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When Marketing Meets Finance

When Marketing Meets Finance

Marketers wake up every morning focused on improving customer experience, driving sales and ultimately increasing brand value in the eyes of their customers. Almost 70% of marketers say that driving sales and revenue for their companies is a requirement. Yet according to a 2012 global survey by Furnaise Marketing Group, “eighty percent of CEOs don’t trust or are unimpressed with their CMOs”. And although many would think that CIO longevity is the shortest in the executive team, surprisingly, it is CMOs. As called out in the “CMO Impact Study” by Kimberley Whitler, more than 40 % of CMOs have been in their roles two years or less and 57% have been in them three years or less. With ever changing customer expectations, companies are making significant investments and funding initiatives to drive customer engagement, improve experience and win the loyalty of their customers. Given these often-significant investments, how do CMOs and marketing teams analyze and communicate the value they are delivering to the organization?

CMOs and marketing teams need to speak the financial language of the CFO and board of directors. Analytics are now mission critical to the marketing organization, not only to understand, predict and act based on customer behaviors but also to inform the C suite and company of the business value marketing is delivering for the investments made.

A recent example highlighting the importance of analyzing your customer metrics and marketing effectiveness is the Blue Apron IPO in June 2017. Prior to the IPO, analysts called out Blue Apron’s increasing revenue and customer acquisition as strong indicators of growth. However, about a month prior to the Blue Apron IPO, Daniel McCarthy, a professor at Emory University, utilized statistical algorithms to delve deeper into Blue Apron’s revenue and customers. He identified a declining customer retention rate paired with declining average revenue per customer. He found that 62% of Blue Apron’s customers churn within six months. And with customer acquisition costs at $130 per customer, it was questionable whether Blue Apron could acquire enough customers to offset the high rate of churn. These new metrics provided a more complete financial picture and prior to the IPO, Blue Apron reduced the initial share offering form $17 per share to $10….and the stock is now trading at $4.77.

Today, marketers have access to new data and analytic techniques that enable them to go beyond commonly used marketing metrics and more fully demonstrate the value delivered by marketing strategies.  

  • Value of new customers; maximize acquisition by capturing and managing every lead from identification to conclusion and optimizing sales and onboarding processes.  Expand your analysis of acquisition strategies beyond numbers of customers acquired and acquisition cost by analyzing the value of new customers acquired over time. Identify if you are acquiring more valuable or less valuable customers and why.  
  • Customer churn; reduce churn by identifying which customers are at risk of churn, when, and why (e.g., identifying the root causes of churn). Proactively manage interactions and messages with these customers to retain them. Improve your churn prediction models with new data types and multi-genre analytics. Measure increased accuracy of your churn prediction models, effectiveness of retention actions and resulting improvement in churn rate.  
  • Conversion and profitability; improve conversion by automatically identifying cross-sell and up sell opportunities. Improve profitability by personalizing offers to individual customers at the right moment and in the right channel, based on customer needs and journeys. analyze the impact of personalization strategies on customer response, sales and profitability.
  • Customer satisfaction; improve customer satisfaction by identifying and addressing the root causes of dissatisfaction. Go beyond survey based measurement for a small sample of customers to measuring satisfaction for all. Analyze and understand customer satisfaction across all touchpoints and channels. Understand top customer sentiment themes and trends over time to understand if there are any emerging, changing trends to be addressed. Share insights with the organization and opportunities to address “broken” processes.
  • Effectiveness of marketing spend and programs; improve effectiveness through ongoing testing and analysis of campaigns. Understand the most effective vehicles/channels that attract higher value customers and reduce unproductive marketing spend. Identify the programs that meet or exceed financial targets and analyze reasons for revenue short falls.
  • Value of Customer engagement; Expand your view of customer value beyond purchasers to measure the value of highly engaged customers who interact across multiple channels, post content, provide feedback, rate/review products and are brand evangelists that influence and refer family and friends.

Marketers can now use analytics to share new, innovative customer insights throughout the organization. They can provide financial results and metrics that demonstrate the value delivered by marketing initiatives and build a strong business case for continued investment in marketing innovation.

Portrait of Leslie Dinham

Leslie Dinham

Leslie Dinham is a Senior Business Consultant in Teradata’s Customer Journey Practice. She helps clients translate their customer strategies and opportunities into business outcome led analytic solutions that optimize customer experience and drive revenue. Leslie works with a variety of leading companies across industries such as financial services, CPG, media and entertainment, and retail, where she has extensive experience. Prior to joining Teradata, Leslie was the VP of Client Relationship Management for a large, prestige Beauty retailer.

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