Dynamic speakers presenting unique ways of applying the lessons of customer lifetime value. Industry leaders engaging audience members on innovative topics through interactive panels. Those are just a few of the features from the 2018 Customer Centricity Conference, held May 17-18th at the Wharton School’s San Francisco campus. Allison Hartsoe summarizes the Customer Centricity Conference events and its key points, including the core concepts of Customer Lifetime Value and how to transition your organization to focusing on building customer equity.
Key Concepts: Customer Lifetime Value, Marketing, Digital Marketing, Testing, Company Culture Shift, customer centricity, customer equity
Who Should Listen: CAOs, CCOs, CSOs, Digital Marketers, Business Analysts, C-suite professionals, Entrepreneurs, eCommerce, Data Scientists, Analysts, CMOs, Customer Insights Leaders, CX Analysts, Data Services Leaders, Data Insights Leaders, SVPs or VPs of Marketing or Digital Marketing, SVPs or VPs of Customer Success, Customer Advocates
Allison Hartsoe - 00:03 - The Customer Equity Accelerator, a weekly show for marketing executives who need to accelerate customer-centric thinking and digital maturity. I'm your host, Allison Hartsoe of Ambition Data. This show features innovative guests who share quick wins on how to improve your bottom line while creating happier, more valuable customers. Ready to accelerate? Let's go!
Allison Hartsoe - 00:33 - Welcome everyone. Today, I'm going to summarize the second annual customer centricity conference, which we just held May 17th and 18th. This is 2018 at Wharton's San Francisco campus in partnership with Google. This year's format was more conversational than last year's, and having speakers engaged with the audience on panels instead of Powerpoint presentations made a pretty big difference. We definitely feel like we're starting to build a nice CLV community of people and the folks who are new felt very welcomed, so I'm really overall very happy about how the conference turned out. Also, we played the CLV simulation game, and that was split across two days so that people could really dig in and ponder ways to increase value. Now, Ehow Chen, our VP of customer success at Ambition Data wrote up the summary this year, which I'm going to walk through in a moment, but be sure to check out his posts on Linkedin because it includes many links to additional research podcasts and articles that were referenced by the speakers.
Allison Hartsoe - 01:46 - Now the conference kicked off with Professor Peter Fader from Wharton and myself discussing the current state of customer centricity is a little bit of regret from Pete for using the words customer centricity because it has become so loaded with other ideas like customer experience, customer service, and the never-ending put the customer at the heart of your business. Instead of the core concepts of customer centricity like heterogeneity and focusing on the right customers for strategic advantage, which by the way is the byline of his book. So this led to a discussion about Nike's acquisition of Zodiac, which is Pete's startup, and then he elaborated on other big brands like Starbucks, Target and Amazon, and the various tactics that they've deployed over the past year to improve customer loyalty and to upsell existing customers on expanded services.
Allison Hartsoe - 02:51 - American Airlines was also mentioned for their use of customer lifetime value in combination with what's a basically a vulnerability score, and that provides the organization with a really great way to arm the front line by giving them an indication of how they should be treating customers that might potentially lapse. Now, this isn't to say that they should displace other customers or bump them over upgrades or other things like that, but it was really just designed to say in a situation where uncontrollable events had happened, how could you prioritize, uh, to satisfy the most vulnerable and the most valuable customers and ensure the friction is minimized for them. Then to end the session, I asked about the best approach to shift towards customer lifetime value, and Pete suggested naturally starting with the CFO to get buy-in and then moving to the CMO for the budget.
Allison Hartsoe - 03:55 - That transitioned us pretty nicely into the next discussion, which was with Google on LTV and with Bain's Laura Bowden, so Paul Frantz from Google, he's the national sales director for a large customer. Sales kicked off the discussion, and he talked about how to use big data to achieve gains in customer lifetime value. He went into specific examples for a booking site and then the use of geo-targeting to increase transaction with their high-value targets. He then talked about machine learning as the best way to respond to testing and customer needs as it just takes too much effort. There's too much time leg in the more traditional methods such as market research. Ultimately, he brought up three key questions to really understand if your company is oriented around customer lifetime value and those three questions, where are you leveraging the data within your company to derive insights about your customers?
Allison Hartsoe - 05:01 - That of course, implies that the data is connected and shared across the organization. Question number two, are you bidding to find more or your best customers or are you still bidding to the key word or the first interaction or impression? And question number three, are you leveraging the latest automation technology to operate at scale and in real time? Then Paul introduced Laura Bowden, who was a partner at Bain that leads the global marketing research area, and she discussed some of the shifts that she's seen in marketing. Specifically, she observed that CMOs bear more responsibilities and that CLV can be one of them. Marketing is also shifted from the give me all your data attitude to the give the data that matters and how to approach that data attitude, which is important from both a process and a decision making standpoint.
