The best laid plans often go awry.
In the midst of the COVID-19 pandemic, which has had far-reaching consequences on global health and the economy, this saying rings especially true. The economic slowdown triggered by the pandemic has upended organizational plans for 2020 and forced businesses to re-evaluate their priorities and resources for 2021.
While overall business expectations for 2021 will be conservative, organizations should be planning for modest growth. Focus is likely to be on retaining key customers and encouraging repeat business to drive profitability. Planning for slower growth is expected to go hand-in-hand with budget cuts, and it will be important to plan investments in a way that maximizes returns and improves the organizations’ ability to make well-informed decisions.
According to Gartner’s Annual CMO Spend Survey Research for 2020-21, nearly 44% of Chief Marketing Officers (CMOs) and their teams are facing mid-year budget cuts in 2020 as a fall out of the pandemic. As many as 69% of CMOs hold a risk-averse position for 2021, stating that emphasis within their organizations will remain on maintaining status quo or taking limited risks as they enter the new year. Holding fort with smaller budgets, and in some cases, smaller teams, will require marketers to focus on safer bets like extracting maximum value from existing customers, driving repeat purchases, and relooking at performance metrics to ensure they align with the priorities for the year.
Top strategies marketers are relying on to maximize returns in 2021
Value Segmentation: From a marketer’s perspective, the idea of making the best of what you have means doubling down focus on retaining the organization’s most profitable customers and increasing return on investment (ROI). However, the distinction that many fail to make is that not all loyal customers may be worth retaining or engaging in times like these. With budgets shrinking, value segmentation is an essential step towards optimizing marketing spend and improving overall returns. This segmentation requires in-depth data analysis of customer engagement across all touchpoints, their transactions, potential for growth, and likelihood of churn.
Retention: Experts estimate that it is 4x more expensive to acquire a new customer than to retain an existing one. In today’s competitive business environment, organizations cannot afford to take a passive approach to customer retention. Instead, marketers should take measures to proactively improve engagement and customer satisfaction by understanding their customers and their journeys (both data journeys and purchasing journeys). This will allow them to develop relevant and useful messaging, create reward programmes, and exceed customer expectations by delivering a positive experience.
Targeting: Targeted campaigns can help organizations narrow their audience down to customers who are interested in their products/services and therefore, more likely to make a purchase. With enough data about their customers, marketers can promote the right products to the right people and increase conversion rates. Moreover, by targeting fewer people, marketers stand to lower costs and improve ROI, even in the world of affordable digital tools. Accurate targeting also expands scope for customization and personalization of messaging to make it relevant and engaging for your customers.
Personalization: Most marketers agree that the future of marketing lies in personalization. Customers receive hundreds of marketing messages each day and without personalization, it is easy for your organization’s content to be drowned out in the noise. In email marketing, personalization has been known to increase transaction rates by as much as six times, compared to bulk emails and this increases by multiple factors when personalized video messages are also leveraged. However, according to Gartner’s survey, only 14% of CMOs consider personalization to be a vital marketing capability this year. Some of this apprehension stems from the perceived difficulty of customer data being personalization-ready.
Data and Analytics Remain the Underlying Success Factors
Data and analytics are common threads in all the strategies mentioned above. While most organizations today collect customer data at every touchpoint, be it physical or digital, only a few of them are able to successfully leverage this data to make a positive impact on business. Data analytics for marketing has immense potential, but studies show that many marketers are still in the process of attaining or strengthening their analytics capabilities.
Data quality remains a big hurdle in extracting value from analytics. In most cases, marketing data is rife with errors, inconsistencies, and duplication, which makes it difficult to use for both analytics and targeting. Typically, customer data is collected from multiple sources, in different formats and with varying degrees of detail. Creating a usable one-true source from these separate data sets is a task that often requires a data governance team and the appropriate technology platforms, such as Ataccama.
Data governance is the process of putting in place capabilities, processes and systems within the organization to achieve their goal of clean, mastered data that is robust, accurate, complete, valid, and verifiable. Without proper data governance, the results extracted from analytics solutions will remain questionable, if not entirely incorrect.
Analytics plays a huge role in value segmentation and determining the lifetime value of customers. As one can imagine, if the input data for this analysis is inaccurate, it could lead to marketing investments in customers who are not going to be profitable, while missing out on those who really matter to the business. It could also adversely affect the organization’s customer retention plans or result in marketers rewarding less valuable customers rather than the ones who have the potential to make repeated purchases and therefore, the most business impact. For organizations with robust data, leveraging AI and Machine Learning tools and models can afford the right insights to achieve the goals that are set out. While “out of the box” solutions do exist, more in-depth knowledge and expertise is often required to assist the organization on its analytics journey.
Targeting and personalization, too, are almost entirely dependent on data quality. If the objective is to maximize conversions and return, accurately targeting the relevant customers is critical. Personalization, despite its tremendous upside of higher engagement and transactions, can go horribly wrong if based on the wrong data and in some cases, errors like incorrect names, salutations, and email addresses can lead to unsubscriptions from mailing lists. Due to these data management challenges, some marketers have already been contemplating abandoning their attempts at personalization. Nonetheless, the opportunities that targeting and personalization offer, especially in the light of reduced budgets, are worth the effort of improving the quality of your customer data.
High quality, trusted data can help marketers maximize the returns they generate and can help organizations grow even in times when business is slow. Moreover, data governance is an ongoing process and investments made in improving data quality and accuracy will deliver results that span far beyond merely the next financial year.
As CMOs firm up their plans for 2021, it is essential that they take a long-sighted approach and keep in mind that recovery is a journey that requires just as much work and patience as growth.
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