#38: Maximize Customer Lifetime Value with Great Experiences | With Izzie Rivers

Full transcript:

Izzie Rivers  00:00

If you've got 12 or 13 companies underneath you that haven't been fully rolled up into your brand yet, and they've all got their own products as well, but you're still trying to drive people into the top of the funnel, then that's a lot of friction to conversion or to sale.

This is something that really is a true marketing- and company-led double-down on profitability, and marketing has a huge role to play in getting that right.

David Bain  00:30

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Hey, it’s David. How can improved customer experience result in more sales and better customers? That's what we're discussing today with a lady who has 25 years of experience in the B2B media industry, working on many large accounts, including IBM, HSBC, and Oracle. She recently founded Realm, a dynamic and modern B2B media agency that puts clients’ businesses’ needs first. A warm welcome to the Strategic Marketing Show, Izzie Rivers.

Izzie Rivers  01:16

Hi, David. Thanks for having me. It's great to be here.

David Bain  01:20

Hey Izzie, thanks so much for coming on. Well, you can find Izzie over at RealmB2B.com. So, Izzie, why does lifetime value matter?

Izzie Rivers  01:29

Oh, that is a big question. Lifetime value has always mattered – I'd probably throw that out there first. It's always been a conversation we've had a lot with our clients, but it's become more important over, probably, the last two to three years. I dread to say the ‘COVID’ word (we don't want to have another conversation about the effect of the pandemic on marketing, I don't think, at this point), but that did start it.

Now we're seeing, because of the macroeconomy and all the conversations you're probably having with guests around how the economy is impacting marketing, we're seeing that have a direct correlation to new conversations on lifetime value. That's because clients are looking at, ‘Oh, how can we do things like manage churn, deliver quality work, and look at those levers that we have internally to make sure we're getting the most out of the clients that we actually have or that we're onboarding?’ So that the people that make it through the next couple of years, with this crazy macroeconomic environment we have, with the highest spending clients will be the ones that win.

That's why the direction has very much gone on to ‘double-down on profitability’, ‘profitable first growth’, and either making the most of current clients and making sure they're spending as much as possible, or making sure that the people that we’re getting into the business, from a net new marketing perspective, are going to spend as much as possible, and are not just going to do a trial and then abandon, for example. Yeah, lifetime value. It's probably one of the hottest topics.

David Bain  03:00

I guess, sometimes, some marketers tend to focus on acquiring new customers, maybe because they feel it's easier or perhaps it's more challenging to measure the impact, the lifetime value, of that customer.

So how easy is it to measure the financial impact of improving customer experience?

Izzie Rivers  03:18

In terms of measuring the impact of customer experience, there are some easy indicators that businesses are using but they can, sometimes, be a little bit confusing for the marketing team because those are financially driven metrics. So, consumption, usage, increase in subscription rates, and amount of time in platform, for example. If you happen to have a cloud-based solution that's eminently trackable, that's always very helpful.

But they don't always link back to marketing, so it's a bit like the old days when you used to run a TV campaign and then just measure sales and assume that there was an impact based on what ran. You can measure lifetime value very easily and simply but I think it's about taking those metrics and moving them up through marketing, with that customer experience, to really understand: what are the things that are driving better people into the business? Better new customers and better usage when they get in, to really increase that profit margin and reduce friction in renewal patterns.

David Bain  04:23

Okay, so I guess what you're suggesting is to profile the people that are heavier users of what you offer, and then take that profile and use that to design perhaps some kind of marketing persona to better define your acquiring campaign.

Izzie Rivers  04:40

Yes, that can be a bit of it. It's got to be very aligned with the product teams and the sales teams as well. This is part of marketers coming together to be more of a dynamic unit within the business itself.

Say there is a metric or a strategic decision that's taken by the business to manage this double-down on profitability in today's environment, and let's say that decision is, ‘We're going to cut the number of offers and promotional deals that we do because we can't offer too much off on the top line, we want to get them spending as much when they come in. So we're not going to give them 50% off, we're going to give them 20% off.’ Well, even those decisions have a dramatic impact on how to change the customer journey pre- and post-trial. There are some really fundamental things that would then go along with that, in terms of the media and the marketing assessment to bring those in.

Again, plucking an example out of thin air, let's say it's inbound, so SEO and PPC. Google, your pay click, your search, the people who are coming through to your website, etc. You need to make sure they're going to the right places, that the pages are all realigned to the new offers, that it's as easy as possible to get to that offer, and that you're then using first-party data as intelligently as possible to get those people to convert after they've completed the trial, for example. That’s before we even get into questions like upsell and cross-sell once they've come across the line.

