Customer acquisition costs are rising and macroeconomic trends have brands eyeing their balance sheets. Companies still need to grow, but they can make more effective use of their resources by focusing on the customers they already have.
Typically, brands that see the most considerable long-term success prioritize customer lifetime value (CLV) and have a marked focus on retention. That’s not surprising, considering that acquiring a new customer is five times more expensive than retaining an existing one and that the top 10% of a brand’s customers typically make up as much as 70% of their revenue.
Businesses know the importance of keeping existing customers — so why do so many struggle when it comes to retention?
The answer is data. Or rather, how to use data effectively. First-party data, information that companies collect directly from customers, is the key to maintaining customer relationships and successful personalization, two critical elements in retention. But more than 80% of brands feel they could do more to make use of the data they have.
Messy data = messy marketing
Here's the problem: brands want to keep their existing customers but struggle because they don't have a handle on their data. Messy data trapped in silos means companies can't accurately resolve identities and the data isn't easily accessible throughout the business. Without a unified view of the customer, brands can't use personalization to improve retention, because they can't effectively market to buyers without truly understanding them.
An effective way to increase CLV and keep customers coming back is by offering relevant content and standout experiences. In order to do that, companies need a foundational base of solid first-party data that allows them to personalize content, service, and offerings to each customer. A unified view of customers built on first-party data allows companies to thoughtfully re-engage with individual customers, which boosts satisfaction, and in turn, loyalty.
Know your customers and know your business
A unified view of the customer creates a positive domino effect: brands truly know their customers and gain insights into their likes and dislikes, which allows them to personalize effectively, which in turn improves customer retention. It also lets marketing expand to all touchpoints in the brand: customer support, customer service, clienteling, product development, and more, while bringing the voice of the customer to every part of the organization. But it can’t exist when data is in a chaotic state.
So, what does knowing your customers really mean? It means having a long-term memory (that continuously updates) of everything your customers have ever done with the brand. That allows you to ask questions that unlock a fundamental shift in business, like:
How many customers have spent more than $1500 lifetime to date and are not in the loyalty program?
What communication cadence do your customers prefer?
What's the distribution of CLV by segment?
Who is predicted to have high lifetime value?
What are your customers’ favorite channels?
Who has visited my website that I know already, and how can I best serve them the right offer?
The effects of data on customer experiences
Here's what happens when brands don't have a clear view of their customers:
Bondi Daze, a (fictional) consumer packaged goods brand has masses of customer data, but it's chaotic and complicated for employees to access it, let alone begin to understand it. So when they want to promote their new sunscreen line, they send an offer to their entire email list. But this means that customers who have already bought the product receive repeat communications, which is annoying and makes them feel like strangers. Other customers who have never bought skincare products are getting pitched on a category they haven't shown interest in. Customers who have only bought through ads on social media channels are getting emails. Many buyers unsubscribe from the company's mail list to shop with another company that knows their preferences and treats them as individuals.
Here's how the situation could have played out differently if they had a clear view of their shoppers:
Bondi Daze has a firm handle on its customer data. It's organized, unsiloed, and easily accessible by all teams in the company. Summer's coming, and it's time to launch their new sunblock. They send personalized emails to buyers who have shopped for sun-protection goods or who typically make purchases in the summertime. They also make sure to communicate with customers on their preferred channels. The result? A successful product launch, increased retention rates, and a boost in revenue.
The key to success
To supercharge retention marketing efforts, brands need to unlock a cohesive view of the customer. But they can’t do that without a robust foundation of first-party data, and the right technical tools to organize it and pull valuable insights from it.
To learn more about the impact of a unified customer view, check out our study "Brooks Running Goes for Gold with Unified Customer Data."