Tag: CLV

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Confused about customer data management?

a man in black crew neck t shirt

What do you have? An ERP, a CRM, a CDP, a loyalty system, a webshop? Chances are if you are in a business that has been around for some time, you may have literally dozens of systems (including spreadsheets) that contain customer data.

When your data repositories are siloed and fragmented, held in different systems with a variety of purposes in mind, it is difficult to converge on a single understanding of who and what the customer is and consequently, it is even tougher to work on an optimized customer experience across all the systems and repositories that your business may have.

So where does all this tie into customer data management you might ask? That answer may lie in your understanding of what customer data management really is. Vendors will tell you that their technology stack is customer data management. That might be true, but it might not be true for your organization. Ultimately, customer data management isn’t exclusively about technology, it is also about business practices (think processes); roles and responsibilities (of people), and of course a bit of technology to help control, evaluate, track and distribute whatever it is that your team(s) are working on.

Focusing on the people

Your business may be in the luxurious position of having a data office and a chief data officer (CDO). More likely it has a Head of the DMO (Data Management Organization). Whichever it is, doesn’t really matter that much. Either way, if you have people with job titles that contain the word “data” and they’re not lowly data analysts, then your organization is likely well-placed maturity-wise. It is likely clear who is in charge of the data and accountable for resolving issues.

If you don’t have this kind of structure then the fundamental question is going to be, who is responsible and accountable for the management of the customer data entity. This could be the role of people in Sales, Marketing, Service, or Support; but ideally, it isn’t IT.

Setting standards

There are a number of solid industry standards that your organization could consider in relation to customer data management. The Data Management Association (DAMA) International defines data management as a domain aspecific term as the “planning, oversight, and control over management (sic) of data and the use of data and data-related sources.” That’s a broad expectation for the objective of managing data assets.

Master data management (MDM) is a sub-discipline and requires some very specific data governance activities namely: agreement on people that will be accountable for the mastered data, agreement on the processes and policies that will be implemented and applied, and agreement on the tools and technologies that will be applicable.

One should also not be confused by the subtle but important differentiation between governance and management.

Governance establishes policies and procedures while management enacts those policies and procedures to compile and use the data, ultimately in service of the business needs. So while your business may have a governance policy, does it have a way to execute that policy with a management approach? It could be manual, but it could just easily be automated or semi-automated.

Putting the gears in place

There’s a view that breaking down the silos or at least overcoming the limitation of silos is the first hurdle to address in any organization.

You may be lucky, if your organization is small enough, this could be a deftly meted-out edict from the Chief Executive Officer but the real question is going to be how do you follow through on that intent in a meaningful and productive way?

There is a school of thought that suggests that you should try to corral all the business functions (sales, marketing, service, support, accounting, eCommerce) and make sure that they are all aligned, but that may be impractical or unnecessary.

What’s more important is knowing that those divisions exist and knowing what they have and understanding what the commonalities are for each of them. A well-implemented and well-considered approach to Customer data governance doesn’t have to hamper, hinder or detract from the way that they currently gather and manage their customer data but what it can do, is it can help make their process and data capture activities a wider audience.

Compliance serves as an important aspect of the end to end process of customer data management and this is not easily achieved if there isn’t a clearly designated boundary in relation to who owns which parts of the data puzzle. Further, if you don’t actually have a centrally managed repository of customer information how on earth do you service things like Data Subject Access Requests? With a CMDM, Pretectum believes it is much easier.

If you’re curious about the implementation approach then you’re recommended to have a read of a Pretectum piece on this very topic – getting started…

Why bother?

The “why bother” question, is very important to respond to, and I’ll try to do that here In the general schema of things you might wonder why the marketing team would need to know every shipping address a customer ever used. You might also question why they need to know whether the customer is a pre-pay or postpay customer? The key may lie in the convergence of these two pieces of data accompanied by perhaps the volume of business that the customer generates for the business. Consider that piece of insight as to the CLV.

An effective marketing campaign, for example, is one that has the highest likely yield or return in response to very targeted and specific measures and objectives. Customers may live in one place and take delivery in another. They may even live in one place, take delivery in another and yet shop in a completely different place (in-store pickup).

Customers who prepay might yield a greater or lesser margin for the business as compared to postpay and you may in fact have a campaign that is looking for prepayers based on where they live rather than where they shop. The power of analytics for customers is only improved when you have as much data as you need, easily accessible and unified to those that need it most.

Identity at the core of customer engagement

We’re not talking creep intrusive stuff here, though understandably that might be of concern to some. What we’re considering here is the fact that a collection of anonymous events, wherever they come from, is much less useful than an activity that paints a useful picture of the interests and tastes of known customers.

