For the longest time, the product was thought of as the center of the marketing universe. Brands would build their programs and strategies around getting those products into as many homes as they could—who was buying the products was less of a concern. Make it, and they will come. The goal, above all else, was to drive brand equity.
This is no longer the case. Much like the stark realization that the Sun was, in fact, the center of the solar system, marketers are coming to understand that the center of the marketing universe is not the product, but rather the customer. For marketers to thrive, they must rethink how they view customers and experiences, replacing brand equity with customer equity.
This understanding requires not only a shift in mindset, but also a shift in approach. And there is a north star leading the way for brands trying to make the move to a customer-centric approach: customer lifetime value (CLV).
Factors driving customer-centricity
It’s impossible to pinpoint just one aspect of our current “age of the customer” and credit it with propelling the shift. Brands are facing a number of challenges for which the best solution is focusing on the customer and leveraging customer lifetime value as a critical metric. These are some of the most prominent drivers creating the need for a customer-centric approach.
First-party data is more valuable than ever. The demand for personalized, relevant experiences has never been greater, and those can’t happen without first-party data. Yet it’s also exceedingly more difficult to come by thanks to the “walled gardens” of Amazon, Google, Facebook, and others. Add in the impact of data privacy laws, such as GPDR and CCPA, and brands must be much more cautious and conscious about how they collect and use that data.
The shortening customer journey
The traditional customer-journey funnel is collapsing. The clear stages of discovery, awareness, consideration, and purchase are being chopped down into shorter moments of truth, sometimes leading customers directly from discovery to purchase. Take social commerce as a prime example, where a single click inside an Instagram post can lead consumers to completing a transaction in seconds.
The attribution wars
Despite the investment in first-party data analytics, channel marketers within brands are still fighting with each other for the all-important credit of attribution. This war for credit is distracting from the true indicator of substantial growth, which is customer lifetime value.
The DTC playbook
Thousands of digitally native direct-to-consumer brands are entering the market with the same playbook. The result is a battle for consumer attention that leads to a cost of customer acquisition that exceeds the customer’s lifetime value.
The factors driving the need for customer-centricity are in no way slowing down. Competition in B2C industries and the demands from consumers for personalized, always-on, anywhere-they-are experiences will continue to rise. It will be imperative for brands to keep up. The behaviors of customers change on a daily, hourly, and per-minute basis, and the ability to meet them in that real-time moment of need or behavior change with relevant messaging is critical to engendering satisfied and long-lasting customers.
The formula for success requires equal parts analytics and strategy. Impactful 1:1 engagement can’t happen without integrated first-party data and a model to better understand the moments to prioritize. And the data and models are only as powerful as your ability to act on them. Let us know if you have questions or challenges with either area in your pursuit of customer-centricity.
Your guide to embracing customer-centric marketing
Gain more insights into why and how brands are shifting focus toward their customers by downloading a free copy of our customer-centricity guide.