CEM Top Ten #8: Customer Experience Follows When You Invest in Really Knowing Your Best Customers

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The power of relationship building through CX enhancement emanates from knowing what genuinely motivates and moves your most profitable customers.

I have incredible respect for marketers who integrate smart, creative ideation with best-in-class digital tools based solely on sparks of brilliance. That’s not me. My confidence in both marketing and technology tends more to fact-driven analytics, insights that lead me to actions, and stories of observation that allow me to evangelize cause and effect.

Since the population of truly brilliant creative types is so small, I’ve found that the vast majority of marketing technologists also seek the comfort zone of customer insights—and increasingly, a highly sophisticated view of customer behavior, segmentation, and attitudes. I also realize that while analytic capabilities are rapidly growing in customer-focused organizations, time and people remain resource constrained and must look to prioritize their efforts and expense.

Customer experience—the entire accumulated meshing of digital, physical, creative, personal with consumers (or business-to-business customer relationships) relies heavily on insight and relevance. The idea of journey mapping from awareness to consideration through purchase and retention (loyalty), relies at every stage upon customer insights to identify acquisition channels, craft messaging, distribute inventory, intelligently engage, and build and maintain relationships.

Best customers are also far more receptive to more intimate customer experiences that use real-time contextual data to trigger communication “in the moment” of purchase consideration, customer service, or even just passing near a location.

On a purely strategic basis, it is imperative to know the point at which an organization makes the cuts between its best and very best customers. This can be described by deciles for best customers (e.g. 10% of customer account for 50% of revenue) or small percentages (top 2% account for 20% of revenue)

  • For the top groups, understand their key metrics (frequency, seasonality, retention) versus other customers
  • Then, build a much deeper understanding of sources of acquisition, product affinities, offer responsiveness, and the detailed paths they took from new-to-loyal
  • Finally, overlay demographics to paint a more personal picture (but note, this is a final, not driving, step in the process)

Recently, working with a designer and retailer of high-end optical gear, our best customer analysis pointed out a key fact that best customers didn’t actually come in and buy a pair of sunglasses on their first purchase. Instead, those that combined sunglasses and replacement lenses had a 40% chance of joining the top customer cohort. Those that purchased sunglasses, replacement lenses and an apparel accessory were 70% likely to eventually end up at the top of the customer base.

Merely armed with a whole host of facts: knowledge of first purchase, time to second purchase, products bought in combination, channel preference, offer responsiveness, has allowed this organization to rapidly gain their stride and request the level of marketing funds that allowed them to greatly expand their tactical efforts.

For example, organizations with deep best-customer insights:

  • Shape customer experience from the top down with a recognition that preservation of best customers has higher ROI than optimizing for a mythical average customer
  • Create an aspirational customer experience that good customers want to share
  • Identify and explicitly market to customers who exhibit the traits (e.g. acquisition source, first purchase, product choices) of best customers but have not spent to their potential
  • Focus on customers who at one point were best, but for some reason have lapsed in their engagement and require intervention
  • Find new customers who have a higher propensity to eventually become best customers and proactively shape their journeys down focused paths

Eventually, the organizations that are strongest at identifying and learning about their best customers are able to extend those insights and that experience beyond the relatively small slice of customers. Smart organizations however start small (number of customers) but actually quite big (the impact on profitability) that comes from prioritization and the level of execution that top customers expect.

To catch up on the first seven posts in the Customer Experience Marketing Top Ten series by David Rosen, click here. Check out how other companies and leaders began their journeys and got on the road to digital business at TIBCO NOW last month by watching the enthralling keynote presentations here.