I have questions. Why in many businesses is customer growth performance still largely only reported in total or gross terms? Also, why do we use customer segments to drive our communications but we don’t use them to define our business strategy?
When I say gross terms, I mean at an executive level we are still largely looking at how many new customers we acquired, how many we retained, how many churned and how engaged our existing base is with our product. Which of course is exactly what we should be looking at. It’s just not all we should be looking at.
It’s not about how many customers we acquire, it’s about which type of customers we acquire.
Our customer data gives us a wealth of insight that unlocks better growth practices. We have seen incredible advances made in leveraging this data tactically to personalise communications & and product recommendations to end users.
Where we have not seen enough advancement is the use of factual, transactional data to understand the shape of the customer base and what that means for business strategy. We can’t expect sustainable customer growth if we are not using the customer data we have effectively. I know most companies believe they are and have invested significantly in Bustech and Martech to do exactly this. Yet, in practice, too many organisations are still looking at how many customers they acquired this week, versus which type of customers they acquired this week.
We should be using this data to deliver consistent customer knowledge into our core business, which is then constantly leveraged to align customer-focused priorities and execution.
Whilst the intention is to put customers at the centre of business, the reality is we put customers at the centre of business functions.
These functions are often siloed. In practice, optimisations and personalisation are happening at a product level informed by product analytics, which is good. Additional optimisation and personalisation is happening at a campaign level informed by marketing analytics, which is also good. Often though, these systems are not talking to each other and we lack a common understanding of the DNA of our customer base to underpin strategy. This results in disparate and competing views on why new customer growth has slowed or why customers are spending less.
So how do we define this customer’s DNA? If all customer interactions with our brand across channels, and how these link to purchase and value, are the basis of our customer segments, constantly and dynamically, we have the right to play. If those customer segments were then the foundations for growth reporting and subsequent investments across functions, we have the right to win.
So, how do we use our customer data ‘well’?
We need to be better at looking at the health of our business through the lens of looking at what our customers are actually doing. In other words, use your data ‘well’. At leadership level. Holistically. Every week leadership should collectively be looking at how many customers they acquired and retained at a segment level. They should do so in the shared knowledge of what each of those segments is like, what motivates them, how they engage with you and how valuable they are.
When this happens, there is a collective “ringing of the bell” when there is an acquisition spike in Segment A & D for example, as it is known that these are the best-performing segments in terms of product engagement and expected lifetime value. Therefore, whilst the cost to acquire is slightly higher for those two segments, it is accepted as their ROI is significantly higher.
Seems obvious I know. Yet, we see too many instances where efforts to acquire certain customers are paused because the CAC is too high versus other customers. But this is done in a vacuum of knowing if those customers are worth the CAC or not. Or we see engagement efforts inside the product not linking to what is being pushed to that same customer in social channels.
Customer first, tech and functions second
When we use our customer data well, we are able to celebrate healthier growth returns precisely because we are equipped to plan for and invest in those returns. Customer segments should not be owned by a single function strategically, but by the full executive – championed by the CEO. Ownership should also not be the product of one martech system or department shouting the loudest, as this often serves to divide instead of unite. A shared and single view of the customer across functions – trading, product & marketing, informing growth priorities for winning and keeping the right customers – that’s using our data well. When every week, leadership is reviewing growth reports and planning in customer segment terms versus gross terms, we are making the advancements that will matter to business longevity.
Having been at the intersection of these pain points, both within executive growth and marketing roles, as well as seeing our clients experience them, we wanted to actively solve it. This has resulted in GrowthAct, a customer segment intelligence layer that sits within your Data Warehouse or CDP and informs your bustech/martech. Most business intelligence sits in channel pockets (messaging platforms or CRM platforms). Yet every interaction your customer has with you (across channels and within your product), they are telling you something. Drawing that huge amount of data and insight and using it to drive your strategy (in real time, every week) and plug into your actions across product, CRM, and messaging – that is what GrowthAct does.
– Nicola van Ast, Co-Founder and Head of Strategy at Growthink Group