Chief Marketing Officers: Four Steps to Succeed with Lifecycle Marketing in 2017
As we head into 2017, retail chief marketing officers are under the gun more than ever before to produce measurable results. Jobs are on the line, as CEOs demand evidence that increased marketing technology investments are paying off. And that spending won’t slow down soon: Gartner recently doubled down on its prediction that CMOs will outspend their CIO counterparts on technology in this coming year.
Meanwhile, today’s consumers are empowered — and unforgiving — if they feel neglected at any stage. So while marketers have gained the ability to synchronize, refine and optimize campaigns across all marketing channels, they can’t afford to lose focus on the long term relationship. More than ever, customers need to be immersed throughout their lifecycle with the business.
While many brands are using marketing technology data to foster customer-centric campaigns, some are also looking at the big picture: using lifecycle marketing to better communicate and create more revenue across customers’ entire buying lifecycle, for life. To succeed, they need to execute these four essential steps that drive lifecycle marketing in today’s consumer-driven world:
To help fuel a relationship that moves beyond the transaction, the responsibility rests with the brand to put the customer at the core of its communication strategy the moment they cross the threshold from being a prospect to becoming a buying customer.
Across all of retail, the majority of customers are one-time only purchasers from a particular brand. In these situations, the brand has failed to give customers a reason to reengage or stay engaged. Often, the culprit is an “unhealthy” customer list that limit brands’ insight into the different customer segments. As a result, retailers end up treating all customers the same, regardless if they have purchased one time or are a repeat customer.
Following a purchase, proper engagement is king. Data has shown that for the vast majority of multichannel retailers, repurchase falls off dramatically during the 60 days after an initial purchase. During this two-month “honeymoon” period, brands should strategically leverage customer data to determine the most relevant offers and messages – then hit the right customer at the right time to fuel transactions through optimal engagement.
One tactic for maintaining a mutually beneficial relationship with the customer is through a coordinated email Welcome Series. Today, many brands use a single bland welcome email; it’s a much better idea to build a campaign that communicates meaning and relevance to customers based on their interaction with the brand.
While the mechanics of a welcome campaign may vary from brand to brand, the goal remains the same — keeping customers engaged with relevant content and offers until they are ready to purchase again.
By overlaying behavioral and purchase data collected at the point-of-sale or via online cookies, including demographic information, products searched, products clicked, etc., brands can test messaging and offers to determine how to most effectively engage with customers throughout the welcome campaign.
Targeting customers early with relevant content allows brands to invite them into a relationship that converts one-time buyers into repeat purchasers.
Twenty percent of the customer base often generates about 80% of the revenue for a particular brand. Although brands want to drive value by converting one-time buyers into repeat customers, there is still significant revenue being produced by the “best customer” segment – a loyal audience that must be sustained and kept in the pipeline.
Industry research has shown that with every ensuing purchase, returning customers spend on average 67% more than new customers. Sustaining engagement through relevant offers and communication with the best customer segment throughout their lifecycle will help to drive future high-value transactions.
One tactic to enhance a customer–brand relationship is with a ‘Surprise and Delight’ program — saying “thank you!” to best customers for their loyalty while encouraging customers to move cross-category. Surprise and Delight programs work so well because they tap into basic human nature to stimulate response instead of numbing them with tired marketing messages. They heighten receptiveness to new products, upgrading services and more. Moreover, surprises can fuel word of mouth marketing and turn best customers into brand advocates.
For brands, winning a customer is only half of the battle. Once a brand has converted a prospect to a customer, the customer lifecycle is still an ongoing, cyclic process that needs to be fed opportunities to sustain a bilateral relationship.
When a customer is reactivated, their lifetime value increases — boosting the potential revenue associated with their future purchases. At the same time, the cost of acquisition decreases because it is more cost effective to market to past customers.
By sustaining customer-centric communication with lapsed customers, multichannel retailers can help reactivate lapsed customers. For example, an orchestrated outbound communication series can create an increased sense of urgency as customers approach the inactivity cliff.
Using past customer behavior data to define a relevant offer or create personalized email with tailored content can help to rebuild the lost relationship. Retailers can also model the future value of a reactivated customer so that they can have a framework for investing in win-back initiatives and the value gained once a customer is reactivated.
