February 12, 2017 by
Successful digital companies are organizations that use technology as a competitive advantage in its internal and external operations.
Many definitions abound but, in a nutshell, this is what makes them successful. Like any major achievement, success doesn’t occur unless the transformation changes the company culture as much as is does the company.
In this article, we study common characteristics. Here are 10 terrific traits of successful digital companies with examples.
- ARE UNREASONABLY ASPIRATIONS: Being “unreasonable” is a way to jar an organization into seeing digital as a business that creates value, not as a channel that drives activities. However the vision is described, if you aren’t making the majority of your company feel nervous, you probably aren’t aiming high enough. Burberry, in 2006, was a stalled business whose brand had become tarnished. A series of groundbreaking initiatives, including a website (ArtoftheTrench.Burberry.com) that featured customers as models, more robust e-commerce catalog that matched the company’s in-store inventory, and the digitization of retail stores through features such as radio-frequency identification tags leaped frog Burberry over competitors and tripled revenues.
- ARE CUSTOMER OBSESSED: Knowing what the customer wants has always been the key to successful digital companies. Advances in technology and data science make it possible to analyze the complete history of customer transactions and identify individual shopping habits, patterns and motives that drive behavior. 86% of consumers say they were willing to pay more for a better customer experience. And 89% begin doing business with a competitor following a poor customer experience. This mind-set is what enables companies to go beyond what’s normal and into the extraordinary. If online retailer Zappos is out of stock on a product, it will help you find the item from a competitor. While it might seem heretical to buy from competitors, it’s worth it for Zappos because 75% of its orders come from repeat customers.
- KNOW CUSTOMER LIFETIME VALUE (CLV): It is 6-7 times more expensive to acquire a new customer than it is to keep a current one. Successful digital companies recognize that, while customer acquisition is always important, there is often more to be gained be exploring ways to increase the Customer Lifetime Value (CLV) of current customers. According to a 2013 study by the Consumer Intelligence Research Partners, Amazon Prime members spend $1,340 annually. And that was 3 year ago. More important, Consumer Intelligence Research Partners estimates that Amazon Kindle owners spend approximately $1,233 per year buying stuff from Amazon, compared to $790 per year for other customers.
- ARE SOCIAL MEDIA ADEPT: If your company is customer obsessed, then you’re constantly listening to what your customers have to say about your brand, your competitor and your industry. Successful digital companies not only listen, they are adept at doing something with this data. McDonald’s decision to serve All Day Breakfast may have been a surprise to some customers, but shows how the massive company is trying to move nimbly and take some risks with its messaging. “Customers were saying to us ‘Hey, McDonald’s, this is the next big thing. This is what we want from you,'” said McDonald’s USA Chief Marketing Officer Deborah Wahl. With help from Twitter and Sprinklr, McDonald’s found 334,000 tweets mentioning All Day Breakfast at McDonald’s and found the most “engageable” accounts to send customized messages.
- ARE QUICK AND DATA-DRIVEN: Rapid decision making that is data-driven is critical in a dynamic digital environment. A cycle of continuous delivery, experimentation and improvement, adopting methods such as agile development and “live beta,” supported by big data analytics, are characteristics of successful digital companies. U.S. Xpress, a US transportation company, collects data in real time from tens of thousands of sources, including in-vehicle sensors and geospatial systems. Using Apache Hadoop, an open-source tool set for data analysis, and real-time business-intelligence tools, U.S. Xpress has been able to extract game-changing insights about its fleet operations. Data on the fuel consumption of idling vehicles led to changes that saved $20 million in fuel consumption in a year.
- PREPARE THEIR INFRASTRUCTURE: To take advantage of all that a digital world has to offer, successful digital companies have to be willing to invest in digital-ready infrastructures that will accelerate their digital strategies and the digital experiences of their customers, employees or citizens. As part of its three-year IT overhaul following a brush with bankruptcy, General Motors closed 23 of its data centers worldwide and moved most of that capacity into two new data center in Michigan. Reducing the distance for data to travel was a huge financial motivator for the company to not only saves on networking costs but improved responsiveness. New data centers are ‘private-cloud-meets-mainframe’ operations that run cloud-ready apps.
