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Is customer lifetime value not important anymore? Understanding the total customer experience and the entire customer journey seems to have superseded customer lifetime value.
At least, according to Kate Atty, Director of Marketing for Persio.
Atty participated in a Q&A with Loyalty360 to talk more about this interesting loyalty marketing trend.
Customer LTV was always viewed as such a great metric. Why has it outlived its value?
With the development of more sophisticated CLTV models and the applications thereof, CLTV continues to be a widely utilized metric. However, the value of CLTV as a metric is entirely dependent upon the accuracy of the data that is feeding the predictive model. Many CLTV calculations are simply inaccurate due to a lack of understanding of the customer lifecycle. Without having a firm understanding of when customer journeys begin and end, it is difficult to build reliable CLTV models. To maximize the value of CLTV, marketers must begin with putting in the mechanisms to track consumer lifecycles across all digital and physical touch points.
What are the challenges marketers face understanding the new and improved customer journey?
With the proliferation of consumers utilizing digital channels to influence in-store purchases, marketers are faced with numerous challenges in understanding the customer journey, including cross-channel customer identification, behavioral tracking, and applying purchase attribution. The customer journey is fragmented, represented across a variety of web, mobile, and store experiences. Marketers are challenged to connect data across these touch points and tie them to individual customers.
How can they meet those challenges and gain a greater understanding of customer expectations along their respective journeys?
Brands must devote resources from across their organization, including marketing, IT, store, and loyalty to understand and manage the customer journey. A critical requirement is the synchronization of data sources among multiple internal and external databases including email, mobile, web, and point of sale (POS). Only when marketers can aggregate these data sources and see multichannel behaviors at the customer level can they truly understand the customer journey. In addition to synchronizing data sources, marketers can look for ways to channel experiences together across their regular marketing activities. For example, using a web opt in to send an offer with a unique barcode to a customer’s mobile phone or email. This is a use case that allows them to tie web to mobile to store.
How has the customer journey been impacted by the mobile factor?
Mobile was a major catalyst for change in the customer journey. On one hand, it made consumers even more of a mystery for brands, as they were suddenly able to go incognito into a plethora of apps or mobile web or messaging or map functions without a reliable desktop cookie to report on their activities. Mobile became an interim way to showroom, compare prices, even order online while standing in a store. On the other hand, for marketers who can leverage it correctly, mobile represents one of the few ways to effectively bridge online and offline. When it comes to connecting with consumers throughout the journey, mobile is the most direct line to the customer, but because it is always at hand and such a personal device, marketers must be careful when and how they engage.
How important is personalization in this new and improved customer journey process?
There’s a reason personalization has been the buzzword of the last year or so. It’s effective. It drives sales, engagement, and it’s come to be expected by customers. For digital natives in particular, they’ve become accustomed to being treated like individuals across the board. Part of personalization is using known data from one channel and applying it throughout the customer journey. This requires marketers to link channel IDs (i.e. email, mobile number, web cookie) and associated data, but it is what makes the entire effort effective. Consumers don’t think about channels or the path to purchase, they think about their experience with the brand in aggregate, and this is where true personalization comes into play.
How would you characterize the state of customer loyalty today?
Loyalty is a precious resource for any brand, but especially for traditional brick-and-mortar retailers. The proliferation of ecommerce retailers, deal sites, discount merchants, and platforms by which to evaluate and purchase have made competition for loyalty extreme. Brands have to work hard and fast to offer an advantage and create loyal shoppers, and the advantage can’t be centered only around price. Loyal customers aren’t lured in by a one-time deal. They shop frequently and reliably and remain loyal because they value many aspects of the brand experience over others. Brands that are focused on understanding LTV and have used the customer journey as a basis to define that metric have a head start on identifying their most loyal customers.
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