The Bottom Line
Gone are the days of the traditional sales funnel, where customers moved from awareness to transaction in a linear fashion. Today’s customers move in and out of the buying cycle so swiftly that for brands to properly engage, they need to place the customer at the core of their marketing and have the right lifecycle campaigns in place to reach them regardless of their stage along the buyer’s journey. For retail CMOs, this may well be a mandate to survive and thrive in 2017.
Augie MacCurrach is the CEO of Boston-based Customer Portfolios.
Starbucks among brands on cutting edge of AI in retail
Coming soon to Starbucks: virtual baristas.
The coffee giant plans to add a Siri-like virtual assistant to its mobile app that will allow users to place an order by talking to a virtual barista that will then send the order to a store nearby user where it will be made by an employee.
The new AI feature is just one example of how a handful of brands, including home improvement giant Lowe’s, are using artificial intelligence in their operations, reported Adweek.com.
"AI is going to be like electricity or the Internet — it's going to be foundational technology [for] which most things are built," says Kyle Nel, executive director of Lowe's Innovation Labs.
Click here to read more.
Amazon increased holiday TV ad spend in a big way
While most retailers reduced traditional advertising spend in favor of digital sources this holiday season, Amazon made an unprecedented move to television.
This was according to the “MediaRadar Trend Report” that examined holiday advertising spend among Amazon, Walmart, Target, Macy’s, Sears, Kohl’s, Nordstrom, and J.C. Penney, between October and November 2016.
When comparing holiday ad spend by retailer, here is how the companies fared:
Amazon: While Amazon saw print ad spend decline (-10%), it aggressively increased spend in linear TV ads (76%) and digital (224%). In fact, Amazon owned the biggest increases in each area year-over-year.
Walmart: Walmart, the top brick-and-mortar retailer by sales volume, decreased ad spend across print (-15%) and television (-10%) compared to last year. The drop in TV spend was the third largest behind Sears (-53%) and Nordstrom (-45%). The company spent considerably on digital advertising, upping its investment by nearly 170% (+168%). The increase was second only to Amazon (+224%).
Target: Target was the only retailer to increase ad spend across every key marketing channel: print, TV and online. Investments in print went up 4%, while TV grew 54%. The increase in print was the second highest following Kohl’s (59%). Target was also the runner-up for its TV increase, losing only to Amazon (+76%). Target also spent more on digital ads compared to 2015, raising spend by 161%. Only Amazon (+224) and Walmart (+168) spent more.
Macy’s: Macy’s decline in print ad spend was the biggest across all eight retailers. The company cut investments by a quarter (-24%). It did boost TV (+20%) and digital (+34%) spend considerably, however.
Sears: Sears saw pronounced cuts across the board. Though print spend lowered by just 5%, TV was more than halved (-53%) while online de-creased by almost three-quarters (-72%). The cuts in TV and digital were the biggest among the eight retailers.
Nordstrom: Nordstrom also cut holiday ad spend across every channel, but to lesser degrees in most areas. Print spend dropped nearly a quarter (-23%). Only Macy’s saw print investments decline more (-24%). Similar-ly, TV (-45%) and digital (-28%) spend all lowered. The cuts in TV spend were second only to Sears (-53%) while the drop in digital was the third largest behind Sears (-72%) and Kohl’s (-58%).
Kohl’s: While six out of eight retailers reduced spend on print, Kohl’s put forward the biggest investment year-over-year, increasing it by 59%. The rise in budget seemed to be taken from TV (-7%) and digital (-58%). Kohl’s nearly 60% drop in online ad spend was beaten only by Sears (-72%).
J.C. Penney: J.C. Penney’s print spend declined 17% in 2016, the third-biggest drop on the year behind Macy’s (-24%) and Nordstrom (-23%). Digital spend was also down by a modest 7%. TV, however, was up 49%, the third-largest growth among the 8 retailers, following Amazon (+76%) and Target (+54%).
“Most retailers are reducing print spend while focusing on other channels, like linear TV and digital,” said Todd Krizelman, CEO and co-founder of MediaRadar. “Online ad spend, however, saw some of the biggest increases percentage-wise. This is driven by shifting consumption and shopping patterns among holiday consumers.”