5 questions CMOs must ask when "they don't show up"

| by Chris Petersen
5 questions CMOs must ask when

What if you held a really important event, and spent a lot of time and money on decorations and catering … and no one came? Well, maybe a few people showed up out of curiosity or for the food, but not the really important guests you were expecting.

A really successful personal party or event is based upon dynamics of relationships. When you plan an important party you don't just drop invitations in the mail or a text … you follow up personally. In many ways, businesses are "throwing a party and just blasting out anonymous invitations, ala mass media, in the expectation and hope that "they will come." The ultimate irony for CMOs in an omnichannel world is that more channels does not necessarily mean more traffic or sales. To change results will require new questions and behaviors in the marketing arena.

Why this is important:With today's omnichannel consumers, mass marketing "ain't what it used to be." To earn the right to retain customers and repeat business requires asking different questions focused on building and sustaining relationships.

Omnichannel is shifting focus from 3 Ps to "customer relationship"

In the age of big box retailing and "mass marketing" the emphasis was on the 3 Ps – Product, Price and Promotion. Brands and retailers "blasted" out ads primarily based upon selling things (products) at "low" prices, and special prices on promotion. Reaching consumers was literally measured in terms of "reach and frequency" of the mass broadcast media, circulation of magazines and newspapers. Although direct marketing through snail mail and email was more "targeted" to certain demographics, the approach was still primarily based on leveraging the 3 Ps to generate traffic that could be converted to sales.

Many smaller retailers, especially "mom and pops," have been using the strategy of sending personal invitations to customers for upcoming events. Essentially, they are inviting them as "personal guests" to a party, celebration, grand opening, or even just a sales event. The underlying foundation to this strategy is threefold:

  1. They know who their customers are by name
  2. They know how to contact them
  3. They know what appeals to them beyond price

The tremendous value of "relationships"

In the transition to omnichannel, customer relationships are increasingly becoming important for even the largest retailers. Customers who have a relationship with a business shop more often, make contact across more channels, and ultimately purchase more.

  • Amazon Prime customers visit the site more frequently, purchase more far products and are much more profitable than occasional Amazon shoppers
  • John Lewis department stores in the U.K. consistently finds customers who have a omnichannel relationship, which includes shopping more than one channe, purchase 350% more than customers who just shop online or just shop stores

What should be keeping CMOs up at night – customer relationships

There is a simple basic truth that has been around for a long time … it is far easier to sell more, and be more profitable with existing customers than it is to sell more things to new customers. The 80/20 rule is alive, well … and more important than ever today. The fact: 20 percent of customers drive 80 percent of the profitable business.

Today's CMOs are now being asked for more than traffic, unit sale conversion at any price. There is increasing pressure to find answers to produce results in three key areas:

CAC – customer acquisition costs. To lower the cost to acquire and retain customers over time that will generate repeat business.

CR – customer retention.What percent of customers are retained year over year. Or the converse – churn rate … how many customers are lost year over year.

LTV - life time value.What is the total value of a customer over time, not just this week's shopping cart.

5 questions every CMO should be asking about marketing

Going back to the metaphor of a personal party or event, you would most likely start by inviting people you know … those you have relationships with. The key is that you would start with friends, not strangers. Likewise, CMOs can no longer be viewing customers as aggregated sets of demographics. To develop and retain customer relationships that generate increased lifetime value and profit, CMOs must be asking their teams new core questions:

#5 How many of our customers can we individually contact?

The ugly truth is that most brand and retail systems were designed to sell things, not create, cultivate and manage individual customer relationships. Even many call centers were established to prevent returns and cut costs, not to cultivate and develop long term relationships and loyalty. The single greatest gap in retail today is the lack of adequate CRM systems. The biggest nightmare and starting point for many CMOs is the inability to track individual customers, what they have purchased, and the future ability to reach them as individuals in the media they prefer.

#4 How many ways can we touch/reach our customers?

The simple fact is consumers are changing behavior in how they consumer everything. They are more likely to use social media or blogs to initially research a product than to visit a store. While social media may not be a "selling media," in terms of converting unit sales, consumers are 14 times more likely to believe a "friend" than a brand or store ad. Lowes and Nordstrom's have millions of followers on Instagram, in large part because they understand the value of reaching existing customers with new ideas of what is possible, and then literally having their customers invite their friends to "come to the party" to see what trends and what is possible at their favorite retailer.

#3 What are our value props for customers, and did they respond?

The mass advertising scenario primarily focuses on price and promotions. Consumers can get their own best prices on their phone. The real question for marketers now is what are the value props beyond price: Speed of delivery, free shipping, convenience, ease of returns, warrantees, and/or services after the sale? The real question for CMOs going forward is not consumer segmentation, but customer preference mapping and patterns based upon the holistic value propositions of the brand and the impact on customer experience. This will take creativity and sophisticated tracking, well beyond which products sold at a price.

#2 How many of our customers responded … purchased?

The simple fact is most organizations can readily track sales by product. They can measure sales and revenue uplift for ads and promotions. But, the real question for CMOs is did existing customers come back, and what did they purchase? This kind of personal marketing requires data at the personal level, a real CRM system that tracks both individual customers, and their purchases over time.

#1 How can we thank and follow up with each of our customers?

How many retailers make the time and effort to express gratitude for your business? Customers come back to where they feel valued, and where they are served AFTER the sale. Exceeding customer expectations beyond their purchase goes an incredibly long way in terms of retaining their loyalty and repeat business. A fundamental job one for today's CMO is customer relationship loyalty.

The bottom line? Future survival, and essence of today's marketing is all about creating and sustaining customer relationships, not selling another item today. That requires asking different questions and CRM systems beyond any mass advertising campaign of the past.


Topics: Consumer Behavior, CRM, Customer Experience, Marketing, Omnichannel / Multichannel, Psychology, Technology



Chris Petersen
Chris H. Petersen, PhD, CEO of Integrated Marketing Solutions is a strategic consultant who specializes in retail, leadership, marketing, and measurement. He has built a legacy through working with Fortune 500 companies to achieve measurable results in improving their performance and partnerships. Chris is the founder of IMS Retail University, a series of strategic workshops focusing on the critical elements of competing profitably in the increasingly complex retail marketplace. wwwView Chris Petersen's profile on LinkedIn

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