Does the need to meet quarterly targets mean strategy takes a back seat to expediency? Rupert Harrison, Planning Director at Zeta Global argues that marketers need to acknowledge that not every situation can turn into immediate revenue – and knowing when to message commercially, and when not to, is a careful balancing act.
We live in an increasingly immediate world. In an age where everything is on demand, the desire for instant gratification and real time results has replaced the pursuit of patience. Our lives used to happen in sequence, whereas in our digital world everything happens concurrently. Politicians, corporate leaders and the general public are now regularly accused of adopting a short-term outlook – often seen as detrimental to society, the economy, the environment and human relationships.
Are we seeing a similar mindset taking hold in the world of marketing? The evidence seems to support this view. New IPA analysis has found that 47% of a marketing budget is now spent on short-term activation strategies, up from 31% in 2014. Meanwhile another recent IPA report argues that marketers are put under increasingly short-term pressures that make it “practically impossible for them to do the long-term job”.
But what is causing these competing priorities? The drivers vary depending on the nature of the business, but the impact is very similar.
Public businesses are subject to unrelenting pressure from shareholders to deliver healthy quarterly results. This means they tend to focus on campaign strategies that deliver short term results but have a diminishing impact over time, leading to attrition and reduced effectiveness.
Meanwhile smaller business will often adopt similar short term strategies, but for different reasons. The need to rapidly acquire new customers and gain momentum can mean that firms under invest in nurturing and retaining those customers – despite the critical role this stage of engagement plays in building repeat transactions, loyalty, and advocacy.
In both cases this leads to a tendency for marketers to measure short-term results and ignore more long-term engagement metrics that show how inclined a customer is to purchase time and time again. The result? Attrition, churn, and ultimately the erosion of brand equity.
So, what can companies do to create a more balanced approach?
Balancing short-term business results with long-term brand loyalty
Companies need to have an effective CRM system in place, allowing them to capture valuable engagement insights from touch-points across the whole customer journey. This enables them to build a clear picture of how customers interact with a brand before, during and after the point of transaction, helping them understand how to effectively build long term relationships and loyalty with their customer base.
The latest IPA study suggests that the best campaigns have a 60:40 ratio of long-term customer engagement and brand building versus short-term sales activation.
For many brands this is easier said than done – without the right systems in place it is significantly more difficult to demonstrate an ROI for campaigns that take place after the transaction. But to ignore the longer term picture will inevitably have a damaging effect on business performance and long terms profits.
Customer experience: more than just lip service
Customer experience is increasingly accepted as the point of convergence between the short-term target of driving immediate sales and the longer-term goal of fostering loyalty through repeat sales – the sweet spot between customer and business needs.
Businesses must avoid the trap of using ROI over a period of weeks as the primary indicator of success and instead address the needs of the customer relevant to the particular point in their lifecycle, balancing them with immediate commercial goals of the business. The requirement to measure performance in the short-term too often trumps the need to nurture loyalty, enhance customer experience and build brand advocacy for the long term.
Seeing the bigger picture: understanding customer lifetime value
Marketers need to understand the cost of acquisition vs the lifetime value of a customer to ensure that they think about their engagements with customers as a long-term relationship rather than a short-term conquest.
To achieve this, CMOs should take a considered look across the channel mix at which metrics are a true indication of engagement, and adapt their goals and strategies accordingly to deliver a mix of short, medium and long-term returns.
Automation has a big role to play in taking the burden of execution off marketing teams’ hands so planners and strategists can think about the bigger picture and make sure all activity contributes to broader, longer term business KPIs. And pattern recognition tools such as predictive modelling will help drive continual incremental growth by maximising on customers with a propensity for purchase and refining targeting to prevent attrition on fragile customer relationships.
Customer communications: Less is more
Brands must be careful not to erode customer loyalty with excessive or aggressive sales-driven marketing.
The proliferation of channels connecting us to the consumer means there is a tendency amongst some brands to bombard customers from every angle in the hope that something sticks. Equally, with so much data available to brands, there is a temptation to over-target a customer, using prior browsing or buying history to try to push them repeatedly down a path to purchase that they simply don’t want to take.
Being able to understand and respond to indicators from the customer will allow brands to know when to try to close a deal and when to back off. Pummelling disinterested consumers with sales messaging will leave them feeling alienated and frustrated that a brand is not listening to them. Marketers need to acknowledge that not every situation can turn into immediate revenue – and knowing when to message commercially, and when not to, is a careful balancing act.
Getting to know you
As with any good relationship, taking the time to woo the other person a little will invariably pay off in the long term. This means listening to customers, finding out what they like and showing them that you understand them and can respond to their needs.
It takes time to build up a picture of a person, but creating a profile of a consumer based on how they engage allows brands to more effectively target them over their entire lifetime. Using data smartly will create a meaningful value exchange between brands and their customers through relevant, personalised content.
“How poor are they that have not patience!”
In all the immediacy of the modern world, marketers might do well to remember this cautionary line from Shakespeare. The digital and data revolution allows us to understand and target individual customers in the moment like never before. But striking a balance is vital.
An effective CRM system, a relentless focus on customer service and having smart metrics in place to better understand customer lifetime value will go a long way in helping businesses to prioritise effectively. Those who shun a longer term approach in favour of short term expedience in their marketing strategies do so at their own peril.
By Rupert Harrison