CRM in Programmatic: Part Three

The third in a series aimed at helping marketers put their first-party customer data to use in digital display advertising

After focusing on the existing market trends within CRM, how it allows for more segmentation and personalization, and how CRM-driven marketing can be applied to different verticals, on this new of our series we’ll focus on the culmination of CRM: measuring and influencing customer lifetime value.

CLV + CRM = Sustainable Customer Relationships

Customer lifetime value (CLV) is the net worth of a customer to a business, during their entire relationship with that business. For most customer-facing businesses, the overall objective of any CRM program should be to increase customer lifetime value. The health of a company, in the end, doesn’t come from how many clients it has: it comes from its ability to retain and forge long-term relationships with customers over time, especially as market penetration peaks. High customer lifetime value is desirable because it offsets the costs of further customer acquisition, helping to provide sustainable growth.

We all know retaining and growing existing customers costs far less than acquiring new ones, but too often businesses ignore this fact and continue to place their focus on new customer acquisitions. The temptation is often to overlook existing customers as they generate incremental sales, and instead favour the winning of new customers which can score first-time, big ticket sales. But this is short-term thinking, as those incremental sales deliver a lower cost and higher margin per sale, grow customer share and increase CLV.

Data-driven CRM can provide great insight on those existing customers, and help a business know when their attention or loyalty is in danger of slipping. Businesses adopting the Recency, Frequency, Monetisation (RFM) model should pay keen attention to the recency score of their longstanding customers, to gauge when they might be in need of a little more personalised attention.

A CLV model can additionally give a business rich insight into the different pockets of customers they may have, particularly if they operate at a global level.

Calculating this group’s CLV may well deliver an unattractive sales figure, but in terms of cost of influence, their lifetime value to the company may be far greater in what they generate through others. This paves the way for the introduction of influencer and advocacy status as an important aspect of CLV scoring. A CRM programme which pays attention to the customer journey, ensuring the customer experience is a pleasurable one, and can be helpful in building brand advocates.

The Road to Personalization

Programmatic has made a significant impact on the display advertising industry already, but there remains plenty of untapped potential, particularly when it comes to customer profiling and targeting. Progressive businesses have the opportunity to develop highly personalised campaigns, fuelled by their CRM intelligence.

So moving forward, businesses that have their CRM data in order will be able to build customer profiles and segments to drive their programmatic strategies forward and even use that data to reach lookalike audiences. They will be able to focus their investments on the highest performing customer groups, or even individuals, with the highest potential for revenue growth in the long term. By creating clusters of customers with similar CLVs, for example, the business will be able to create CRM groups which can then be used for ad targeting. Programmatic creates the possibility to adjust the pricing and the messaging to each customer profile, thus dealing with customers the right way: as people, not numbers.