More than ever marketing is under pressure from upper-management to justify their annual spend. The ability to prove ROI has become increasingly valuable to obtaining larger budgets, increasing brand presence and furthering campaign efforts to connect with consumers. Shop.org 2014, held at the Washington State Convention Center in Seattle at the end of last month, offered one panel, “Leveraging Customer Lifetime Value Data to Power Your Digital Marketing Strategy,” addressing the importance of marketing and finance coming together to leverage data as a way to better measure campaigns, set realistic marketing goals and ultimately ensure marketers can maintain or increase their annual budget.
Rose Hamilton, EVP & CMO at Pet360, explained how she has strategically partnered with her CFO in order to begin to assess customer lifetime value and integrate it into her marketing efforts. There is so much emphasis being placed on the partnerships forming between the CMO/CIO that it is important to recognize other opportunities for internal strategic partnerships, specifically in this case the CMO/CFO. These partnerships break down internal corporate silos, offering direct communication leading to commitment and results. Plus, these partnerships may help when you find your drained budget needs an extra boost in Q4.
Hamilton explained the steps she took in order to help integrate lifetime value into marketing started with balancing customer value with cost structures. From there she started to “connect the ‘intangible’ customer value to profitable customer behavior changes,” as a way to quantify trends occurring to justify spend. This lifetime value measurement was comprised of different components including: organic growth, monetization of every visitor, engagement, and profitability. The outcome led to better customer segmentation and defined value, showing marketers where they should be placing their spend for the best ROI.
As she was speaking it was clear to see lifetime value could not be calculated without a system in place to first, collect all of the data necessary, and second, analyze it. This centralized system of being able to breakdown silos and connect all data points is crucial in discovering the value of your customer and continuing to help lower customer acquisition costs as you learn the specific quirks of your ideal customers. In addition, Hamilton pointed out that you need to understand the true value of all of your costs, including often forgot factors such as shipping, to get a realistic view of this calculation.
With marketing, it can be overwhelming when trying to decide how to spend the budget allocated to you, especially if the industry is rapidly changing. I believe the best place to start is with your owned data, internal resources/partnerships with other executives and a plan in place to measure your spend. By using data you have you can strategically design, test and refine your spend on all marketing efforts, ultimately resulting in a more strategic spend targeting customers with a higher propensity for a longer lifetime with your brand.