Chief marketing officers—your time is now.
The mantra of modern commerce is to attract, convert, retain, and build relationships—and CMOs are uniquely positioned to grasp and track the true value of a company’s prospects and customers. CMOs have never had a more viable opportunity to maximize their contribution to the corporate top and bottom lines.
The entire concept of marketing is moving away from simply promoting products and services to the more cohesive concept of brand management and customer-experience creation, informed by business intelligence. But in order to do the job effectively, a CMO also has to structure his or her business processes to fully align with the customer life cycle.
To start with, an organization needs to have a clear road map and long-term strategic plan to maximize the lifetime value of all its customers. Sustainable profitability is typically tied to effective and efficient efforts in the six areas of the customer life cycle: acquisition, retention, upsell, cross-sell, profitability, and customer lifetime value.
Analysis of these key building blocks should be the central driver of marketing’s customer-centric initiatives. Acquiring, engaging with, and building on customer relationships are activities squarely at the center of the CMO's realm. But the other big-picture insights that a CMO needs to meaningfully drive action and inform the organization are too often siloed across the marketing department, which is typically organized according to job functions: creative, advertising, campaign management, field marketing, lead generation teams, etc.
These functional divisions may provide internal efficiency, but they act as barriers to getting a complete view of the company’s most desirable customers. To gain sufficient ROI on a company’s investment in acquiring and keeping customers, a CMO needs to leverage data that is continually collected across the entire enterprise, throughout each step of the customer life cycle process. Put all these pieces together, and the result will be a powerful understanding of an industry and of a particular company’s position within its marketplace.
Learning From The Life Cycle
Along with fostering brand loyalty, customer acquisition remains the key goal of most marketing initiatives. Come up with a concept, create a compelling way to tell the story, transform it into a great slogan or infographic, then watch as customers glide effortlessly through the sales funnel. This may vastly oversimplify a complex process, but grabbing and retaining customers’ attention is nevertheless a primary key to success—and if CMOs weren’t very good at this process, they’d soon be out of a job.
But to retain profitability and build sustainable new revenue streams, a CMO also has to build on that initial momentum. You want profitable customers to stick around after that “new customer” special-offer period has elapsed. And you want them to stick around happily, so that they continue to purchase products and services. You don’t want customers who stay simply because they have no place else to go or are locked into a contract. Disgruntled customers are not profitable customers.
These aren’t new concepts to anyone in the business world. What is new is the shift in focus from product life spans to customer life cycles and CMOs’ increased involvement in the process. It's becoming increasingly apparent that CMOs should be the ones tracking customer profitability, and using big data analytics to optimize the value of each customer.
Any analysis of customer lifetime value (CLTV) must factor in profitability calculations if the projection is to have any realistic, long-term strategic value. CLTV is a long-term analysis based on a significant number of inputs that can change at any point of time. This can unfortunately make organizations distrust—and find it difficult to justify—any continuous visibility into this metric. So it's important to remember that the uncontested ubermetric of total shareholder value —the number upon which the boards and the CEOs are measured—is the sum of all the lifetime values of a corporation's existing and new customers-to-be-acquired.
But just having access to data doesn’t magically guarantee success. What generates growth and profitability is working with the data, connecting the dots and finding new understandings, and then rapidly developing plans and implementing processes that deploy that data efficiently to drive business initiatives.
A CMO is the executive best-positioned to have his or her finger on the pulse of CLTV, from acquisition and retention to cross/upselling and tracking profitability. When CMOs are running retention programs, they need to know what the impact will be on the other building blocks of customer value, such as customer profitability, cross-sell potential, CLTV, etc. Similarly, when they are focused on maximizing cross-sell, they should have immediate visibility into the impact it will have on retention, CLTV, etc.
This kind of predictive, analytics-driven view into the customer life cycle can only be enabled by a connected analytics platform or solution that enables CMOs to have such an end-to-end view. By extension, then, CMOs could (and should) wield utmost power at the executive conference table—provided they can visualize, track, and predict customer life cycles.
Leveraging big data to build bridges across the entire enterprise can create joint initiatives that can, in turn, generate sustainable profit opportunities. But this will require CMOs to have the necessary data, technologies, and analytics to allow them to track, measure, and predict customer value across the entire life cycle.
The stakes have never been higher for CMOs, but the potential rewards have never been greater.