Companies must shift their focus from driving transactions to maximising customer value to successfully compete in an aggressively interactive environment. It simply means that brands, services and products should be subservient to the customer relationship instead of investors’ interests only. Keeping this in mind, there is nothing wrong in saying that companies today are better equipped to understand the requirements and sentiments of their customers thanks to powerful technologies at their disposal.
Customer’s Life Time Value: The top priority of every business is to keep its bank account profitable and there is nothing wrong with it. However, if you want to keep your bottom-line healthy, it is essential for you to determine profit or loss potential for each client regardless of your target customer base. The Customer Lifetime Value (CLV) is the prediction of how much a business will benefit from its relationship with the customer. Businesses normally do their level best to make a good estimate because it is impossible for them to predict how long the relationship will last. Usually, we say “this customer’s 12-month (or 24-month, etc) CLV is $x”.
The Pareto Principle states that 20% of the causes are responsible for 80% of the total effect. This simply means that there are some customers which are much more valuable than the rest. It can be extremely profitable for your business to identify such customers at the earliest. Businesses can change their narrative about the acquisition by taking customer lifetime value into account.
Customer lifetime value enables you to change your approach of acquiring as many customers as possible by spending least amount of money. On the contrary, CLV helps you to optimise your spending on acquisition for achieving maximum value instead of minimum costs.
The Importance of Building Relations (BR): Apart from focusing on CLV, it is mandatory for businesses to develop long lasting relationships not only with their customers but also with other businesses, professionals and brightest minds in their respective industry. Successful businessmen rightly understand that effective networking is not all about “hunting” but “farming.”
The most important connections are those that come from your referral sources. The problem with such connections is that you have to nurture them with the passage of time as they just don’t spring full grown. In general, effective networking is one of the primary requirements of running a successful business in the context of ever evolving and changing business environment.
Evaluating Marketing Department: Nowadays, organisations seek to more effectively allocate their precious resources in the likes of talent, money and time. In the context of this discussion, it is also imperative for them to effectively evaluate the performance of their market departments or sales staff. There are many things they can take into account while analysing their marketing department. Whether they are keeping abreast with latest marketing techniques and tools to beat the competition? Are they directing their attention to the customers or are they more profit oriented? Are they thinking long term or focusing on short term targets and goals?
Return on Marketing Investment: Businesses can do many things to help their marketing departments improve their performance considerably. One such method is the Return on Marketing Investment (ROMI). ROMI is a metrics which help higher authorities make better decisions about future investments by analysing overall effectiveness of the marketing campaigns. In ROMI, you measure marketing investments with total profits over a certain period of time. ROMI is mostly used for online marketing campaigns but it can also precisely determine overall success of social media, broadcast and print provided the campaign is integrated and compact.