The “holy grail” for retailers may well be the possibility of becoming truly customer-centric in every facet of their business — from customer service to marketing to supply chain. For marketing teams in particular, being able to communicate the right message to the right customer at the right time is critical.
Customer-centric marketing allows you to put customers (not events, channels or categories) at the center of all analysis and decision making, allowing the marketer to understand customers’ different behaviors and preferences.
Nowadays, thanks to advances in technology and tools, it’s possible to communicate with each customer as an individual.
However, becoming a customer-centric marketing organization is a complex process that takes buy-in on many levels. Here are five steps for getting started.
1. Start Organizing Your Data Around Customers
One of the great advances of e-commerce marketing (and something that has long proved elusive in the offline marketing world) is the ability to collect and store data on individual customers over time.
The first step on the road to becoming a customer-centric marketing organization is to unlock the power of this customer-level data. This means moving past aggregate metrics on a product, channel or event level (for example, what were sales for a particular SKU? Or, how many onsite conversions did we have last week?), and making sure you can access data on individual customers — and their behavior over time.
2. Put The Right KPIs In Place To Identify Opportunities
How do you make sense of customer-level data? It’s easy to know what to look for with aggregate metrics: for example, when overall sales are trending up, or when click-through rates are declining.
Long-term success for customer-centric marketing organizations comes down to two fundamental questions:
How valuable are the new customers we’re acquiring?
How effectively are we maximizing the value of every customer relationship?
Tools like cohort analysis can help surface long-term trends in customer acquisition and retention. For example, are the customers that you acquired in holiday 2013 sticking around longer and making more repeat purchases than those acquired in holiday 2012?
Additionally, truly customer-centric marketing teams integrate a variety of key performance indicators (KPIs) into day-to-day life to evaluate the effectiveness of marketing strategies and tactics. These include crucial metrics like customer lifetime value (CLV) and Customer Equity, as well as retention-specific metrics like the Early Repeat Rate and Leaky Bucket Ratio. You can read more about those customer-centric marketing KPIs here.
3. Seek Out Customer-Centric Insights
KPIs can help an organization understand the impact of its actions on customer behavior. But in order to bring these opportunities to life, the organization needs to dig a layer deeper — to uncover insights about customer segments.
For example, let’s say that a marketing team notices their CLV is trending down month-over-month. Using one of their KPIs (CLV by acquisition channel), they realize that this change is being driven by a change in acquisition strategy: they’ve been acquiring a greater percent of customers from a channel that tends to attract “one-and-done” customers who don’t stick around long after their first purchase.
The opportunity here is to convert more of these customers into repeat shoppers. But in order to take action, what types of insights might the team want to seek out?
Based on the behavior of customers who do repeat, what’s the ideal time to reach out with a follow-up message to drive deeper brand engagement?
For those customers who do repeat, what are the categories or brands that they gravitate toward?
How price sensitive is this segment? Are they more likely to respond to a discount message?
These are the types of customer-centric insights that can help guide a testing strategy designed to cultivate deeper relationships with this segment of customers, and ultimately boost CLV.
4. Experiment & Iterate
Customer-centric marketing organizations adopt as their motto a variant on the sales battle cry made famous by Glengarry Glen Ross: “Always be testing.”
Why testing? Experimentation is the only way to validate the effectiveness of any marketing strategy — and a prerequisite for any data-driven organization. Additionally, a well-designed test can uncover additional areas of opportunity.
Experiments emerge from the opportunities and customer-centric insights highlighted in the steps above. In the example above, the marketing team might want to test the impact of an email sequence highlighting the categories this segment tends to respond to, with an escalating discount offer.
The team would want to run a controlled experiment, evaluating the impact on purchase behavior of this email sequence against a holdout group that did not receive the emails. Based on the results of this test, the idea would either be pronounced a success, or the team would want to go back to the drawing board and evaluate alternative tactics.
It’s important to recognize that unsuccessful experiments often reveal as much as successes. Learning that an escalating discount strategy didn’t actually generate incremental purchases for the customer segment in question, for example, would help the team pivot away from a strategy that spent promotional dollars unnecessarily.
5. Automate
Automation is the step that transforms marketing actions from a one-time win to an ongoing source of value. Once a team has identified successes — tactics that help them acquire more high-value customers, or maximize the value of a customer’s relationship — identifying the right automation tools is crucial.
These tools vary by channel. For email marketing, the team would want a system that automatically segmented customers and triggered emails to different segments at the appropriate point in their lifecycle. For acquisition, the team would want to put a system in place that helped guide monthly or quarterly acquisition spend decisions based on the CLV of new customers acquired.
In each case, though, the objective is the same: leverage successful tactics identified through experimentation to drive more valuable customer relationships.
Conclusion
Ultimately, the promise of customer-centric marketing is the ability to establish more meaningful (and ultimately profitable) relationships with your customers. While it can seem daunting to shift away from established metrics and realign around customer-centric marketing principles, the five steps outlined above can help provide a roadmap for organizations that are ready to capitalize on this extraordinary opportunity.
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