Time to Say Goodbye? Shifting the Definition of a Customer
Marketers must understand how to engage with customers, and, sometime more importantly, when to say goodbye. Having worked in the digital marketing industry with a focus on email marketing for more than 10 years, I’m still often surprised at how little the industry as a whole has done to truly understand their customers.
Email has long been touted as the most cost-effective digital marketing channel, with the DMA often citing that you can expect a $40 return for every $1 spent. But there is an inherent cost to sending a campaign, not just in terms of money spent, but money lost or left on the table.
This surge of success in e-commerce may have led some to grow over-confident and lose sight of an important fact; you don’t “own” your customer data.
Your customers own this data, they trust you with it as part of a mutually beneficial relationship. In this relationship, you have been trusted with their data on the proviso that you have, or in the near future will have, provided the customer with a product, service, or information they find valuable.
Recent changes to data protection laws, email marketing deliverability within Gmail (priority inbox) and Outlook.com (Clutter), have largely been met with dismay or even outrage – “This will ruin my marketing programs!”
These laws aren’t there for us as marketers. They exist for consumers. They protect customers from unscrupulous marketers and less-than-ethical marketing practices.
Proper customer data acquisition starts with understanding who your current customers are, and who you want to keep. Research from Emarsys, backed up by research firms such as Gartner, have highlighted that in most B2C Businesses, 20% of a customer database drives up to 80% of revenue over the lifetime of their business. This is because a loyal, repeat purchasing customer is typically five times more likely to convert within most e-commerce businesses. If we can really refine the data points, we can understand the DNA of a loyal customer, their key attributes, and use them to drive engagement and repeat sales. From this cohort, and in our acquisition campaigns, we can start to find more customers like them.
Both we and our customers are fanatical in trying to understand and create more of these customers; converting leads into first-time buyers and those first-time buyers into active repeat buyers.
But we also need to realize that not every customer wants to buy from us again. Not every lead will make a purchase. Sometimes people fall out of love with our brand.
It’s high time we started investing more into segmentation and analysis (particularly in low cost, high touch channels such as email marketing) to also understand who is not engaged. If we can also put some of the intelligence, data science, and analytical brain power into understanding who not to market to, we’ll increase our marketing effectiveness.
If a subscriber has been in your database for two years and has never bought from you, are they a customer? What if that same subscriber hasn’t engaged with your campaigns for the last six months, are they a customer? For many retailers, the answer would be yes, but I can guarantee the consumer doesn’t think so. The next exciting phase of marketing, perhaps ushered in by making it more difficult to repeatedly market to these people, is understanding who is currently not a customer, who is about to stop being a customer, and who will never be a customer.
As we look at the new laws coming from across Europe and the US, as well as the changes enforced upon us by major ISP’s, Facebook, and the AdChoices initiative for display, it’s perhaps a great opportunity to learn how to say “Goodbye”, both to some of our marketing practices, and some of our “customer relationships.”