The alternative is clear, every sale made, a deal brokered or engagement had, is either serendipitous or is part of a larger and more elaborate deliberate business plan.

You want to remove the luck and chance elements and start putting a little more predictability into your deliberate behaviour and shaping the potential customers and markets that need to underpin your business growth plans.

Data, and Customer data, in particular, is often considered in the context of how it might inform digital transformation or how much of a burden it represents in terms of privacy or compliance. Those are all good reasons to consider it, but data for insights which can help to guide business growth plans, reduce organizational friction and elevate the personalization of the customer experience should actually be front and centre to why customer data needs more of your focused attention.

Pretectum thinks that centralized customer data management, the kind provided by a CMDM like that offered in the cloud by Pretectum, is one of the best ways to wrap all those diverse requirements up and package them for the general use of your employees and the technologies that they use, support and deploy.

A deliberate Customer Experience

To improve the customer experience, your business needs to be able to recognize the individual and spot their omnichannel interactions with your brand. You need to use identifiers, traits and potentially a slew of other aspects of the customer profile to do this. All of that requires data.

An incomplete customer profile limits your ability to categorically identify the customer when limited data is on offer. An inconsistent or downright wrong profile attribute from any given source can make a truly unified understanding of the omnichannel customer well-nigh impossible.

Industry analysts, Gartner, suggest that your customer data management processes and infrastructure must be flexible and adaptable. Flexibility lies in the ability to take the single dimension of customer and facet it according to the needs of use. Can you do that with what you have today?

Pretectum feels that the rigidity of CRM and ERP, which are largely for transaction processing, make this difficult.

For CDPs, there are overlaps but the greatest challenge is likely found in the fact that CDPs are generally targeted at a narrow group of organizational users for whom the capabilities of the CDP are either too prescriptive or don’t cover enough divergence in terms of alignment with the individual business user’s need.

This is where CMDM may serve as a better hub and datastore with connectivity to all and any systems you might have through a variety of integration methods.

Contact us to learn more about how CMDM may be a great addition to your data management landscape.

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Are you ready to take your one shot?

man love people woman

Think about a brand that has surprised you lately. You may be surprised. Your own reaction might simply be one of a shake of the head or an “aha” moment. It’s a tough world out there, trying to get headspace with customers and brands that do it well are leaving an impressionable mark.

On the one hand, it is about the specialism that a particular brand might have, on the other, it might be the solid experience and reputation that all customers have with that brand. Whichever it is, brands recognise that being clear, present and unambiguous will likely win them loyalty and repeat business.

The pandemic, for example, will have left many of us unclear on some aspects of our lives like debt management, travel and health care.

Simple questions like, “if my employer goes to the wall, will my bank come after me for settling my credit card bills or call me out as a heightened risk of mortgage default?“; if you booked to travel during the pandemic and were not able to fly, what happens to the value associated with those airline tickets and more importantly, what happens to your air miles and perhaps your air mile status if you’ve not been able to maintain topping up your account? With health care, it becomes even more fundamental. Will my health insurer pay for my treatment if I contract COVID-19 or one of the many variants?

Savvy brands have cottoned on to these anxieties. Some financial institutions have reached out to customers to provide them with assurances that they won’t come after them; some airlines have banked the value of your flight anticipating that you will travel later, or have frozen your airline miles account expecting a return to normalcy at some point and healthcare insurers have provided updates to their members informing them on safe practices, self-diagnosis and what to be aware off if members suspect COVID-19 illness.

All of these approaches hinge on three very important aspects of understanding the customer.

The first is, “who exactly is my customer“; do I have all their basic details and more? If your systems carry only the most basic of data, perhaps now is a perfect opportunity to revisit your customer master data management strategy. Get rid of the duplicates, and take stock of the overall quality and completeness. What do you need to have in terms of customer data records and how can you gather updates as quickly and as effectively as possible?

The second aspect, is that you may have a lot of customer data but is that data current and relevant? It is not unusual for companies that have had customers for literally decades, to still have some of the most geriatric data in their systems, some of which may paint an entirely incorrect picture of the customer. Here again, consider what should you have, how current should it be, and when last did you update it.  If it is old and potentially irrelevant,m what’s the plan for it?

The third is the general usability of data. Again, this isn’t a particularly astonishing fact, but the reality is that people do change, their email address, phone number and physical address and yes, there is the concept of customer churn.

