Getting to grips with your systems, operations and CX to improve CLV

Posted by Rosie Stano
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Customer Lifetime Value

Econsultancy recently published a report on Customer Lifetime Value (CLV) featuring the opinions of Netcel's Chief Strategy Officer, James Scott. Rosie Stano, Digital Marketing Executive at Netcel, spoke to James to look in further detail at the challenges and opportunities presented to brands considering CLV and how organisations can improve their customer experience.

What is CLV and why is it so fundamental in helping brands understand their customers better?

CLV is the total worth of a customer to a business over the entirety of their relationship. CLV helps you understand who your core customer is, so that you can be clear on what products, services and marketing messages best appeal and demonstrate the most value to them at different stages of their relationship with you. In turn, this means you can target similar customers with the right things at the right time to increase acquisition, retention and average order values. It also means you can develop an understanding of how you might diversify your activities to better appeal to customers outside of that core audience.

Does CLV sit between the clients you work with and their customers or do partners such as Netcel own that relationship?

While we’re meeting more and more organisations that have dedicated customer experience teams in place, in many cases we’re still seeing unhealthy departmental silos, competing for customer attention in ways that only serve to cause confusion and frustration. And because these teams are competing against each other, rather than taking a holistic ‘customer first’ approach, they’re not meeting regularly to keep each other informed. As a result, they’re actually missing out on information that could help them achieve their objectives. Ultimately, the relationship is between the client and their customer. As agency and consultancy partners, we bring a perspective that can uncover the issues standing in the way of great customer experience, and help solve those problems.

How can we overcome internal teams acting in these silos?

Some centralised governance of customer experience, positioned in the interests of maximising CLV is what’s needed. The hierarchy, or at least the workflow, needs to switch around so that product owners shape their offering according to the advice of their customer experience advisers, rather than customer experience teams being tasked with shaping experiences around legacy propositions that may no longer hold appeal.

What are some of the challenges you experience when trying to demonstrate the value of CLV to companies?

For the organisations that understand the importance of customer experience as the key differentiator, most are still approaching it from a perspective of “how do we sell more of what we offer, more often, to more people”. The problem we see in many cases is that what’s on offer and the way it’s presented, isn’t something that may have a repeatable value or appeal to the same customer long term. A lot of the focus is on the functional convenience of the transaction, and not how it feels to interact with the brand, and the value exchange beyond that of cash for products/services. So there’s a service design element, which can be daunting when so much time and effort has gone into developing what is or was a very successful proposition.

So how can an organisation maximise CLV?

To maximise CLV, organisations need to be prepared to innovate to deliver incremental changes to their offering(s), reframe their proposition to make it relevant to customers according to the way they mature over time, and/or create new products to cater for customers as their needs change at different stages of engagement. The best thing an organisation can do is join the dots between quantitative data and qualitative data. Talk to your customers. Find out what they need. Note, I didn’t say “ask them what they want”. Cue the Henry Ford story about people wanting a faster horse, when actually they just wanted to travel longer distances over shorter time periods, more comfortably. They simply had no idea this might mean ditching the horse in favour of something else entirely. Don’t try and sell the thing you make, make the thing you can sell.

There’s a lot of talk around implementing a data-led strategy, but how meaningful is this without understanding customer behaviour first and foremost?

There is a mix of qualitative data and quantitative data, but it’s rarely joined up. For example, Google Analytics will provide some hard and fast facts, as well as a mixture of information that can be interpreted in different ways. Meanwhile, there might be a quarterly customer satisfaction survey. Rarely do we see organisations cross-referencing this information and entering into direct dialogue with customers to validate hypotheses about patterns of behaviour and work out what changes should be made. There’s a greater amount of A/B testing undertaken, but in context of newer personalisation technologies available today, this is a rather broad-brush approach that doesn’t consider customer lifetime value. It just helps work out what best appeals to most people right now, regardless of where they are in the path of their relationship with your organization. But that’s not to say people aren’t doing their best. This stuff is hard work! However, as AI is employed more readily, we’re more likely to be able to build out better customer experiences based on outcome data, at a speed and scale that wouldn’t otherwise be possible.

At present, how successful do you feel the majority of businesses are in terms of taking a holistic approach across all customer touchpoints?

It’s amazing how few businesses have anything that resembles a single customer view. Small organisations perhaps can’t justify the investment without a certain critical mass, while large, mature businesses tend to have a patchwork of systems that have been introduced iteratively over many years to do different jobs, without an underlying technology strategy to make sure systems are going to talk to each other. Integration between CMS/CXM and CRM, Marketing Automation platforms and indeed any system involved in servicing customers would be the utopia, though the advent of platforms like Tealium can help disparate systems work in concert (incorporating third-party data sources like the weather and share prices) to trigger cross-channel actions.

So where do you think the problem lies?

The challenge is channel attribution and identifying that the customer in store today is the customer that was researching product x on their iPad last night and their laptop last week. Social sign-on solutions remove a lot of the barriers to signing in across multiple digital devices, but a bigger shift is required towards the recognition of devices and their owners in physical spaces, so that digital or person-to-person interactions in those spaces can be optimised. Naturally though, we need to be watertight on privacy and security. 

How can brands improve the customer experience across all touchpoints?

Breaking down departmental silos to create a ‘customer first’ team and engaging with customers to obtain qualitative data that can bring greater context and insight to other analytics. We’re encouraging clients to establish the foundations to make use of artificial intelligence so that they can deliver 1:1 personalisation at scale. Without all of the heavy lifting of having to create visitor groups, content variants for each group and then analyse the effectiveness of that experience, they can concentrate on engaging with clients in the interest of service design around their needs. Tracking interactions with individual customers across multiple touchpoints is the key to understanding how short-term activities influence long-term advocacy.

What’s the biggest challenge you find that companies looking to measure CLV currently face?

Integration is the number one challenge we find. Not only of systems, but also people. Getting systems to talk to and understand each other is one thing. Dealing with company politics, legacy structures and processes and the friction between the stakeholders who have been there forever and will never leave, versus the positions where there’s more churn, is quite another! It’s also important to agree on what good looks like, and/or understanding what a realistic set of targets and meaningful measurables will be. I think this is a key barrier to even starting to address systems integration projects.

Finally, what advice would you offer to companies looking to improve how they monitor and measure CLV?

Get the balance of different kinds of data right and cross-reference them to corroborate your hypotheses. And get people aligned to a common cause – the customer!

 

Read the full Econsultancy report on what marketers should consider when using customer lifetime value.

 

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At Netcel, we look beyong the technology and work with clients to transform their people systems and processes. We're pretty good at the tech-side too. To work more efficiently and get the best out of your digital investments, leave us a message or call us on 020 3743 0100.

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