- KNOW THEIR METRICS: Metrics are a proxy for what matters most to senior management. But the measurements of success varies widely between marketing, tech management, and business unit leaders. This can creates conflict and confusion unless your company is clear about outcomes being measured. P&G created a single analytics portal, called the Decision Cockpit, which provides up-to-date sales data across brands, products, and regions to more than 50,000 employees globally. The portal, which emphasizes projections over historical data, lets teams quickly identify issues, such as declining market share, and take steps to address the problems in measurement the company considers critical to success.
- OPERATE IN A DIGITAL ECOSYSTEM: A digital ecosystem is the detailed visual of how all digital and social assets of a brand interconnect and interact. When managing multiple platforms, it’s important to understand how they will all work together to achieve the brand’s goal. Starbucks offers the largest and most robust mobile ecosystem of any retailer in the world, with more than 12 million Starbucks Rewards™ members (up 18% year on year), 8,000,000 mobile paying customers with one out of three now using Mobile Order & Pay, and more than $6 billion loaded onto prepaid Starbucks Cards in North America during the past year alone. Starbucks digital flywheel has also continued to gain momentum with the launch of true one-to-one personalization.
- PUT THE RIGHT LEADERS IN PLACE: The fast-moving digital world is exposing gaps in digital leadership, especially with regard to front office disciplines (those related to the customer experience) and head-office disciplines (those related to enterprise strategy). According to Gartner, three types of digital business leader have emerged to fill these leadership gaps: 1) Digital strategist, 2) digital marketing leader and 3) digital business unit leader. “A lot of our digital talent is home grown – mavericks who have their own businesses and have adapted their business in entrepreneurial ways. It is important to find these people and leverage their skills,” says David Crowley, Chief Commercial Officer, British Airways.
- SHOW ME THE MONEY: Many organizations focus their digital investments on customer-facing solutions. But they can extract just as much value, if not more, from investing in back-office functions that drive operational efficiencies. Successful digital companies know the value of reducing the costs of doing business. One-third of the digital innovation projects at Starbuck are devoted to improving efficiency and productivity away from the retail stores, and one-third focused on improving resilience and security. In manufacturing, P&G collaborated with the Los Alamos National Laboratory to create statistical methods to streamline processes and increase uptime at its factories, saving more than $1 billion a year.
Are these traits you associate with successful digital companies? Any there others you would add? Is your company interested in developing the capabilities of successful digital companies?
February 06, 2017 by
Digital transformation is “the realignment or new investment in technology and business models to more effectively engage digital customers at every touchpoint in the customer experience lifecycle” according to Brian Solis.”
It’s important because the idea is to accelerate business in a strategic and prioritized way. Digital transformation serves as a major, maybe the ultimate, demonstration of change management.
Regardless of the definition and the desired results, digital transforming takes time (2 years by most estimates, planning and testing along the way. Plus, it requires a significant investment. What should you know to guide the journey?
Here are 50 digital transformation facts to manage company change.