Allison Hartsoe - 06:04 - Talking about how long it takes to move toward CLV. Laura elaborated on the word transformation. She said it takes time to change an organization and its thinking then spoke about CLVs biggest challenges, namely metric alignment, silos of information, uh, organizational silos as well. Incentives, quick wins versus organizational movement and tying in the customer experience so that it can all become more relevant. Basically pivoting everything around the customer. That after this session with Laura and Paul, the first panel took the front of the room and that was the future of Martech panel featuring Joe Stanhope at Forrester and Bob McKinney from Batteries Plus Bulbs.
Allison Hartsoe - 06:59 - Joe started the conversation about Martech and went right to the point he basically said that his work is focused on helping clients get the right Martech solution by asking them which technologies matter and then which ones are ready for prime time, which isn't necessarily the same thing. Sometimes you think about launching a technology, but it's not yet ready for prime time, and of course, CLV is a consideration when asking that question. Joe Elaborated on the fact that there is no shortage of data and it's more important to be nimble so that you can change the way you think about analytics and reporting on customer journeys. He also mentioned a growing need for customer identity resolution, which is a really fundamental issue when you're talking about CLV analysis. Then Bob McKinney also spoke about the secret sauce that they use for Martech at Batteries Plus Bulbs, which is essentially creating almost like an enterprise API bus.
Allison Hartsoe - 07:58 - He called it the mortar between systems that are fed using APIs and the skillsets to do that are pretty minimal to leverage the system, you know, so you don't have to know in depth how to operate a tool. If you're hitting the API, but you do have to know maybe some SQL or r or python, so more importantly he cited that it's the critical thinking skills that are most valuable to his team. In addition to using APIs, he also called out the Census Bureau, which provides a great resource of data, particularly for geospatial analysis. You can add in another layer of data that are not commonly used, such as phone call data with natural language analysis and the organization as a whole ends up with sophisticated means of predicting and calculating CLV for their customers and leads very quickly. So it's a really good process for getting a sense of who should use your salesforce because calling on if you have lots of customers and lots of data and lots of information coming in.
Allison Hartsoe - 09:02 - Next up was the panel called Wall Street meets marketing at the corner of customers and equity. And on this panel, Pete Fader was the moderator, and he introduced Anthony Choe from Provenance Digital, which is a private equity firm. And Jaime Colmeranes from eBay. And they discussed the impact of CLV on investment and corporate decision making. Now Anthony started talking about how as an investor, he sees companies that are growth or profitability focused and that that's his particular niche and in effect, both of those things are really two sides of the same coin. He also hears a lot of platitudes about how companies might be all about the customer, but that can mean really just about anything Jaime than chimed in with some of his own views about how retailers are using CLV.
Allison Hartsoe - 09:57 - He mentioned that some retailers are testing ways of growing value within their most valuable customers and those retailers might also be on the cutting edge of moving away from historical sales and instead using predictive methods to anticipate the value that those customers will bring and CLV our the most cutting-edge retailer space. The challenge of making everyone in their organization understand why the heterogeneity of customers is so important and that means that they have to fight concepts like blanket personas that really aren't built with CLV in mind. And then we went back to Anthony, and he shifted the conversation back to investing and how companies that he invests have to speak about their customer base. Essentially that's their basis for analysis, and sometimes these companies are embarrassed that when they run the numbers, they find that 80% of their equity sits in 20% of their customer base.
Allison Hartsoe - 11:00 - And they sometimes think about that as one group, like we're really popular with millennials, and they think that those are the people who are really driving their business, so this is a bit of an eyeopening exercise. The Provenance runs with the companies that they invest in by helping them understand where their growth is coming from and who they're actually attracting. Now, Anthony also sees that the future of brands and companies is a lot less winner takes all, which is the heavy brand marketing we have today and more about mindshare and psychographic factors, which is to say that customers can care more about a company's value and not the price, so people are essentially choosing their brands like they choose their friends. Just going to say prices and important at all. It's just that it's more of a relationship that they're cultivating with today's brands.
Allison Hartsoe - 11:58 - Then we kicked off the simulation and Pete, and Sarah gave a fantastic but lightweight introduction. Letting the audience know that there were many Easter eggs in the early conversations that would help them on the game and then they divided the audience into different teams, and those teams were a set loose on the customer centricity simulation. The teams were allowed to play three rounds, which out of nine that's really just scratching the surface, but it allowed them to get to know a little bit of the group dynamics to get to know each other, what their skill sets were and to start maybe to get the very first inklings of what their strategy might be. And then the groups came back and reconvened and there was a little bit of lightweight discussion but true to form Pete and Sarah don't give away a lot of information at this point because they really want the teams to just get a sense for where they are against the other teams and you know, think about some of the early decisions that they made or didn't make.
