Historically, customer acquisition has been the focus of marketers, and companies today continue to throw their marketing dollars in that direction. However, key findings suggest that this money would be better spent on customer retention–not acquisition: A Gartner Report suggests that 80% of a company’s future revenue will come from 20% of existing customers. Similarly, a study conducted by Adobe reported that if a meager 1% of existing customers return, a company will generate 10% more revenue. Despite this, 80% of online retailers’ digital marketing budgets are spent on acquiring new customers.
The takeaway is simple: If companies focused a fraction of the budget and time they spend on customer acquisition towards customer retention, they would be able to generate exponentially more revenue.
Two major reasons for the popularity of acquisition over retention are:
-The ease of ROI measurement
When calculating acquisition ROI, it is a simple point-in-time division of marketing expenditure over sales generated. Retention ROI, on the other hand, requires a customer lifetime value (C-LTV) calculation, a measure which is ongoing.
The second major challenge that customer retention presents, is the need for a multi channel technology platform that is capable of engaging customer data throughout the life cycle in a deep and personalized manner. Customer experience is the key to retention, and a marketer needs to understand every interaction a customer had with the organization. This requires a system that can track individual consumer behavior across multiple platforms, analyze the data, and then create a personalized experience across a variety of channels.
Most organizations have a great deal of information about their customers, however, they face a multitude of challenges when it comes to accessing it or incorporating it into their strategy:
- Communication platforms are often channel specific in silos, which are designed to handle large volumes with limited customization.
- Organizational silos and disparate technologies make it difficult to organize information and derive meaningful customer insights.
- Barriers between businesses, analysts, and IT stall timelines and reduce agility.
- Limited visibility into customer relationships across the full enterprise leads to duplicate, irrelevant, and untimely messages that increase opt-out rates and erode trust.
Omni-channel Customer Intelligence Data Platform:
In order to have a 360-degree view of a customer, and to create relevant personalized communication in an Omni channel environment, you needs to have a data platform that can capture a customer’s behavior from a variety of different sources (structured & unstructured) and integrate it into a single system that has the capacity to manage it. This requires a multi channel communication platform capable of capturing and personalizing data, as well as an analytical engine that can decipher patterns and suggest the appropriate actions.
While you may have bits and pieces of these technologies; the key is integration, unification, and discovery. With machine learning techniques and big data technologies (like Hadoop) becoming mainstream and accelerating solutions (like ‘Data Lake’) gaining popularity, the cost of technology is going down. What you really need is the drive to change your business processes and a skilled techno-marketing partner who can quickly deliver a cost effective, agile solution.
DataXylo’s bottom up approach can help your marketing department or business users balance efforts between acquisition and retention. Schedule a meeting with us to understand how to adopt, or further leverage, Big Data technology in a lean but effective way.