Marketers have grown up with the 4Ps of marketing: product, price, place, and promotion. In the martech world, unknown customers can now be uniquely identified, thus making it possible for brands to build relationships with them. This entails anticipating their next needs, at times even before they know it. Digital is now not an afterthought but the primary engagement option. For a brand, digital equals data. The hitherto anonymous buyer is now identified. Each customer is as unique as a snowflake. Branding and push messages help in driving this 1:1 engagement – a visit to the website, or opening the app. Every action (or non-action) needs to be tracked so AI engines can further improve the experience. The endgame is omnichannel personalisation, and the bar keeps rising for this. 1-way communication channels are becoming 2-way conversational platforms. Customers want seamless movement across channels for which brands need to ensure experience continuity.
It is these relationships which will drive revenues, but not all revenues are equal. Offer me a 50% discount for ordering a pizza via the delivery app, and I will do it. The question is: what happens after the discount is withdrawn? If I don’t use the app as often, then the revenue realised was actually a transfer of cash to me! Of course, the hope is that if I do the same ordering a few times, I will form a habit and then the discounts can be weaned away. Customers are much smarter as brands who have burnt through investor money offering discounts have realised. Revenues need repeatability – almost subscription-like. Only then will they become drivers for sustainable profits.
To build relationships, drive revenues, and grow profitable customers for life in the digital data-driven world, marketers need to bring a sharp focus on the 4 Rs: retention, rewards, reactivation, and referrals. Let’s discuss each one of them.
Retention is the key, else what’s the point of acquisition. Relationships lead to retention. Existing customers need to be retained, but which ones? Does it make sense to keep giving offers to the long tail who do not become regular buyers at the right price points? This is where brands need to calculate the customer lifetime value, and then determine who are the customers that must be retained. Retention of the right customers means ensuring zero churn in the Best customer cohort.
Rewards is not a new idea. Many brands have loyalty programs. But all existing rewards programs are linked to transactions and the spending of money by the customer. What is being missed is that attention and engagement are upstream of transactions, and need an equal focus. There is no nudge, no incentive to push customers along the journey. This is where the idea of “atomic rewards” comes in – incentivise customers for their time, because their attention is upstream of every action. These rewards can help nurture good habits – opening a brand message, clicking on the link for more info, filling in a survey form, watching a product video, agreeing to a trial. Atomic rewards can help marketers get the desired customer behaviour and thus accelerate the eventual transaction. A rupee spent per customer per month on rewards can avoid the need to spend Rs 100 should the customer churn.
Reactivation is the missing link in the customer engagement chain. The reality is that customers do become inactive. They start ignoring brand messages and are as good as lost. But the brand still has a hotline to them in the form of an email address, a mobile number or a still installed app. How can this connection be used to reactivate the customer? Instead of a laundry list of offers, perhaps some interesting content can ignite interest. Instead of treating the customer as part of a big segment, a narrowcast message based on specific affinities could do the trick. Reactivation is hard, so allowing customers to become dormant should be avoided. But it is still cheaper than reacquisition which entails using Google-Facebook and spending many times more.
Referrals are near zero-cost acquisition, and so it is a big mystery why most brands don’t do it. All a brand has to do is to ask its existing customers. They speak to their family and friends, and are probably going to be very willing to spread the word. A simple question on a sign-up or first transaction form which asks “Who suggested us to you?” can help marketers quantify and accelerate the referrals process. Word-of-mouth remains the most powerful marketing weapon and its one which is missing from the arsenal of most marketers. An atomic reward for referrals can create a low-cost alternative to the Google-Facebook spending.
The 4 Rs form the bedrock of the coming Martech era and should become part of a marketer’s new vocabulary. Just as marketers learnt how to make the best use of Google and Facebook, they will need mastery over these new methods for winning in the Martech era.
Thus far we have discussed the Martech era from the lens of the marketers. To delve deeper into the next secrets, we need to switch sides and look at the view from the customer side. Marketers need to walk in the shoes of their customers.