Allison Hartsoe - 13:04 - Then we went into a little bit of a reception, which is a nice pattern because it allows us to all have lots of stuff in common to talk about. And the following morning, the group's reconvened and got right back at it when they had until about 1:00, maybe 12:30, 1:00, when the final stages of the game wrapped up and all the teams came through decision number nine, the headed to lunch as Pete and Sarah ran the calculations and got a really good sense of which teams were the winners and what might've been driving their winning decisions. So the very end of the simulation. This is probably one of the most valuable processes. There's a lot of discussion about why certain decisions were made, why certain things were presented in the simulation as options, whether that was a good option or a bad option, whether you should have taken it now or later and this led to a lot of discussions and just solidified learning about the key principles of customer centricity and customer lifetime value.
Allison Hartsoe - 14:11 - It's one thing to talk about it at a conference. It's another thing to hear great stories about it, but it's a whole step change. To really use the data and make decisions and see how well you absorb the information and then get that tie back, that practice to say, oh, did I really apply customer-centric thinking or was I really still in my product box or my brand box when I was making that decision. So after the roundup of the simulation, the teams were definitely excited, and Zack Anderson from electronic arts came award prizes, some great electronic arts gear that went to the winning team. Then Zack and I kicked off a discussion about transformation, particularly around CLV and Zack said that EA had actually been voted the worst company in the world numerous times and then had transformed itself into becoming the most player-centric company in the world.
Allison Hartsoe - 15:18 - And no joke, if you look at their stock price, and you can't necessarily say this is a one to one relationship, but if you pull up electronic arts stock price, you can definitely see a major change over the last five to seven years as they've rolled out this strategy and become more player-centric. Now, when he joined Electronic Arts, he started in the supply chain area for analysis, but he ended up working on small customer analytics projects and with a small customer analytics team. After observing that EA was operationally well, but really weak player engagement. They weren't thinking about the unification of data under a player, and so his team first focused on player loyalty, looking at patterns on when and why those people would purchase a game.
Allison Hartsoe - 16:10 - And that actually fixed some issues within their market research and allowed them to address questions they had about what drove game adoption, what drove game engagement, and how did that relate back to the marketing spend. Ultimately, it caused them to adjust their marketing spend accordingly. He also used analyzed in-game telemetry to understand where players were enjoying themselves the most and then ultimately laddering that up into a powerful set of organizational KPIs, which is really the key to understanding success across the player Lens. So by unifying the organization across these metrics, he really shifted the conversation away from the product focus, which is sales and revenue to the longer term player-centric measures of player engagement, Success spends and satisfaction.
Allison Hartsoe - 17:10 - Then after Zack's discussion, I did a brief overview of the ambition data, customer lifetime value maturity curve, and walked the audience through some of the different tactics that they could take along the way, pointing out particularly where they are matters because it determines what the organization is ready for. So if you don't have a lot of customer data enter locked, then you might not be able to take action quickly. Or conversely, if you can take action quickly, but you don't have a lot of customer data, then the problem is reversed. So this was a great way just to end the day and try to send people home with some real media tactics that they could leverage as they took these ideas that they were very excited about and brought them home into their organizations to try to achieve the same success that some of the leaders had achieved.
Allison Hartsoe - 18:12 - So ultimately, I have to say I'm just so pleased with the tribe of people who are forming around the love and the signal that customer lifetime value provides. And certainly, I encourage you to visit the customer centricity conference website and sign up for notification of when the next event is or follow us in our social media platforms and just engage with the conversation, be part of the community. If this is a topic of interest to you, this is a great way to find more people who are wrestling with some of the same questions, wrestling with the same issues, and certainly, a foundation data can help guide you along that way. We're happy to do so, so thank you, everyone. Remember, as always, this is a journey. It's not magic. It's just a very specific journey that you can follow to get results.
Allison Hartsoe - 19:19 - Thank you for joining today's show. This is Allison. Just a few things before you head out. Every Friday I put together a short bulleted list of three to five things I've seen that represent customer equity signal, not noise, and believe me, there's a lot of noise out there. I actually call this email the signal things I include could be smart tools. I've run across articles, I've shared cool statistics or people and companies I think are doing amazing work, building customer equity. If you'd like to receive this nugget of goodness each week, you can sign up at ambitiondata.com, and you'll get the very next one. I hope you enjoy The Signal. See you next week on the Customer Equity Accelerator.