Customer Lifetime Value has become a matter of life or death for retailers
Retailers have always had to innovate to keep up with shoppers. For the consumer, this leads to more convenience, greater choice and a more personalised service, but for the retail industry, keeping pace is not always easy. Toys R Us and Maplin are the latest to fall victim to the ever-changing face of retail. Of course, the reasons for a company’s downfall are always varied and complex, failing to provide a seamless and quality customer experience will always be a contributing factor.
It's time for retailers to take Customer Lifetime Value seriously.
Meeting ever-increasing consumer expectations requires marketers to think beyond measuring short-term, transactional gains and toward building long-term loyalty. This shift involves a focus on more complete metrics like Customer Lifetime Value (CLV) - which provides marketers with the insights they need to build a holistic view of their customers – essential when it comes to providing a relevant, personalised customer experience.
Measurement is an age-old issue for marketers which has seen the industry fall back on metrics like click-through, conversion rates and return on ad spend (ROAS). They all serve a purpose but fail to consider the longevity of each customer. These pin-hole views provide a good sense of a particular campaign’s success, but not the holistic value of a customer over a lifetime of campaigns.
The total value a consumer represents to a business is the fundamental, most transparent metric on which to evaluate overall brand performance and while CLV has been the focus of marketing discussions for some time now, application continues to be a challenge.
Data can solve the CLV challenge
At Criteo, we recently spoke to 100 UK marketers to understand how effective their measurement of CLV is. Despite almost all (98%) believing the metric is important to their marketing strategy, three quarters (76%) admitted their organisation fails to measure it effectively.
Lack of budget, no internal buy-in and a skills shortage were some of the barriers to effectively managing CLV. But lack of data and the inability to create a holistic view of the customer was critical. Nearly half of respondents said they did not have ability to track customers across devices, and 72% said not having the right data was a major stumbling block to achieving CLV.
It is clear then, that data is the answer. It holds the key to unlocking customer insight and uncovering a complete view of the modern shopper which can be effectively acted upon to deliver genuinely personalised, relevant experiences that keep them coming back again and again. And UK marketers agree, with 81% stating that data is the key to solving the CLV challenge.
But the intricate and unique paths to purchase that we all undertake mean that one data set is not enough.
Retailers need to collaborate and share data that will enable them to build a view of the customer across channels and devices. While five years ago sharing customer insights and preferences seemed outlandish, the tide is turning and retailers now understand the benefits of collaboration and working together.
Change is the only constant in retail today and using data is the only way that retailers can keep pace. By putting the customer at the centre of everything, understanding their journey and their value to the organisation, retailers can thrive and create loyal, engaged customers.
John Gillan is managing director of UK and Northern Europe at Criteo
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