Enhancing Customer Lifetime Value through Automation

Digital SLRMarketing Automation is often talked about in terms of moving a new contact through the sales funnel until they become a customer while, of course, minimising the chance of them falling out of the funnel! Lead 'nurturing'. It's equally applicable when maximising income from existing customers. We've all heard the saying that it costs more to acquire a new customer than to keep an existing one.

Customer Lifetime Value (CLV) is a prediction of the net profit attributed to the entire future relationship with a customer, adjusted based on when one might expect to achieve that profit. It's purpose is to reflect the value today that the future business with that customer has to the organisation. It's a complicated subject and at the end of the day it's a prediction - not a fact.

One thing is clear though. Increasing the average CLV of your existing customers will be easier than acquiring new customers. Assuming you exceeded their expectations on that first purchase then you already have a receptive ear for any follow-up sales activities.

There are two ways of increasing a customer's lifetime value. Firstly, and most obviously, sell the more!

The CLV calculation however includes an 'aging' factor. This recognises that if I sell something to someone today then that sale has more immediate value to the organisation than if that same sale were to be made next year or in five years' time.

I'm going to use the example of a customer buying a shiny new Digital SLR camera. You knew there was a reason for those pictures didn't you? I've chosen this example partly because I recently bought such an item so it's fresh in my memory. This isn't quite the customer journey I had, but it could have been if there'd been a suitably enlightened retailer out there!

Selling more

As a customer I did my research online. I read the reviews and decided what to buy, the next task being to choose a retailer. Let's assume that one especially enlightened vendor, Acme Cameras Ltd (ACL for short), has taken on board the idea of content marketing. As part of my research I read plenty of camera reviews but also came across a number of well written articles by ACL telling me about some of the pitfalls to look out for as a new DSLR user switching from film (that's me!). The articles impressed me and I signed up for their newsletter and got a few more really good articles from them.

When time came to buy my camera ACL was already high on the list and despite a slightly better price from a global retailer (let's call them 'Rainforest Inc') I decide to go with ACL because I felt more comfortable buying from a specialist, knowing I may well have a few questions to ask. I order, they delivered. On time, nicely packaged and fully working. I'm a very happy bunny.

The only problem is that my DSLR is much more complicated than my old 35mm camera. Many more buttons and with modes that were a mystery. I could have floundered, left it in fully automatic and used it to take snaps. Eventually I may have booked myself on a training course or some kind soul may have bought me a really good digital photography book for Christmas.

This could have happened, but instead ACL started sending me weekly emails with links to really interesting articles. Not directly selling but instead drip-feeding me with ways to get the most from my new toy, all in nice bite-sized chunks. I didn't read all the articles, just the ones that interested me.

One article of particular interest concerned using filter systems with a DSLR. I clicked on the link, read the article. The images in the article looked amazing. I didn't think any more about that until a few days later when I got a separate 'special offers' email from ACL. They cleverly included a number of products, but fairly obviously there was a filter starter kit. This isn't something that I would necessarily have bought and I did check around on prices to make sure ACL's were reasonable. They were so they got more of my cash. Not only did I buy something I'd originally had no intention of buying but I bought it from ACL.

Selling sooner

My DSLR has a built-in flash that popped up above the hot shoe at the flick of a button. I used this a few times but the results were pretty awful. The flash is fairly bright but there's no diffuser so any indoors use creates a picture with very harsh shadows. It's useful as an outdoor fill-in flash but that's about all. I missed the external flash from my 35mm camera and my first inclination was to buy one. That was until I saw both the price and the complexity. Some flash guns could cost almost as much as the camera and each had different operating modes and you had to get the right one to work with the metering system of your specific camera. I dithered. I wanted one but had no idea what to buy and I didn't have enough time to do the research.

Thankfully ACL came to the rescue again. This time pointing me at a very clear and concise article on the different kinds of flash gun available. I clicked on the article, read it and also clicked through to descriptions of some of their available products. I didn't buy right there and then. I dithered, again.

A couple of days later I got a call from ACL and talked to a very nice company representative who wanted to know how I was getting on with my camera. Was it working how I expected? Was I happy with the results? Did I need any help? Any questions?

I bought a flash gun…

Increased Customer Lifetime Value

I now have both filters and a flash gun. One I may never have bought, the other would have taken me a lot longer to buy. Both of these increase my value to ACL. Careful planning using marketing automation tools like CommsBox would allow much of the interaction above to be automated:

  • The email sequence of links to articles would be triggered through the sale of a DSLR
  • The special offer email leading to my purchase of filters was triggered by my interest in a particular article
  • The sales assistant called me because the automation system spotted that not only did I read an article on flash guns I also went to the trouble of looking at specific products. This combination resulted in a sales call 'task' to be scheduled in the CRM system for two days later. The person that made the call had my entire customer history in front of them.

Digital marketing coupled with Marketing Automation goes far beyond nurturing new leads and can significantly increase the value of your existing customers.

If your competitors aren't doing this yet then they are probably doing their research. Get there first and understand how marketing automation can help your business.

Peter WilsonPeter is the chief architect for the CommsBox™ Integrated Marketing Platform. With over 30 years experience in a variety of R&D and IT positions Peter has worked for both large multi-national organisations and small technology start-ups. Peter founded YellowHawk in 2002 to bring Enterprise class web-applications to the SME market.


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