- 90% of US consumers feel that organizations are disjointed in their digital connection, forcing them, for example, to repeat steps and information. (Verndale)
- 88% of companies report they are undergoing digital transformation (Altimeter)
- 88% cited customer experience (CX) as the driver for change. (Aria)
- 87% of companies see digital transformation as a competitive advantage. (Capgemini Consulting)
- 90% of companies say they will appoint a chief digital officer. (Wall Street Journal)
- 87% of companies think that digital transformation is a competitive opportunity. (Capgemini Consulting)
- 86% of organizations believe their organization should execute a business transformation initiative regularly just to stay competitive and relevant. (Verndale)
- 85% of enterprise decision makers feel they have a timeframe of two years to make significant inroads on their digital transformation before suffering financially and/or falling behind their competitors. (PWC)
- 82% of companies say that responsibility for overall leadership of digital transformation has been formally assigned to someone within the organization. (Apigee)
- 81% of companies cite their have digital department (Altimeter)
- 81% cite innovation is at the top of the digital transformation agenda. Right behind it is the need to modernize the IT infrastructure with increased agility, flexibility, management, and security (80%). (Aria)
- 80% of top managers view digital change as crucial for future business models (PWC)
- 76% of marketers think marketing has changed more in the past two years than the past 50. (Adobe)
- 71% of those responsible for digital transformation cite understanding behavior or impact of the new customer as the primary catalyst for change. (Altimeter)
- 71% of leaders said understanding behavior of connected customers is a top challenge they face. (Altimeter)
- 71% of digitally maturing companies say they attract new talent based on their digital vision, (versus 10% of early-stage companies. (MITSloan)
- 70% of change management programs fail to meet their goals, often due to a lack of planning for what happens post-launch (Verndale)
- 70% of executives have started the digital transformation of their supply chains. (Capgemini Consulting)
- 62% say their organization is in denial about the need to transform digitally. (Progress)
- 59% are worried its already too late (Progress)
- 55% of companies without an existing digital transformation program say the timeframe to adopt one is a year or less. (Progress)
- Only 54% of have completely mapped out the customer journey. (Altimeter)
- 53% of companies cite “growth opportunities in new markets” as a driver to not only reach existing customers in better ways, but also expand markets. (Altimeter)
- 52% of senior executives cite a lack of familiarity with technology to be a barrier to digital transformation. (Sant ku)
- 51% of executives cited support from leadership as the top reason for success of a business transformation initiative. (Verndale)
- 51% of senior executives believe it critical to implement digital transformation in the next 12 months. (Sant ku)
- 50% of organizations surveyed do not have a well-established process for managing change to organizational structures and business processes based on new BI functionality. (Verndale)
- Only 48% say they feel highly proficient in digital marketing. (Adobe)
- 48% of companies are not prepared to execute business transformation. (Verndale)
- 48% of respondents say their companies don’t have the necessary capabilities to ensure that change is sustained. (Verndale)
- 45% of executives expect digital to grow their revenue, and 25% of executives expect digital to create better customer experiences. (PWC)
- 45% of companies trust third-party vendors to support its digital transformation initiative to provide a better customer experience. 43% choose to do so to reduce burden on internal resources, and 40% do so to reduce liability and risk. (Verndale)
- 41% of leaders surveyed said they’ve witnessed an increase in market share due to digital transformation efforts, and 37% cite a positive impact on employee morale.
- 39% say their digital transformation efforts have helped them make strong progress in enabling real-time transactions. (Accenture)
- 39% of marketers plan to increase their digital budgets without increasing overall marketing spend, essentially reallocating existing budgets into digital channels. (CMO Council)
- Only 36% of CMOs have quantitatively proved the short-term impact of marketing spending; for demonstrating long-term impact, that figure drops to 29%. (Convince and Convert)
- 33% say that their digital transformation efforts have helped them make strong progress in creating new sales channels; 25% say it has helped them make strong progress in accelerating product development. (Accenture)
- 33% of organizations see digital transformation as a huge challenge. (Sant ku)
- 32% say it has helped them make strong progress in improving the efficiency of operations. (Accenture)
- Only 29% feel that implementing digital metrics and measurements was a critical component to enabling digital business. (Verndale)
- Just 29% of companies have a multi-year roadmap to guide to digital transformation evolution. (Altimeter)
- 28% say it has helped them acquire new customers. (Accenture)
- 27% of senior executives rate digital transformation as now being “a matter of survival.” (Capgemini Consulting)
- Only 27% of companies say that their executives possess the skills necessary for digital transformation. (Verndale)
- Only 26% of managers at large global enterprises agreed that their analytics program had met or exceeded their expected business outcomes, and only 31% felt their digital initiatives did the same. (Verndale)
- 25% of companies have a clear understanding of new and underperforming digital touchpoints (Altimeter)
- Only 22% of those surveyed cited having a content strategy in place that addresses customer needs at all journey stages. (Altimeter)
- Mere 20% of leaders are studying the mobile customer journey/behavior. (Altimeter)
- Only 5% of executives surveyed were able to claim they have a seamless customer experience across channels today. (Verndale)
- $100 billion is wasted each year on digital and analytic business transformations that do not deliver what they promise. (Verndale)
Do these digital transformation facts guide your company’s journey. Does your company need help with digital transformation?
