eMarketer Webinar: Customer Acquisition—Marketers Focus on Data, Audience and Lifetime Value

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Customer Acquisition: Marketers Focus on Data, Audience and Lifetime Value

Jillian RyanAnalyst

October 13, 2016


Today’s agenda: How and why marketers prioritize acquisition efforts

The various definitions of acquisition

How marketers use data to acquire new customers

Why creating an experience that focuses on the audience is important for winning acquisition strategies

The importance of lifetime value and finding quality customers at the right price

The relationship between acquisition and retention

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Acquisition Remains Essential


Customer acquisition continues to be a priority for marketers

US marketing professionals who said expanding their focus on new customer acquisition was a leading priority:

Q2 2016: 70.0%Q1 2016: 66.4%Q4 2015: 62.7%

Source: Direct Marketing Association (DMA) and Winterberry Group, August 2016

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Acquisition’s importance is constant across all types of companies, models and strategies

77%of inbound marketers

said converting contacts was a

priority

68%of outbound marketers

said converting contacts was a

priority

Source: HubSpot, May 2016

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Marketers can use customer acquisition as a measure to gauge the success of their strategies

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Focus on acquisition is likely to continue

2 in 3 US marketing executives surveyed in August 2016 saidthe acquisition of new customers was a customer-related metric that they expected to increase in the next 12 months

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The majority of US marketers allocated their budget to areas of the customer life cycle which were acquisition-focused

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Defining Acquisition


Many marketers continue to think in terms of the traditional marketing funnel

“The funnel matters. It is a way to describe audience members who may not be aware of your brand or category or people who are now aware and who have taken some specific behavioral steps in the process that the marketer can identify.”

—Ciaran Bossom, Senior Vice President, VaynerMedia

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The funnel helps track awareness, a key part of customer acquisition

34% of US marketers named brand awareness as a top strategic priority

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Awareness and upper-funnel tactics drive acquisition

“Consumer acquisition starts with qualified awareness. We work to make consumers arrive in a store and know our products before going through the door.”

—Luis Spencer Freitas, Digital Marketing Director, Pernod Ricard USA

“When a client is focused on new acquisitions, the funnel is important.It represents a prospect moving from awareness to becoming a customer.”

—Marcela Maryniak, Vice President, Activation, ZenithOptimedia

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Some take a less traditional approach to the funnel—or have thrown it away completely

“For us, the funnel has fluidity. Most tactics live in multiple levels of the funnel, whereas in the past you put things in one place.”

—Ashley Wolf Berman, Vice President, Acquisition Marketing, Birchbox

“We really don’t focus a lot on funnel, because that is an archaic way of thinking about acquisition.”

—April Mullen, Senior Marketing Strategist, Selligent

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Other marketers focus on the moment when an unknown user becomes identifiable

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Marketers can consistently deliver messages to known users

“We need means to communicate with a customer on a consistent basis, which is obtaining contact information like their email or mailing address.”

—Jim Schuh, Director, Digital and Direct Marketing, Great Wolf Resorts

“Since you know who that user is, mass advertising or generic experiences are not necessary. Tailored marketing messages can now be delivered.”


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Marketers work to detect individual customer sessions

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The website is the centerpiece of digital acquisition

It is the hub where users become known

Detecting an individual customer session is still out of reach for many marketers


For most marketers, acquisition happens at the point of transaction

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Soft conversions must lead to a sale to be an acquisition

“Soft conversion goals, like brand exposure, lead capture and activating users via behavioral elements on the site, lead up to a transaction, but we want that transaction.”

—Terri Rockovich, Vice President, Acquisition, Casper

“Getting an email is a warm lead on the journey to transaction. I wouldn’t classify that as a customer. A customer opens an account and actually makes a purchase.”

—Jordan Finger, Vice President, Customer Acquisition, Freshly

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Data’s Role in Digital Acquisition


Data is a common component of winning acquisition strategies

Nearly half of US CEOs used data and analytics to find new customers. Source: KPMG, April 2016

Another half of US senior marketing executivesbelieved that new customer acquisition was a metric used to measure the effect of their data-driven marketing initiatives. Source: Forbes Insights, September 2015

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Customer acquisition was named most frequently—by 42.4% of US marketing executives—as an area where they used marketing analytics to make decisions

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Using data beyond the basic principles

“Today’s acquisition needs to be 100 percent data-driven. If not, you’re not doing it right. And that doesn’t mean the basics like traffic measurement, but having data on conversion paths and attribution modeling to know what conversions and revenue were made via different channels and touchpoints.”

—Matthew Capala, Founder and Managing Director, Alphametic

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What is attribution and why is it important for acquisition?

Attribution is the practice of assigning credit to any advertising- or marketing-driven interaction or other brand-imposed touchpoint across channels and devices.

Nine in 10 US digital advertising professionals are concerned about attribution and measurement. Source: Mixpo, July 2016

Just 44% of senior marketers worldwide said they used attribution to measure marketing effectiveness.Source: Econsultancy, March 2016

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Major investments in internal data systems are critical for this analysis

“We are at a tipping point with CMOs having access to technology teams to build internal, custom data systems. The more data you have, the more you know [about] your customers, and the better you can market to them.”