It used to be that we were in such a high growth mindset for years, and the birth of SaaS and this huge increase in subscription models and digital, it was all just, ‘Get me as many net new customers in the door as possible! I just want new.’ and it was all about that high growth. That story has changed dramatically – slowly in the first two of the last three years, and then, in this last year, much more aggressively – towards every marketing dollar needing to count. Each one of those needs to be more attributed to profits and building strength into the company versus just volume that may not be too helpful.

David Bain  06:43

You mentioned sales teams and product teams there as well. Can you perhaps highlight specific areas within the sales process or product development process that marketing teams, or marketing leaders, need to be highly involved in?

Izzie Rivers  06:58

Oh, gosh, there are so many. I could take one. ABM (Account-Based Marketing) is a good one; there's been a lot of conversation about how ABM lives or dies by the quality of the target account list, for example. Sales and marketing and product have been very aligned on, ‘What is our category entry point? What is the product and the service that we need to sell?’ and then, ‘What are the accounts that resonate with that and bring those in?’

I think marketing's job is very strong in that cohort in driving the strategic value of the audience. Because sales will want to do a really good job with what gets anything in the door to meet their targets (that's the way they operate, and they do a good job of it usually). The product teams are working within an internal environment based on the expertise they see there. Marketers can take a fresh look at the audience as a whole and come up with a strategy that's much more, ‘Okay, do we need to go more premium? Is there a better competitive share that we could be taking in the upper mid-market? Are we going to get higher spenders overall if we go after enterprise companies, and our business is currently going after small to medium businesses?’, for example. So, identifying where that growth is, and pushing away from business as usual.

Some of it's about cohesion and working more intelligently together to deliver something that's less friction driven. I think some of it is about looking at the landscape as a whole – what the competitors are doing and what the audience is doing – and trying to answer for that in a profitable way.

David Bain  08:33

Through experience with what the customer does or wants to do, should marketers use that information to assist product teams with future product development, or is that overstepping the mark a little bit?

Izzie Rivers  08:51

I think that product teams and product managers have always looked for customers to drive product development. They probably looked for existing customers to drive that, primarily, because that could be things like adding on bolt-ons or products and services or things that the product actually does. They’re always looking for outside help.

With marketing, if you're driving net new in particular, I think the value there is very much looking at the needs, wants, category entry points, and competitors, and feeding that back in. Because that definitely would have an impact on the product teams, perhaps in terms of selecting what a Hero project could be, ‘What are we going to go to market with?’, ‘Which of all the products and services we have might resonate more with the audience?’, and really pulling that out more than just pushing it back in.

David Bain  09:44

You also say that an improved customer experience allows for an increased rate of self-selection. What do you mean by that?

Izzie Rivers  09:52

Well, you could play a little bit of marketing bingo with some of the terminologies that go around, like ‘The path to purchase isn't linear anymore.’, ‘90% of the customer journey is driven by the customer itself and not by the brand.’, ‘A customer will search for 10 things before they ever put a brand term into the search bar.’, and whatever those things are.

But you know they are inherently true. The path to research and consideration, in any kind of significant purchase, is now driven by the customer themselves. That's sort of what I mean. Customer experience is the answer to that: making sure that you have a really cohesive brand or cohesive story, you're in all the environments that you need to be in, in a way that makes it easier for people to engage with and consume your content and then perhaps move further down that sales funnel. That's what I mean by self-select.

People need to be able to select the journey they want to take, but ultimately, it still behoves you to attempt to move them into a direction that you want them to, so that you can actually convert them to a sale. It's like an orchestration, customer experience, and there's a lot of consistency required.

David Bain  11:04

I'd like to zero in a little bit more on the defining of high-usage customers, and taking that information and incorporating that into a marketing strategy.

You mentioned earlier on that you can look at usage and other metrics like that. How do you actually take that information and make that a relevant part of your marketing strategy?

Izzie Rivers  11:27

It all comes down to data, doesn’t it? The quality of the first-party data that you hold, how you're gathering that, and what kind of actions you're gathering that on. I often find that, if you're building a framework, simplicity is best – because this can get very granular and very complicated very quickly. The customer journey is already very complicated. The user experience is very complicated. Measurement, and the frameworks behind that and the content behind that, should be as clear as possible so that you can actually use the insights. 

You need to really sit down and have a look at, ‘What are the things that are high value to me?’, not just with a framework that you've been using before, but, ‘What is high value to this particular thing we're trying to achieve? How do we measure that? And how do we capture the people that are doing it?’

If you can capture the people who are landing on your page from certain large enterprise companies, for example, and doing a high-value action that you care about, reverse IP those, and build a segment to go after large enterprise on an ABM front to bring more of those kinds of companies in, that's something that you can do in the mid-funnel. Whereas, if you identified that MQLs don't mean much more to you anymore – because marketing defined that you want to remarket against SQLs or SALs or people that are further down the pipeline – then you would very carefully carve those people out and figure out, ‘Can I build them in Google or can I build them in social? How do I attract more attention from these people?’