January 29, 2017 by
Customer Experience (CX) is the interaction between an organization and a customer over the duration of their relationship.
The quality of the interaction is determined by:
- Journey the customers has to take
- Touchpoints of the company with the customer along the way
- Environment (e.g. in person, digital, phone) in which the customer and the company interact
Customer Experience is measured by the individual’s experience during all the points of contact versus the individual’s expectations.
Much research has been done on signs companies should pay attention to help create awesome customer experiences.
Here are 55 customer experience facts not worth ignoring.
- 12 positive experiences are necessary to make up for one unresolved negative experience. (Rudy Newall-Legner)
- 6-7 times more expensive to acquire a new customer than it is to keep a current one. (Bain & Co.)
- A customer is 4 times more likely to buy from a competitor if the problem is service related vs. price or product related. (Bain & Co.)
- Consumers are 2 times more likely to share their bad customer service experiences than they are to talk about positive experiences. (Global Customer Service Barometer)
- Only 1 out of 26 unhappy customers complain. The rest churn. Indifference is the enemy. (Huffington Post)
- A one-star increase in Yelp rating leads to a 5-9 percent increase in revenue. (Harvard Business Review)
- 91% of customer who had a bad customer experience won’t willing do business with your company again. (Glance)
- 89% of consumers who experience poor service with your brand will leave for your competition. (Forrester)
- 88% have been influenced by an online customer service review when making a buying decision. (Zendesk)
- 85% of customer churn due to poor service was preventable. (Huffington Post)
- 83% of consumers require some degree of customer support while making an online purchase. (eConsultancy)
- 82% say that getting their issue resolved quickly is the number 1 factor to a great customer experience. (LivePerson)
- 81% of companies motivate employees to treat customers fairly, and 65% provide effective tools and training to gain trust with their customers. (Peppers and Rogers Group)
- of companies with strong capabilities and competencies for delivering customer experience excellence are outperforming their competition. (Pepper and Rogers Group)
- 80% of companies say they deliver “superior” customer service; 8% of people think these same companies deliver “superior” customer service. (Bain & Co.)
- 80% of Americans agree that smaller companies place a greater emphasis on customer service than large businesses. (American Express)
- 78% of consumers have bailed on a transaction or not made an intended purchase because of a poor service experience. (American Express)
- 75% of customers believe it takes too long to reach a live agent. (Harris Interactive)
- 75% of brands do not know what engagement means – but are measuring “it.” (Huffington Post)
- 72% of consumers share a positive experience with 6 or more people; 13% of consumers who had a negative experience tell 15 or more people if they’re unhappy. (Huffington Post)
- 72% blamed their bad customer service interaction on having to explain their problem to multiple people. (Zendesk)
- 71% of visitors expect help within five minutes when purchasing product online. (LivePerson)
- 70% of customers whose issues were resolved in their favor say they would return to purchase from that company again (Glance)
- 70% of buying experiences are based on how the customer feels they are being treated. (McKinsey)
- 69% attributed their good customer service experience to quick resolution of their problem. (Zendesk)
- 67% of consumers site bad experiences as reason for churn. (Huffington Post)
- 67% of customer churn is preventable if the customer issue was resolved at the first engagement. (Huffington Post)
- 67% of of customers reported hanging up on an automated system out of frustration at not being able to reach a live person. (Glance)
- 66% of consumers who switched brands did so because of poor service. (Huffington Post)
- 66% of B2B and 52% of B2C customers stopped buying after a bad customer service interaction. (Zendesk)
- 62% of organizations view customer experience provided through contact centers as a competitive differentiator. (Deloitte)
- 62% of B2B and 42% of B2C customers purchased more after a good customer service experience. (Zendesk)
- 61% of consumers age 30-49 are the most frequently angered. (American Express)
- 59% would try a new brand or company for a better service experience. (American Express)
- 58% of Americans perform online research about the products and services that they are considering purchasing. (Pew Research)