Would you reach out to former customers assuming that they are still current customers? Probably not, but you would be surprised at how many marketing departments still send marketing materials to households blindly without a clear understanding of the relationship with the customer base. To maintain brand awareness, you need to be pushing more than just the logo and a story of what your business does, you need to also consider personalization and in particular, targeted personalization. 

It is probably worth considering the meme below as another case in point wherein some data is used to inform machine learning and AI algorithms but falls short of the need and in fact, could be very frustrating for a customer, when their buying journey has long ended. This implies that all data management should be considered important, not just customer data management but it also means that the ecosystem of supplementary data needs to be considered too!

43 Hilarious Amazon Memes That Poke Fun at the Company | Work + Money

SAP, the sellers of ERP software reputedly once used a slogan that is perhaps super resonant. “Your best customers leave quite an impression. Do the same, and they won’t leave at all.” – I couldn’t find the original but it seems appropriate.

Do you subscribe to the belief that we find and maintain an allegiance to brands with which we find affinity? Being impressed is something that builds affinity. If we meet someone we like, we will want more of their time. If we watch a television program and enjoy it, we will likely spend more time watching that program and if we read a book that we enjoy, we are likely to seek out that author’s other writing. 

With the level of messaging that bombards each and every one of us every day the number of real opportunities that each brand has at its disposal has become severely limited.  Gulf Business News in the UAE posted an article in mid-2021 that suggested that a survey by Cisco Appdynamics App in the Attention Index research series offers up statistics of 73% of consumers giving one shot to brands ith their digital experiences before they switch to another provider. This likely translates to more than that market and more than just digital experiences. 

we want more customers like ….

Overall, everything suggests that as we move through 2022 we are likely to see very few retail industry improvements for example; supply chain problems will continue to be aggravated, stocks will remain low, and prices will rise. Customers will move on to the competition if you don’t improve their experience at every touchpoint. 

Consider then, what those touchpoints might be. Your systems likely contain three types of customers. The prospect, the past customer, and the active customer.

Customer Touchpoints

ProspectingActive EngagementPast Engagement
AdvertisingMerchandising in storeWarranty Support
Social Media/InfluencerPoint of Sale/BillingMarketing emails
Product ReviewsWebsite/eStoreOnline help
Referral/Word of MouthCustomer Assistance/BOTDocumentation
 Marketing EmailsInstallation/DeliveryService Delivery 

Not all of these will be particularly relevant but what you should do is examine these and perhaps even other touchpoints that have not been considered and examine what you can do to help those touchpoints with data on the customer, about the customer, and for the customer.

Pretectum Customer Master Data Management is all about providing your systems with the necessary information to support these touchpoints. Using a combination of APIs and direct integrations, you can have the Pretectum C-MDM operate as the customer master data hub to your touchpoint engines serving up insights on the details of customers’ social media identifiers, their associated product reviews, and personalized emails. In-store personnel has the opportunity to directly engage with identified customers in a much more personalized way that conveys a sense of care and attention that your competitors may not be able to offer.

Shopping carts and point-of-sale can extend promotions but only if the customer is known and their loyalty identifiable. Finally, when customers engage through help, service, or support; by phone, email, or chat – having a relationship that demonstrates familiarity and understanding may just draw that customer a little closer and extend the customer lifetime value to your business.

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Unraveling Customer Acquisition Cost (CAC): A Comprehensive Analysis

woman holding magnetic card

In business, every decision carries weight and consequence, and there’s a particular metric that holds a special place in the minds of those driving growth and success, namely Customer Acquisition Cost, or CAC for short.

You might think it’s pennies or as much as several thousand dollars but it’s not just a number; it’s a focused lens on the very heart of a company’s growth strategy, revealing how customers are won and the resources expended to do so.

A boardroom of eager-minded executives and marketing mavens will have CAC, as a metric that commands their attention and sparks a great debate. For any business owner or executive, it’s a barometer of potential profitability, offering insights into the efficiency of the investment in acquiring new customers. It’s not just ad spend or payments per click!

Yes, it’s a number, but one that can make or break a business strategy, one that guides decisions on where to allocate resources and which avenues to pursue business growth.

Dependent on every marketing channel, campaign, and sales, service, and support strategy, it needs a search for ways to reduce acquisition costs while maximizing returns and customer retention. CAC is a balancing act, a delicate dance between reaching new customers and managing expenses, all to drive growth and expand market share.

