The role of marketing has drastically changed over the past few decades. Traditionally the marketing department has focused on building the brand and awareness. This mainly entailed crafting the look and feel of campaigns, and making the design pretty and messaging perfect. Marketing operated in its own bubble within the company, and the importance of its work was often overlooked since there was no real way to tie marketing efforts to sales outcomes.
Then, marketing went through a digital transformation, with the rise of digital channels like social media and the internet. New technologies, such as marketing automation and content management systems, helped form marketing technology stacks to reach, track and engage audiences across these new digital channels.
Now, companies are realizing that retaining customers is just as important as finding new customers. With this new realization, marketing organizations are being asked to consider the impact of customer loyalty, to understand the costs of acquiring and losing customers and how best to maximize customer lifetime value (LTV). New tech tools are providing a valuable assist to these efforts, enabling the marketing organization to more effectively inspire customers to action and tying their work directly with revenue.
Traditionally marketing and sales have been two separate organizations, often working at odds with each other. Marketing took the lead on creative and overall messaging and communications, while sales were mainly concerned with meeting quarterly goals. This dichotomy created clashes among the two organizations. Marketing wondered why sales frequently ignored the leads that they generated, while sales felt like these leads weren’t qualified and hampered their efforts to meet their numbers.
This lack of collaboration between marketing and sales hurts companies’ growth and performance. Studies estimate that lost sales productivity and wasted marketing budgets cost U.S. companies at least $1 trillion per year. And with the traditional focus on soft skills of branding, communications and public relations, marketers were unable to connect the dots about how their work contributed to sales and the company’s bottom line.
The advent of digital marketing channels – including social media, advertising and content syndication – combined with marketing automation tools, customer relationship management (CRM) solutions, cookies for tracking and Google Analytics have changed the equation. These technologies extended the marketing department’s reach, fostering stronger connections with customers and more closely aligning its work with sales. Tracking tools also allowed marketers to directly show how their efforts impact the bottom line, and underscore the importance of their role to the company.
Marketers have been using this marketing technology to demonstrate the return on investment that their programs deliver. These technologies gave them greater visibility into lead management, more insights into sales and the ability to analyze the revenue cycle. As digital marketing overtook traditional channels with the advent of the smartphone and eCommerce, the addition of search engine optimization (SEO), digital content creation and social media marketing further changed the equation.
In this new customer-centric world, marketing organizations are not only responsible for customer acquisition, but they have also been tasked with building strategies solely focused on customer retention. But it’s not without challenges.
Companies must address the high cost of customer acquisition, the importance of the customer experience and how to maximize LTV. Since companies understand why the customer-centric approach is critical and how it will help strengthen their brand and grow revenue, they have added new titles like vice president of Loyalty/Experience to the executive ranks to guide these efforts.
Amazon is one of the “prime” examples of a customer-centric loyalty program. Amazon Prime had more than 105 million members as of mid-2019 and they're fiercely loyal. Amazon Prime membership boasts a 93% retention rate after the first year, a near perfect (98%) rate after two years, according to Consumer Intelligence Research Partners (CIRP). And members far outspend non-members. CIRP noted that Prime members’ average annual spending totaled $1,400, more than double the purchases of causal buyers ($600).
Amazon has been able to reach these heights of customer loyalty by tailoring personalized experiences for each visitor of its site, offering product suggestions based on items they search and giving Prime members access to special offers, free and same-day shipping, and extras like streaming music and video. Amazon encourages more purchasing by making it easy for its members to check out with a single click, and return products for free at a variety of convenient drop off locations.
Starbucks is another loyalty and customer engagement leader, thanks in large part to its My Starbucks Rewards program. Centralizing data on its mobile app, Starbucks has been able to gather valuable data about its customers - from their preferences in food and drink, to their behavior, such as the times they most often visit and what may incent them to make purchases. And through these insights, Starbucks takes personalization to new heights, tailoring freebies, promotions and rewards to each customer's individual preferences.
Starbucks app, which also makes mobile ordering and payment a breeze, is, at 48%, the most regularly used loyalty rewards app, according to Manifest.
The company attributes a good portion of its fiscal growth to its most loyal customers. Membership in the program has grown more than 25% over the past two years, with 16 million members accounting for 40% of sales in U.S. stores.
The role of the marketing organization has dramatically changed as marketing technology trends have evolved. In the last decades, marketing went through a digital transformation. While today in the new omnichannel landscape, marketers are focusing on customer retention and loyalty in order to build stronger relationships with customers to drive growth and LTV.
Learn more about how brands are deepening their relationships with consumers in our new blog post, Transform Your Customer Experience With Personalization.