h Star’s goals for category leaders: Customer lifetime worth model //

This is the third part of a series that focuses on the North Star goals which set category leaders apart among their peers. Part 1 (one to one, omnichannel personalization), can be found here. Part 2 (first party customer view) can be found here.

Marketing professionals know the pressure on sales and marketing professionals to convert customers to their product or service. They also understand how much easier it is to retain a satisfied customer than to win new customers.

It seems that brands are starting to take this to heart in a big way, so much so that according to Reuters, “lifetime value” is Silicon Valley’s next buzzword. The marketing technology industry today focuses on solutions that allow leading brands to capture and measure customer value over the long-term.

It would be difficult to find a company that values long-term customers. There is a huge difference between simply wanting to create great customer experiences and actually delivering it so your customers purchase more often and refer others.

It is important to change the direction and strategy in key areas in order to embrace a customer life-value model. These are just three benefits, but there may be more.

Customer success is aligned with organizational KPIs

First, adopting a customer life-value model as a strategic KPI will change your company’s goals. It makes it clear that customer success is equal to business success.

Although short-term revenue and sales goals are important, CLV can be recognized and adopted by teams and initiatives. This will allow them to give customers the best possible treatment to grow loyalty and increase their value over time.

Greater alignment between retention and acquisition goals

You may be experiencing friction between sales, marketing, customer service, or support in your company. This could indicate that there is a conflict between the desire to acquire new customers and their need to stay.

It is important that leads are of such quality that they become lifetime customers when a customer’s lifetime value model becomes a primary KPI.

This may be the goal of every team, but it’s easy to compromise in order to get net new customers “in the door” to meet a marketing target or sales quota.

Customers who are not a good fit for your products or services will be removed from the top of the priority list so that you can concentrate on long-term, high-quality customers.

Multi-touch attribute models are more holistic.

This is the last example I will give. It has to do how you measure effectiveness in your marketing.

Accounting attribution is only for new customer acquisition. You will only consider a subset the channels that both existing and new customers are exposed to.

You don’t need to look at the attribution models that lead to initial sales when you consider a customer lifetime worth model. Now, you will be looking at:

• What is important in building a solid foundation?
• Which channels are most effective in keeping customers loyal and engaged?

This would mean that you are switching from a first/last-touch attribution system — which gives the “win” for conversions to the first or last channel an audience member has seen or interacted — to a multitouch attribution model that can give credit to all channels that the customer has interacted with during their journey.

This is a difficult task, especially for large marketing programs. However, it can help you maximize your ad spend and understand what interactions customers value most so that you can prioritize them.

Of course, your customers may not be the same. Different customers will prefer certain channels over others, so it is not an all-inclusive approach.

It is possible to reap many benefits by focusing on the long-term value you provide your customers and your customers to your business. However, this principle requires commitment from all parts of your organization.

Get deeper: Marketing Attribution: What is it and how it identifies customer touchpoints

CLV made possible

All of this sound fantastic, but you may be thinking that it would be nearly impossible for your organization because of one of many reasons. You could be one of these:

• Data can’t be tracked or followed if there are silos.
• Teams that don’t share sales or acquisition data with each other.
  
  Lack of a common taxonomy for reconciling activities across departments, product lines, and divisions
• You can also ask about any other issue.

This is why I tell you that although it may seem daunting to do all of this at once, it doesn’t mean that it won’t be worthwhile. You must start somewhere. Find out what you have, and then build on it. A minimum viable product (MVP), which is an iterative approach, can make a big difference.

An MVP is a lifetime view of a customer, but it may not be as accurate or as fidelity as a customer lifetime value model. However, this can grow over time. You could also build CLV by using a subset or combination of products and services.

You may need to make sure that each building block of the CLV calculation can easily be constructed and measured individually if you really want to start from square one. It doesn’t matter where you start, it matters that you do!

The fourth and final North Star goal is the foundation of all work in an organization. It will be discussed in the next article. This is the culture within the organization. It is where the goal is agility and customer-centricity in all aspects. This is why it is so important, and how it benefits both employees and customers.

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