The fascination with CAC extends far beyond the boardroom, however, beyond the marketing department., beyond financial analysis and investors. Stakeholders from every corner like to keep a close watch on this metric, too, as they assess the health and viability of the company’s business model. A growing CAC relative to customer lifetime value (CLV) sends alarm bells ringing, signaling potential trouble on the horizon; a warning sign that prompts deeper scrutiny and closer examination, as stakeholders weigh the risks and rewards of backing a negative trend.

On the front lines of customer engagement, the customer success and retention teams are keenly aware of the implications of CAC; understanding that acquiring a new customer is just the beginning of the journey; they recognize that retaining that customer and maximizing their lifetime value is where the real magic happens.

Armed with insights from CAC analysis, those charged with retention and customer growth, develop strategies to nurture customer relationships, enhance satisfaction, and drive long-term loyalty. It’s a holistic approach that recognizes the interconnectedness of acquisition and retention, all with the ultimate goal of ensuring sustainable growth and profitability.

Don’t dismiss the competition either, they lurk in the shadows, watching and waiting for opportunity. They also focus on CAC, monitoring one another with a keen eye. A lower CAC from a rival can set off a flurry of activity, as competitors scramble to reassess their strategies and find ways to gain a competitive edge.

Considering the science

At the heart of any business lies the quest to acquire and retain customers profitably. CAC serves as the compass guiding this journey, offering insights into the resources expended to bring new customers into the fold. By quantifying the total expenditure on marketing and sales efforts directed toward customer acquisition, CAC provides a tangible measure of efficiency and effectiveness. CAC enables businesses to gauge the return on investment (ROI) of their acquisition strategies, facilitating informed decision-making and resource allocation.

CAC’s significance amplifies when viewed in conjunction with Customer Lifetime Value (CLV) or LTV. While CAC measures the upfront investment required to acquire a customer, CLV delineates the long-term value derived from that customer over their entire relationship with the company. The ratio of LTV to CAC serves as a barometer of sustainability, indicating whether the acquisition costs are justified by the subsequent revenue generated. Favorable LTV : CAC ratios signify healthy customer acquisition strategies, where lifetime value outweighs acquisition costs, yielding greater margin and associative growth.

Calculating CAC requires consideration of various methodologies, ranging from the simplest method to the more intricate. A rudimentary approach involves dividing total marketing and sales expenses by the number of new customers acquired within a specific period. This is straightforward, but as a basic method, it may overlook crucial expenses, presenting an incomplete picture.

Conversely, the complex method incorporates a wide range of additional costs, including salaries, software expenditures, professional services, and overheads. This more comprehensive evaluation provides a more accurate depiction of the true cost of customer acquisition, facilitating informed decision-making and strategic planning but may overload the CAC with costs that are not necessarily directly attributable.

Beyond the surface-level expenses, a thorough analysis of CAC necessitates delving into the myriad associated costs that contribute to the acquisition process. From advertising expenditures and sales team salaries to technology investments and production costs, each component plays a pivotal role in shaping the overall CAC.

The role of CMDM in CAC

Factoring in advanced customer data management platforms, such as Pretectum’s CMDM, ushers in the opportunity for data-driven decision-making, enabling businesses to harness customer data effectively in optimizing customer acquisition and retention strategies.

The insights garnered from CAC analysis transcend mere numerical values, permeating into the strategic fabric of businesses. Armed with a comprehensive understanding of acquisition costs, companies can fine-tune their marketing channels, campaigns, and sales strategies to maximize efficiency and effectiveness. By identifying the most cost-effective channels and optimizing conversion pathways, businesses can minimize their overall CAC.

Targeting the right customer profiles through in-depth analysis enables companies to tailor their marketing efforts toward audiences most likely to convert, thereby minimizing acquisition costs. Prioritizing organic channels and inbound marketing techniques not only reduces CAC but also fosters authentic engagement and brand loyalty. Analyzing the customer journey also provides invaluable insights into potential bottlenecks or inefficiencies, allowing for targeted interventions to streamline the acquisition process. Simplifying conversion pathways and optimizing website user experience can significantly enhance conversion rates while lowering overall acquisition costs.

The integration of CAC with other key business metrics further enriches its strategic relevance. By juxtaposing CAC with metrics such as customer retention rate, average revenue per user (ARPU), and churn rate, businesses gain a holistic perspective of their customer acquisition efforts. Moreover, tracking CAC trends over time enables companies to identify patterns, iterate on strategies, and adapt to evolving market dynamics effectively. This iterative approach fosters continuous improvement, ensuring that acquisition efforts remain aligned with overarching business objectives.

As long as there are customers to win and markets to conquer, the story of CAC will continue to captivate and intrigue, driving businesses forward on their quest for growth and success.