To become a true profit driven marketer requires an attribution model that will provide you with an understanding of how all of your marketing channels - online and offline, across devices - interact and influence each other. We understand that aggregating data and segmenting customers can be challenging for businesses. By identifying your business's MVC, you can start to build a framework for evaluating your customers.
Profit Driven Marketer: Who is Your Business's MVC (Most Valuable Customer)?
What does it mean to be a profit driven marketer? It means that you're making marketing decisions based on the profits delivered by particular channels rather than the return on ad spend of each channel. To become a true profit driven marketer requires an attribution model that will provide you with an understanding of how all of your marketing channels - online and offline, across devices - interact and influence each other. That's the holy grail of profit driven marketing. But what if the steps to getting there seem overwhelming?
We suggest that you begin by thinking about your single most valuable customer - your business's MVC. We don't mean Men 25-54 with an income of £100K+. We mean the ONE customer who brings in the most revenue or profit to your company. Do you know who that person is? Do you know what that customer's behaviours are? If you don't, we'll explain why this is important, and how it can help you start to think like a profit-driven marketer. When you know who your single most valuable customer is, you'll be able to unlock valuable consumer insights, which will allow you to find more customers with similar behaviours. It can also be the foundation for a framework of how to segment and engage with the rest of your customers.
Finding your MVC
So, how do you find this person? The first step is making sure you have aggregated all of your customer data (online and offline, across devices) so that you have a holistic view of your customers. You will not be able to find your MVC by looking at channels individually because you'll be missing some of the pieces of the puzzle. If you have customer information in various reporting systems, find a common denominator across your reporting, such as a customer ID number or email address, in order to aggregate the data and have a single view of your customers. If you're a Google Analytics customer, you can use the Data Import feature to import and aggregate data from your CRM system(s).
The second step is thinking about what your MVC means to you. In other words, how will you evaluate what most valuable means? This will vary by business, depending on your overall objectives and goals. For example, are customers who engage with your brand on social media and spend moderate amounts frequently, more valuable than the customers who never engage on social media but spend large sums every once in awhile? You'll also need to decide if you'll evaluate your customers based on revenue or profit. Keep in mind that the person who spends the most with your company may not be your most profitable customer. An MVC also may cost more to acquire than other customers but have a larger lifetime value. They may not be your most frequent purchasers, but when they do purchase, they spend more. Decide what metrics are most meaningful to your business and start from there.
If you're not sure how you'd like to evaluate your MVC, our recommendation is to look at your top spenders over the past twelve months (24 months or more for annual contract businesses) and filter out those customers who have not spent recently, as well as those customers you've had to spend more than average on in order to re-engage or remarket to them. This will help you narrow down the pool of customers in order to find your true MVC.
Evaluating MVC characteristics and behaviour
When you've found your MVC, ask yourself a few questions about this person:
- What makes them your most valuable customer?
- What were the selling points that made them a customer in the first place?
- How long have they been a customer?
- How long have they been your most valuable customer?
- What marketing touchpoints or other interactions have you had with this customer that have made them so loyal and valuable?
This knowledge will allow you to think about how you can improve the experience for your most valuable customer. Try to understand what the barriers might be to your MVC spending more. How could you change your advertising, for example, to make it even more relevant? Analyzing your most valuable customer will allow you to find similar existing and potential customers. Once you have a complete view of your customer, think about how you can use this information to evaluate the rest of your customers. This analysis will help you accomplish two things: 1) turn other existing customers into equally valuable customers as your MVC and 2) attract potential customers who are similar to your MVC.
Planning for future success
Finally, start thinking about how your MVC will be engaging with you in 5 years - or even 10 years. How can you make this experience better than they hoped? After completing this one exercise, you will have started thinking like a profit-driven marketer. Just think about the insights you will gain and the steps you'll be able to take toward making the overall customer experience better for not only your MVC, but for all of your customers.
To learn more about how customer segmentation can improve advertising results, refer to this case study from Watchfinder.