- 56% admit to having lost their temper with a customer service professional. (American Express)
- 55% of consumers would pay more for a better customer experience. (Salesforce)
- 55% of customer requests for service on social media are not acknowledged. (Huffington Post)
- 54% of those age 18-29 say they’ve never lost their temper with a service professional. (American Express)
- 50% of the time, customer service agents failed to answer their questions according to customers (Harris Interactive)
- 45% of US consumers will abandon an online transaction if their questions or concerns are not addressed quickly. (Forrester)
- 45% of companies offering web or mobile self-service reported an increase in site traffic and reduced phone inquiries. (CRM Magazine)
- 42% of service agents are unable to efficiently resolve customer issues due to disconnected systems, archaic user interfaces, and multiple applications. (Forrester)
- 42% of online shoppers said they had contacted a retailer about an online purchase in the last 6 months. (Forrester)
- 42% say companies are helpful but don’t do anything extra to keep their business. (American Express)
- 41% of consumers expect an e-mail response within six hours. Only 36% of retailers responded that quickly. (Forrester)
- 36% of customer service organizations deployed communities in the past 12 months. (Huffington Post)
- 33% of consumers would recommend a brand that provides a quick but ineffective response. (Nielsen-McKinsey)
- 26% of consumers have experienced being transferred from agent to agent without any resolution of their problem. (Global Customer Service Barometer)
- 24% of American adults have posted comments or reviews online about the product or services they buy. (Pew Research)
- 22% think companies take their business for granted. (American Express)
- 17% of consumers would recommend a brand that provides a slow but effective solution. (Nielsen-McKinsey)
- 11% of customer churn good be prevented by simple company outreach. (Huffington Post)
- 10% increase in customer retention levels result in a 30% increase in the value of the company. (Bain & Co)
- Consumers prefer assistance over the following channels: Phone (61%), email (60%), Live Chat (57%), online knowledge base (51%), “click-to-call” support automation (34%). (eConsultancy)
In addition to these facts in print, below is an infographic with many of these key Customer Experience facts in pictures.
Is an awesome experience worth creating for your customers? Does your business need help improving customer experience?
January 23, 2017 by
Organic vs paid social media.
Organic social media is the use of social networks like Facebook, Twitter, YouTube, Pinterest, Instagram and Snapchat along with the use of free publishing tools like Hootsuite and Buffer to build a social community and interact with it – publishing posts, sharing others’ posts and engaging in conversations and comments.
Paid social social is paying any of these social networks to boost the reach of posts, display ads and videos or sponsor messaging. Paid social media is charged on a cost-per-click (CPC) or cost-per-thousand (CPM) basis. Measurements showing the path to conversions, transactions and sales are also used.
The social media landscape is constantly evolving. Which one to use? Why? What is right balance?
To understand organic vs paid social media, here are 12 myths vs realities.
- SOCIAL MEDIA IS ABOUT CONVERSATIONS AND CONTENT: Myth. Yes, it is but it’s also about commerce. Research from Crowdtap revealed 64% of 3,000 people surveyed use social to find inspiration for shopping (up 51% vs. prior year). Nearly half (46%) of social media users are already using social platforms while thinking about making a purchase. 40% of users are actively deciding what to buy based on what they have seen on social media platforms, including reviews and recommendations. This is set to grow.
- AS MY SOCIAL FOOTPRINT GROWS, SO DOES ORGANIC SOCIAL MEDIA REACH. Myth. Organic Facebook Reach has been on a steady decline. EdgeRank chronicled the decline. From 2012 to 2014, it went from 16.00% to 6.51%, a 60% decline. The studies showed brands that struggled to engage their audience, when measured against brands with “Social DNA” were hit the hardest.
- LARGE BRANDS WITH LOTS OF LIKES HAVE GREATER ORGANIC SOCIAL MEDIA REACH: Myth. According to a Social@Ogilvy analysis of more than 100 brand pages, Ogilvy also concluded Facebook organic reach hovered at 6%. For large brand pages with more than 500,000 Likes, organic reach hit 2%. Facebook sources were unofficially advising community managers to expect it to approach zero in the future.
