activities they took before they purchased. This obviously requires more partnership data layers and diligence. You can’t simply run a single campaign and start making conclusions. It also requires a deeper and more strategic dive into campaign analytics than most marketers undertake. Pro trip: Only work with partners who are willing to share their data.
Do you know CAC and LTV? Customer Acquisition Cost (CAC) and Lifetime Value (LTV) aren’t new concepts. CAC is figured by dividing the total spent in a campaign by the number of new customers that campaign generated; LTV is a predictive measure of how long a customer will stay with your company and how much they’ll spend at net present value. However, few marketers think about these concepts together. For instance, if you need to spend $1000 to acquire a new customer, should you? It depends. If the Lifetime Value of that customer is $1500, maybe not; if it’s $150,000, of course. Together, CAC and LTV can help you identify a sweet spot of customers who provide the highest return on your marketing investment. With all due respect to Lily and the gang at AT+T, these are the customers who should be getting your best deals.
It sounds easy, but it isn’t always easy. For starters, ag organizations are often listed under different names and entities, making it difficult to get a true picture of an individual’s purchases, CAC, and LTV. And the marketing departments in many ag companies are running so lean it’s hard to find the time to deploy the type and number of campaigns necessary to begin segmenting customers properly or to dive as deeply into campaign metrics as required to make educated assumptions about their customers. In my experience, however, technology is rarely the limiting factor; there are any number of tools and processes that can help you identify those customers who are most likely to do business with you, as well as the proper way to interact with them successfully.
If you’re interested in using your data to better acquire and grow customers in different levels of the sales funnel, I’d love to start a conversation. Otherwise, look here for the next article that discusses how the science of data can help you predict customer behaviors.