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Marketing and media executives are still figuring out the best way to leverage marketing technology in order to optimize the value generated by the use of audience data

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Creating an Audience-centric Experience


Marketers strive for a single view of the customer

Built by filling data gaps, this single view merges all data points into one holistic record about the customer’s preferences and behaviors

67% of business professionals believe such a customer view is an area where tech will have a positive effect in the next two years

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Using data to map the customer journey

Mapping the customer journey helps solve for the current fractured moments that many prospects experience on their path to purchase

That means knowing:– Who the person is – When is the best time to send– Appropriate device/channel to use– Type of message to serve

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Audience

Marketers are becoming less brand- and product-centric and focusing on their customers’ lives and preferences

This means putting their audience at the heart of their acquisition marketing strategy

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For both agency and client-side markers worldwide, the drivers for implementing omnichannel marketing solutions are varied, but the main reasons tend to be tied closely to acquisition efforts

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Differing approaches to audience-centricity

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Traditional vs. Digitally-Native


Working towards audience-centricity

“We look at … visitors to our site and adjust both creative and site messaging differently based on their familiarity with the brand and affinity to our product offering.”

—Terri Rockovich, Vice President, Acquisition, Casper

“We consider the touchpoints involved in the audience journey. Thegoal is to understand role and relevance of touchpoints to know what content is right for each journey phase.”

—Antonio Sciuto, Chief Marketing Officer, Nestlé Waters North America

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Brands are still building their customer experience expertise

Only 3 in 10executives in North America said they had a thorough, up-to-date view of the customer journey

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Marketers are far from achieving their digital priorities

Although marketers have digital priorities related to audience-centricity, only a small percentage actually have the capability to execute

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Partial data solutions may be better than none at all, and can still help reach customers

“There is no concrete answer to the problems of acquisition, or a perfect tool that can execute these strategies. But data can still help marketers revolve around the human-being element of acquisition: the audience.”

—Zach Morrison, President, Elite SEM

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Customer Lifetime Value


It isn’t about volume; focus on cost and quality

“We’re very cost-focused when it comes to acquiring a customer. We have a goal of $85 per customer, and we look at each customer as worth about $1,800 to us.”

—Jennifer Stamper, Interactive Marketing Manager, Extra Space Storage

“You can run sweepstakes or buy names, but the quality won’t be there. You won’t be reaching the people that you really want to reach—quality prospects.”

—Jim Schuh, Director, Digital and Direct Marketing, Great Wolf Resorts

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Quality usually means more than a single transaction; it certainly means positive revenue

“You go out and acquire a whole bunch of people to buy product A. But if the people who buy product A don’t ever buy from you again, how valuable was that acquisition?”

—Zach Morrison, President, Elite SEM

“If $100 is spent to acquire a customer, and then you continue to spend more to try and keep that person, that means you’ll never get a profit—you’re marketing at a loss.”


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Lifetime value is a formula that marketers need to perfect

Build a mathematical equation that factors in:– the cost of the product– how much money it takes to

market to a customer through to conversion

Be smart about allocating your budget accordingly

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Smart brands are willing to spend more to acquire better customers

“For a quality user, I absolutely will spend more to reach that audience in a particular country or a segment that I know will double down on revenue for me.”

—Ken Suzuki, Director, Acquisition, IMVU

“We try to appeal to the right audience to increase the percentage of power users with a higher lifetime value, but sometimes that comes at a higher cost to acquire.”

—Jordan Finger, Vice President, Customer Acquisition, Freshly

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Finding your ‘best’ customers

6 in 10 marketers in North America use data about their customers to find similar audiences

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Lookalike audiences to the rescue

“Shortening the sales cycle is about cultivating better and more richly-informed pools of audiences that have taken specific actions along the path to purchase.”

—Ciaran Bossom, Senior Vice President, VaynerMedia

“Our in-house analysts help the marketing team understand the attributes of our current customers. We make sure we’re targeting the right people who can become our best customers.”

—Nancy Richardson, Chief Marketing Officer, Coastal

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The Retention Relationship


The data shows retention is just as important

Two-thirds of US marketing professionals are expanding their focus on customer retention. Loyalty and relationship management were other priorities. Source: DMA and Winterberry Group, August 2016

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For 45% of marketers, increasing revenue from existing customers was a marketing priority. Source: HubSpot, May 2016

Retaining customers, driving loyalty and activating and upselling current customers were the other budget areas US marketers focused on. Source: AdRoll, January 2016


Acquisition and retention must work together

“We acquire a customer, but that’s one step in the life cycle. We need to engage them deeply from the beginning so they become a loyal customer.”

—Jocelyn Kolkin, Senior Director of Digital Marketing and Loyalty, Flywheel Sports

“At the end of the day,if you acquire bad customers you're not going to be able to retain them. That’s why acquisition and retention strategy really go hand in hand.”

—Jerry Jao, CEO, Retention Science

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Retaining customers has its benefits

32% of executives in Europe and the US got referrals and recommendations from existing customers

20% were able to drive incremental purchases from existing customers

14% saw increased revenue per customer over time

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Quick recap

For marketers, acquisition is an essential strategy. But depending on a company’s business model, product and purchase cycle, acquisition can have different definitions

User and customer data must be harnessed for marketers to be more audience-centric in their approach to acquisition

Locating audiences that will result in the highest lifetime value is critical for success

Acquisition doesn’t work without retention; both strategies need to be aligned to find and keep quality customers

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Customers are different

They are not following the usual funnel

© 2016 IBM

IBM Customer Experience Analytics

A single place to answer what is happening and why

Link quantitative and qualitative understanding

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Leading Consumer Brand Visualizes Entire Customer Journey

• Single view of journeys enables brand to personalize content and deliver extraordinary experiences that meet their business goals

• Understand activities that lead up to key milestones, and customize content to increase conversion

• Target look-alikes on third party sites to find more high value customers

• Single view of customer journeys across channels to better personalize and deliver extraordinary experiences

• Holistic customer understanding of multi-channel experiences

• Easily connected email and web touchpoints for a single view

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Learn more at:www.ibm.com/cxanalytics


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Jillian RyanAnalyst

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