- ORGANIC IS MORE EFFECTIVE THAN PAID BECAUSE IT’S MORE AUTHENTIC: Myth. Paid social media is believed to be more effective than organic for nearly 60% of social media marketers in helping their business achieve its goals, according to recent research from Clutch. Some 59% of respondents say they agree with the following statement: “Paid social is more effective than organic social.” Some 33% of respondents are neutral about that statement, and 8% disagree with it. Plus, 45% of marketers planning to increase spending on paid social this year according to a study from SocialCode and the CMO Club.
- MOST COMPANIES USE EITHER ORGANIC OR PAID ONLY SOCIAL MEDIA: Myth. The great majority of companies us both. According to the Clutch study, 86% of B2B and B2C marketers use both paid and organic social media.
- THERE ARE FEW LARGE COMPANIES THAT USE ONLY ORGANIC SOCIAL MEDIA. Myth. 13% of larger companies only do organic social media according to Clutch.
- SOCIAL MEDIA LISTENING REQUIRES ONLY ORGANIC SOCIAL MEDIA: Reality. Organic is ideal for community management. You don’t need paid campaigns to listen to what people are saying about you. It’s always a good idea to listen and monitor mentions and conversations about your brand to guide any social media activity or plan.
- ORGANIC SOCIAL MEDIA IS EARNED MEDIA: Reality. Just like organic search, the benefits gained from organic social media such as Likes, Followers and Advocates are earned and not likely to go away in the near term. With paid social media just like paid search, the benefits are likely to be there as long as you keep paying for them.
- SOCIAL MARKETERS HAVE TO ENGAGE GROUPS OF PEOPLE BASED ON SHARED INTERESTS AND PASSIONS: Reality. Regardless whether you’re thinking organic vs paid social media, targeting to people with shared interest and values is a requirement of both. And is the way build an audience, relationships and conversion activities. Hashtags, for example, are equally appropriate for organic and paid social media messaging.
- COMBINED ORGANIC VS PAID SOCIAL MEDIA DELIVERS BETTER RESULTS: Reality. In a case study for Castrol Motorcycle Oil, the first phase involved an organic social media marketing campaign for six months. It delivered 5,000 Fans, a good level of organic growth and 26,000 social interactions showing great engagement potential. But Castrol was focusing on North America and only 20% of the audience came from the U.S. When paid social media was added, this hiked up the number to 36,000 Fans and 140,000 social interaction and 50% came from the U.S.
- SOCIAL MEDIA REQUIRES A STRATEGY AND MEASUREMENT PLAN: Reality. As the Castrol case study showed, organic social media helped develop a strategy for a combined effort and measurements guided success. There is no generic formula to determine the right balance of organic vs paid social media. But a strategy and measurement plan leads you to one.
- TESTING HELPS ACHIEVE THE BEST ORGANIC VS PAID SOCIAL MEDIA BALANCE: Reality. Response on social media in general is almost instantaneous. In as little as a couple of days, paid social media can be tested. Variations to ads and messaging can also be tested. A small investment in time or money generates a large amount of learning very quickly in social media.
Does this help you understand the use of organic vs paid social media? Does your company need guidance to help identify the right combination for your business?
January 15, 2017 by
Customer Lifetime Value (CLV) is a prediction of the net profit attributed to the future relationship with a customer.
Peter Drucker said: “The purpose of a business is to create and keep a customer.” Which pretty much sums up the value of Customer Lifetime Value (CLV) .
CLV helps make important business decisions about sales, marketing, product development, and customer support. For example:
- Marketing: How much should I spend to acquire a customer?
- Product: How can I offer products and services tailored for my best customers?
- Customer Support: How much should I spend to service and retain a customer?
- Sales: What types of customers should sales reps spend the most time on trying to acquire?
To calculate Customer Lifetime Value, here is how to do it.
If you want examples of brands that are making the most of it, here are 9 inspiring case studies of Customer Lifetime Value (CLV).
- AMAZON: Consumer Intelligence Research Partners estimates that Amazon Kindle owners spend approximately $1,233 per year buying stuff from Amazon, compared to $790 per year for other customers. So Amazon pays close attention to Customer Lifetime Value (CLV). Amazon Prime has been developed to enable Amazon to efficiently compete on price and to increase customer lifetime value. According to a 2013 study by the Consumer Intelligence Research Partners, Amazon Prime members spend $1,340 annually. And that was 3 year ago. It’s more now. By applying Customer Lifestyle Value (CLV) to the development of Amazon Prime, Amazon knows how to get the most out of their most profitable customer segments.
