Only 34% of marketers report being comfortable with the idea of customer lifetime value, and even those who get it struggle to market across generations
"Know your audience" is Marketing 101, so why do so many marketing leaders miss the mark when appealing to their bases? Even when a brand is successful, it often struggles to maintain that appeal in the long run. Your brand’s customer lifetime value strategy is crucial, no matter what industry you’re in.
Unfortunately, only 34% of marketers report being comfortable with the idea of customer lifetime value, and even those who get it struggle to market across generations. They get lost in the myriad details of the marketing process without realizing it’s an audience’s culture — not one of the countless formulaic solutions that work only on paper — that maintains its loyalty.
To be fair, the lifetime value of a customer is still a formula. Marketers still have to understand the numbers and analysis behind an effective strategy. They hit a roadblock, though, when they focus solely on the formula without asking themselves why it works.
An overlooked asset
When discussing customers, we’re talking about human beings — not just consumption habits. A person will choose a brand to reflect their identity. By choosing a particular brand, that person reaffirms both their own and their tribe’s perceptions about her desired identity.
That leads to a much longer relationship between the person, their extended network of relationships and the brand. What is it about the brand that keeps people interested and will they stay interested in the next decade? In other words, how do people’s values, beliefs and behaviors influence their connections to the product?
These questions, of course, become difficult because you’re not trying to reach just one person. As consumers, we constantly share our opinions about brands with others. We persuade our friends to try products we like, we spread our love for favorite brands on social media and we certainly voice our disapproval of brands that fail to meet our expectations.
An effective customer lifetime value strategy, then, takes these entire social networks into account. For instance, Patagonia connects its brand with several environmental issues to appeal to its outdoorsy and passionate fanbase. The company even created an ad urging customers not to buy its luxury jackets and to swap clothing pieces they no longer needed.
On the surface, Patagonia was condemning a consumerist culture, and in doing so, it tapped into its audience’s environmentalist culture and convinced consumers that the company was doing the right thing. Suddenly, spending $150 on a fleece doesn’t seem so steep when it connects to a cause the customer believes in. And when customers support a cause, their interest is piqued for a lifetime.
Finding your approach
Each company has unique success stories because each target audience has its own set of passions and lifestyles. Learning from other brands is one thing, but understanding the value that your brand brings to your audience is what can separate you from the pack. Try out the following strategies to help you not only reach more consumers but to reel those consumers in for good:
1. Brainstorm on your audience’s evolution
It’s one thing to understand your customers’ culture; recognizing how that culture evolves over time is a bit more complicated. Adidas, for example, has connected with its customers on a deeper level by collaborating with Parley for the Oceans to develop shoe and clothing lines made from recycled oceanic waste.
The athletic apparel company gambled that its customers would prioritize sustainability over traditional production materials and won. In 2017 alone, Adidas sold one million pairs of shoes from the recycled materials and the company anticipates more than $1 billion dollars in revenue from this collaboration in the near future. Adidas’ decision to prioritize sustainability in order to follow its audience’s projected evolution made a big impact on its customer base.
Adapting to your base’s changing characteristics is essential to maintaining their loyalty indefinitely. That makes determining significant milestones in your demographic a perfect first step to solidifying a concrete strategy to enhance customer lifetime value.
Start a list with your marketing team to brainstorm how your customers have changed since your brand first caught their attention. Maybe your ideal patron is turning 50 and their kids are leaving for college. Your base in the ’80s might have been punk rockers, but when those customers have traded their leather jackets for leather briefcases, your message has to evolve as the audience’s identity evolves.
The best way to adapt to your audience’s evolving perceptions is by asking yourself and your team a series of questions. Questions such as "What are their hobbies, and why do they choose them?" and "How do they access our product?" will get you thinking about where your consumers are right now. This way, instead of waiting around for them to tell you they’ve changed, you’re taking the initiative and you’ll prove your devotion to them by making the first move.
2. Personalize your marketing messages
A word of caution: just because your primary customers are adopting new attitudes and behaviors doesn’t mean they are all the same. Even customers in the same age bracket will have varying characteristics, resulting in a diverse target market. Crafting a one-size-fits-all message, then, is a death sentence, as it won’t help you connect to the individual customer.
The trick is to understand what unites your consumers without placing them all under the same umbrella. For instance, personalizing your messages sounds clichéd, but it emphasizes the longevity of your customer lifetime value strategy. Using specific language for each segment of your audience can go a long way, considering that 80% of customers respond more effectively to personalized content. Recognizing common personality threads among your consumers is still important, but embracing one-on-one marketing is what convinces those consumers that you’re not going anywhere.
3. Be a self-proclaimed anthropologist
None of these strategies matters if you misinterpret your customers’ unique values, a mistake that happens when marketers spend all day plugging numbers into a computer. Sure, there are handy tools to analyze your target audience, but seeing as a mere 3% of marketers claim their data is fully optimized, a purely scientific approach won’t cut it. Ultimately, the key to developing a valuable customer lifetime value strategy is to engage with your consumers.
Like a dedicated anthropologist, go out and interact with potential brand loyalists. Dos Equis created this connection with its customers by realizing consumers should be defined by more than their immediate interest in the product. The Most Interesting Man in the World campaign acknowledged that consumers want a beer that makes them feel classy and unique. It wasn’t just marketing to college students who occasionally buy six-packs; it targeted an entire culture that longs to live an exciting life.
To dig into your customers’ real wants and needs, have a conversation with them and leave your biases and assumptions at the door. Afterward, start brainstorming from the beginning with your team. You’ll be amazed at how much more creative your ideas are when you get to know the people you’re selling to.
Don’t be alarmed if all this sounds overwhelming. Redesigning your customer lifetime value strategy can be daunting given the complexity of consumers in every industry. But even if your approach has worked in the past, chances are it’ll soon be obsolete — if it’s not already. Cookie-cutter marketing methods produce average results at best. Understanding your customers’ culture and what makes them tick might just be the solution your company needs.