The Solution – 1
The problem of rising customer acquisition spending cannot be solved by optimisation or better targeting. The solution lies in the relationships that brands build with their existing customers. Through the years, this has been given short shrift. The brand’s current customer base is taken for granted; the excitement is with new acquisition. This is reflected in the skew of marketing budgets: 80-90% of the spending is done on adtech, leaving only 10-20% on martech.
But martech’s promise comes with its own challenges. Martech is about building deep relationships with existing customers; it is about retention, growth, and cross-sell. Martech is a lot of grunt work, a daily grind for the marketing department; unlike calling up a digital agency and deciding the budget and letting them do the job of getting new customers via the adtech platforms. Martech involves getting into the trenches: collecting data from and about existing customers, segmenting the base, running a multitude of campaigns for the various cohorts, orchestrating journeys, planning how to use personalisation, mixing marketer insights with machine predictions, and delivering messages across multiple channels. Do all this and customers may still go dormant or churn.
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.
…The ideas and tech solutions are all there for brands to make our experiences better. Atomic rewards. Velvet Rope Marketing. CLV. BCG. RFM. Automation. Journey orchestration. CDP. Omnichannel personalisation. Unified customer view. Next Best Action. Nudges. Conversational AI. Permission marketing. Predictive segments. Preferred channel. QR codes. Send time optimisation. Frequency capping. Interactive messages. Identity resolution.
A new world of brand-customer engagement is possible. If only the individuals making decisions at brands saw themselves as customers at the receiving end. If only the marketing department felt the pain of poor engagement, churn and wasted money. If only the CEO or CMO started thinking like Chief Profitability Officers. If only the idea of exponential forever profitable growth starts taking root. Only when retention and growth become more important than acquisition and reacquisition. Only then will true “digital” transformation happen. Only then will our lives as customers will transition from “delete” to “delight”.
Little wonder then that marketers favour adtech over martech. But adtech has become a giant perpetual money sucking machine. CEOs are now realising it, and so are investors in consumer companies. But the current approach of trying to figure out ways to optimise the ad spends is not going to work. As Peter Drucker said, “Nothing is less productive than to make more efficient what should not be done at all.”