February 27, 2018 Stewart Marshall

Improving Customer Lifetime Value

It used to be that marketing and business strategy were regarded as separate streams, but modern thinking tends to regard them as co-contributors: members of the same team working towards a common goal. And that seems to make a lot of sense. An objective viewer might reasonably assume (eek!) that these facets of the same organisation would be contributing to the greater good in some way.

Following this same reasoning, we might also conclude that an IT strategy would be there to lend a hand, driving innovation and delivering systems that support the needs of the business.

Reality though, as ever, is well placed to remind us that all is not necessarily as it should be. There are still a great many SMEs for whom the penny simply hasn’t dropped, and if it has, it’s fallen behind the cushions on the couch along with a couple of pen lids and something sticky that’s best left as is because ignorance is undoubtedly bliss.

But what if you could combine the three and use their collective might to deliver a better customer experience, reduce customer churn, and improve customer lifetime value?

Wouldn’t that be something?!

Lightbulb

However, for many SMEs, the reality is that they simply don’t know what they don’t know. IT is X. It is the unknown and the result is that many respond to the challenges of the day by reaching for their metaphorical mallet and bludgeoning the first small rodent they see.

And as The Bard once wrote, “ay, there’s the rub”.

When confronted with an opportunity, the response is often somewhat of a knee jerk reaction, and even if there is a moment of inspiration, a glimpse of a light at the end of the tunnel, it’s typically followed by the realisation that the light belongs to a train and one’s serenity is only going to be short lived.

Three legged stool

Given what’s at stake, it seems odd that such a short term, tactical approach would be taken. After all, a business has a far better chance of remaining upright if its 3 major strategic areas are working together, so this begs the question as to why more care isn’t taken when it comes to IT decision making.

The reasons are of course many and varied and there’s rarely a simple explanation, which means that trying to address the fear, prejudice, ignorance, other other motivators is very a difficult challenge…if not next to impossible.

So how then to move forward?

Learning from history

As ever, we can offer the carrot or the stick, and there’s little doubt that just about everyone responds better to the offer of a treat than they do to the threat of punishment. So what we need to do is to find something nice and sweet that will motivate a CEO or business owner.

We might then perhaps learn a quick lesson from our friends in the world of marketing. Their strategy used to be separate too, and was doubtless kept so for many of the same reasons that IT is left to languish today. However, CMOs found a means to demonstrate their worth by the simple use of metrics, both quantitative and qualitative, and good old fashioned maths.

Put simply, when it comes to grabbing a fair share of corporate funds, “The CMO’s best tool to convince the CEO is ROI,” 

And it follows then that spending on IT should follow similar rationale.

The X factor

Business today is all about differentiating your brand and delivering exceptional value to the customer, both in terms of price and service. By having coordinated and strategically aligned IT systems, your business is more able to effectively engage with your customers in a conversation rather than just trying to selling them something.

So whether it be your website, social media, CRM software, internal order systems or any of the many other uses for IT within your organisation, the simpler and smoother the interaction with the customer, and the better the experience, the more likely the customer is to return.

And given that keeping a customer is at least 5 times as easy as finding a new one, and that improving customer retention by 5% increases profit by at least 25%, you would be well advised to make sure your IT helps extend your customer lifetime value.


Today’s Top Takeaway

Everyone is glued to their mobile device. How can you put your business front and centre?


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