- BONOBOS: Is a leading e-commerce driven men’s apparel brand focused on delivering great fit, a fun approach to style, and superb customer experience. Bonobos has always been a data-driven, customer-focused retailer. With Guideshops, Bonobos has service-oriented e-commerce stores that enable men to try on Bonobos clothing in person before ordering online. Bonobos discovers that Guideshops bring in customers with the highest lifetime value across all of its marketing channels. Insights into which channels are attracting Bonobos’ highest-value shoppers has helped Bonobos increase the predicted lifetime value of its new customers by 20%.
- CROCS: has always had a data-driven, customer-centric approach to marketing. When the marketing team is given a mandate to transform Crocs’ online business by becoming less reliant on promotions and discounts, the team is excited by the opportunity to improve Crocs’ profitability. The team tests to optimize promotions aimed at customers who are predicted to churn, and expands programs to coordinate a “no discount” experience across site, email and display for customers with the lowest price sensitivity. Crocs realizes 10X and 2X lift in revenue.
- HEAR AND PLAY MUSIC: A provider of music lesson products, uses automated lead nurturing and scoring to turn prospects into customers and repeat customers. Many of the company’s products cost less than $100. With automated messages that have a personalized tone to high value prospect, the company has seen: 1) 416% increase in Customer Lifetime Value, 2) 67% increase in click through rate from the best prospects (increased from 24.73% to 41.28% for subscribers with the highest lead scores) and 3) 18.4% improvement in lead-to-purchase time.
- KIMBERLY-CLARK: According to Nielsen, the typical family spends over $1,000 on diapers and baby wipes during the two-and-a-half years their children are in diapers. A Nielsen study was able to quantify the dollar value of key consumer segments, the critical nature of brand selection at various points in the consumer lifecycle and distinct differences in channel choices through key points in the baby care lifecycle. Kimberly-Clark has a clearer picture of its target market and where its greatest marketing and promotional opportunities exist to extend and expand their market share. “Nielsen’s lifetime.
- NETFLIX: An average Netflix subscriber stays on board for 25 months. According to Netflix, the lifetime value of a Netflix customer is $291.25. Netflix knows that customers are impatient and some customers cancel because they don’t like waiting for movies to arrive in the mail. Due to this they’ve added a feature where you can stream movies on the web, which not only satisfies your movie urge, but it keeps you busy while you are waiting. By tracking these stats and behavior, Netflix has reduced their churn to 4%.
- STARBUCKS: One of the most effective ways to boost Customer Lifetime Value (CLV) is to increase customer satisfaction. Bain & Co has found a 5% increase in customer satisfaction can increase by 25% to 95%. The same study shows it costs 6 to 7 times more to acquire a new customer than keep an existing one. Starbucks’ customer satisfaction has been reported as high as 89%. Due to high customer satisfaction, Starbucks’ Customer Lifetime Value has been calculated at $14,099.
- U.S. AUTO PARTS: Realizes the competitive advantage of loyalty and decided to invest. The company debuted the Auto Parts Warehouse loyalty program, known as APW Rewards. U.S. Auto Parts began to leverage capabilities such as increased rewards for high-margin products, personalized post-purchase enrollment offers, a status tier, and triggered email campaigns based off of a person’s repurchase history to maximize customer lifetime value. U.S. Auto parts increased its spend per member by 20%, its repurchase rate by 14%, and its enrollment rate by 45% after updating the loyalty program of its flagship brand,
- ZAPPOS: Has found people who regularly return items can be some of your best customers. It says that clients buying its most expensive shoes have a 50% return rate. Placing a priority on Customer Lifetime Value, Zappos has identified their best customers have the highest returns rates. They are also the ones that spend the most money and their most profitable customers. That’s why Zappos has a 365-day returns policy, free two-way shipping and doesn’t charge for returns.
Do the way these companies pay attention to Customer Lifetime Value inspire you with ideas for your company. Do you want to learn more about making the most of out of CLV.