Editor's Note: Enjoy this blog from the Custora archive, acquired by Amperity in November 2019.
Achieving personalization means putting customers — not categories, channels, or events — at the center of marketers’ decision-making.
For a long time, businesses were obsessed with widgets that allowed them to measure their overall health and make decisions based on the number of particular products sold. To be fair, finding good numbers beyond those wasn't easy before the e-commerce era; it was hard to know who your customers were, much less how to segment them properly. But the problem with product-centric marketing was that it never told the whole story: maybe light-up sneaker sales were down overall, but up 10% among Millennials, who spend more with your brand than any other segment. You’d never know that if you just looked at total sales without considering individual buyers.
Today, smart marketers are looking to be as customer-centric as possible — we’d even go so far as to say customer-obsessed. Customer-obsessed marketing is all about putting the customer at the center of all analyses, allowing brands to pinpoint the different behaviors and preferences of each customer and make decisions accordingly.
And while that may sound hard to accomplish, recent advances in technology, methodology, and tools have actually made it possible to appeal to customers on an individual level. Doing so requires a deep understanding of demographics, transaction history, category and channel preferences for each and every customer. That’s powerful information — if you know what to do with it.
Why a Customer-Obsessed Mindset is Paramount
Becoming a customer-centric marketer is like putting on a pair of glasses that lets you see things differently. Sure, you can take them off at any time and put your business-as-usual goggles back on — but we’d be willing to bet those snazzy customer spectacles are going to be your favorites soon.
That’s because looking at your organizational health through a customer-obsessed lens helps you get into the nitty-gritty of why your data looks the way it does and provides a better understanding of how to improve it. Many retailers tend to rely on observations from historical data to forecast the future behavior of customers, but the retail landscape is evolving too quickly to keep making decisions based on the past. Customer-centric metrics are also forward-thinking metrics; they’re predictive, action-oriented, and concretely informative.
Here’s an example: Say you haven’t sold as many pairs of shorts as you’d like this summer. In the past, that meant you’d send out an email blast to all of your customers advertising 40% off on all of your shorts, trying to clear them out before the end of the season.
However, with customer-centric metrics, you can see that some of your customers are highly motivated by sales and discounts — in fact, they’ve never purchased anything at full price. Another group of your customers, though, only buys newly released items. There’s no need to waste a discount — and an email — marketing a product to a group of customers who will never be interested. Offer the sale to your bargain hunters, and advertise your new releases to your trendsetters.
Unified customer data allows you to see these trends — and many others — and take action accordingly. It gets you closer to explaining why something is happening which also allows you to do something about it. (maybe shorts sales were down this summer because Gen Z’ers are buying pants year-round now. Who knows? No one, until you look at the data.)
KPIs for the Customer-Obsessed Marketer
Marketers can evaluate the efficacy of their campaigns by asking themselves what the true health of their customer base is, what segments require action, what type of action would work best, and what programs are currently working. Answering these questions begins with identifying customer-centric KPIs.
Customer-centric KPIs can be broken down into two categories: executive-level KPIs, which indicate the overall performance of a company’s customer communications management (CCM) strategy, and managerial-level metrics, which highlight concrete marketing opportunities. Executive-level KPIs include big-picture measurements such as customer lifetime value (CLV) and customer equity, while managerial-level KPIs include CLV by channel, lifecycle status distribution, early and overall repeat rates, win-back rate, and your “leaky bucket ratio.”
While totally doing away with a channel- or product-centric mindset can seem daunting, recalibrating your marketing efforts around customer-centric metrics is the first step toward increasing your effectiveness as a retail marketer.