An overwhelming 89% of company respondents and 96% of agencies believe that a great customer experience is a vital requirement for driving brand loyalty and stands as a central pillar of sustainable Customer Lifetime Value (CLV), according to the Customer Lifetime Value: Building Loyalty and Driving Revenue in the Digital Age report, published by Econsultancy in partnership with Sitecore.
Customer lifetime value (CLV) is defined as the total worth of a customer to a business over the entirety of the relationship. Executives universally agree that growing CLV is essential to the health of their organizations and is a key success metric, as something related to but distinct from customer loyalty which is not as tangibly linked to revenue growth.
Shawn Cabral, Marketing Director, Sitecore U.K., said in the report that CLV is an ingrained principle for marketers across all sectors, with marketers continually asking the questions: How can we measure CLV and what as a brand can we do to increase CLV?
“Before digital’s rise to prominence, brands protected their CLV by making sure they addressed the reasons customers leave their brand, through customer services resolving issues and customer retention teams encouraging consumers to stay,” Cabral said. “Using data, brands introduced initiatives such as loyalty programs, and segmented their customer base to identify opportunities to up-sell and cross-sell. Without a meaningful single view of the customer, and the ability to actually market to an individual customer using the insight you have about them, some of these initiatives have resulted in mixed results for both the brand and the impact on the customer.”
The majority of customer interaction with a brand going forward will be via digital channels, Cabral added, which presents brands with new opportunities and challenges.
“CLV will not start post-purchase any more,” Cabral said. “As soon as a consumer interacts with a brand, long before purchase, the journey begins. Brands need to be aware of this entry point and every interaction thereafter, and start to join the dots, using the insight the consumer provides and delivering the best, most appropriate interaction at every stage.”
Whether it is a consumer’s first visit to a website, or a consumer advocating a brand on social, or a long-term customer searching for product support, marketers can make a huge difference to CLV by just recognizing the stage each consumer is at with their brands and focusing on how to maximize the opportunity every time, Cabral explained.
“Customer experience platforms can deliver this granularity to recognize each consumer and optimize every interaction,” he said. “A single platform can be used that brings all channels together, with all the customer insight and detail that a brand possesses to give a unique single customer view. The same single platform can then use this single customer view to manage the channels, and ensure every interaction is honed to the individual customer.”
Providing this holistic experience is not just about technology, Cabral said, but also includes being able to work across departments, with marketing joined with operations, customer service, support and retention teams, to define and deliver together this new approach.
“If a customer feels their individual needs are being addressed, future needs anticipated, issues are resolved quickly and the brand delivers on its promise (whatever that may be), this is a recipe for building solid customer lifetime value,” Cabral explained. “Digital marketing technology offers the power to deliver a personalized experience for millions of consumers every single time, and if customers get the best of a brand every time, surely that is the best a brand can hope to achieve.”
The report finds that 64% rate customer experience as the best tactic for improving CLV, followed by better use of data and personalization.
Of the 42% that said they were able to measure customer lifetime value, 11% of companies ‘strongly’ agreed they could measure it and a further 31% ‘somewhat’ agreed.
One of the challenges is that many organizations simply aren’t set up to manage lifetime value, with 35% of respondents saying that the siloed nature of their organizations and lack of coherent marketing hinders their ability to increase CLV.
A third (34%) of companies felt that poor systems or lack of integration hindering customer experience was one of the most significant factors negatively impacting their ability to build CLV.
Nearly 900 respondents are included in the report, which took the form of an online survey in October and November 2013. Respondents included both client-side (in-house) organizations and agencies, vendors or consultancies (supply-side).