That’s it's very B2B driven. In consumer, there's the benefit of scale. You've got far more people doing it, so this is actually simpler, from a data perspective. You can do more lookalikes and you can do more scale plays. Whereas, in B2B, often it works more to be specific.

David Bain  13:15

Right, and I'm sure you work on many campaigns, or work with many organisations, that have long sales cycles, perhaps even many years.

How do you go about defining which particular touchpoint within that funnel actually had the most impact on resulting in them becoming a customer?

Izzie Rivers  13:37

That's a really good question. Okay. It’s probably easiest to do that for sales cycles that are about six months – three months to six months. When you get into two years territory, that's even more of a challenge because you get all kinds of churn in two years. The people that you're speaking with on the customer side could leave and you're starting again (that's a constant sales challenge), your clients could leave, agency staff could churn, etc. You have people churn, you have tech innovations, or somebody else might bring that client in through the back door and you didn't even know they were in the business. Two years is challenging. 

I think I would always make recommendations on the brand level there. The role of brand for incredibly long sales cycles, as we all know, is absolutely really, really, really important. That kind of interaction builds longevity in the sales cycle. You're not just trying to capture the lowest hanging fruit here, this isn't looking for anybody who will convert as quickly as possible in that high-growth mentality. This is about building that pipeline with audiences that you think will move the needle. That usually takes more of an investment in the brand side of things.

David Bain  14:48

What's an example of a brand that's doing a really good job with what we're discussing?

Izzie Rivers  14:54

I think there are a few actually. There's been a little while for brands to get behind it, really, and start addressing it internally. One brand that I believe is doing an incredibly good job at it at the moment is HPE GreenLake. We've been having some discussions with them over the last year and a half and they're very, very smart internally; they've got a really great team. I think they sat down early on and clearly had very good discussions around what their Hero product should be, with that move to HPE Greenlake as a champion, what that aligns to, and what the brand alignment is to.

Getting brand and product working really hard together is mandatory for this because, if you trap people in and you want to convert a sale, they convert on something, right? It’s got to be easy to buy. HPE do a really good job of that, inside out, in terms of ‘Who we are’, ‘What we want to sell’, ‘Who do we want to sell it to?’, and then the go-to-market plan around that. It's really impressive.

David Bain  15:56

Superb. Just to clarify, I'm used to thinking of Hero in relation to content, so to produce Hero-type content, and you obviously refer to a Hero product. How do you define a Hero product?

Izzie Rivers  16:10

Oh, well, I mean, how much time do you have? There are lots of different schools of thought on it, and it can depend on the category as well. Let's say you're in financial services, for example. You might want to choose a product which has very high liquidity, or something that's good to sell, isn't too controversial, and works well in cross-sectional advertising. In tech, you probably want to pick a cloud-based or agile-based product, because you're then looking at moving people forward through digital transformation a little bit more. It needs to be something that's cutting edge, but then also really delivers and is an entry point into others. So it might be an umbrella category, for example.

There are a lot of different considerations that go into picking products, and it’s often muddied by products that are their own brands, which is always interesting. A lot of companies, of course, expand by mergers and acquisitions, and M&A strategies buy things that can be really good products underneath the main brand, and then you have a whole other raft of challenges. I think that's why it’s so important to look at. Because, going right back to that discussion we had on building a cohesive story, this is an example of: if you've got 12 or 13 companies underneath you that haven't been fully rolled up into your brand yet, and they've all got their own products as well, but you're still trying to drive people into the top of the funnel, then that's a lot of friction to conversion or to sale.

This is something that really is a true marketing- and company-led double-down on profitability, and marketing has a huge role to play in getting that right.

David Bain  17:55

Not necessarily thinking about what we've been discussing so far, what's the number one thing that marketers need to incorporate into their strategy?

Izzie Rivers  18:04

Testing. Testing, testing, testing. It's almost a little bit disappointing saying ‘testing’ because it's something that every brand everywhere should be doing to make sure that their media and their marketing are developing. But, because of the shift to profitable growth and every marketing dollar needing to be attributable and working as hard as possible, we're seeing testing get a little bit disrupted this year, which is very counterintuitive to what it is that people are trying to achieve.

There are some barriers to it. There are some challenges around getting enough content to do testing well, getting enough journeys, etc., but it provides the pathway to scale, to better performance, and to actually having cohesive message cadence so that you've got people having the story and the touchpoints that they need to get to you. I think it's the only thing that's going to answer for such a competitive landscape.

This is as competitive as it gets, this kind of environment we're in right now. Companies will make it through or they won't, and testing is fundamental. That's what I would say.

David Bain  19:10

Great advice. I've been your host, David Bain. You can find Izzie Rivers over at RealmB2B.com. Izzie, thanks so much for being on the Strategic Marketing Show.

Izzie Rivers  19:19

Thanks for having me.

David Bain  19:21

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