When businesses see signs of an economic downturn, the natural reaction is to cut costs and try to do more with less. However, there’s one area where your marketing team shouldn’t look to trim: harnessing the first-party data you collect directly from customers.
This information gained through call center interactions, mobile app behavior, and loyalty programs, among others, can be very helpful during lean times.
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Let’s take a look at three areas where these data assets offer a boost:
1. You can reduce cost per acquisition (CPA) during an economic downturn
With an unpredictable economic future, limiting the CPA for new customers only becomes more important. Focusing on marketing campaigns fuelled by that first-party data can reduce your CPA — improving cost efficiency and growth.
CPA is calculated by dividing the cost of your marketing campaign by the number of customers (or conversion events) that you can attribute to that spending. But for many organisations, optimising this formula has felt like a never-ending quest.
So what does first-party data have to do with reducing a company’s overall CPA? A lot. When you have a better understanding of your current customers — with data, you’ll know how to speak to future ones. This first-party data comes directly from your customers, going right into channels you own.
Tapping into this data means understanding which channels, campaigns, and offers work for your customer base as a whole and across key segments.
And in the (almost) post-cookie age of limited online tracking, these insights are even more valuable. Anyone who has unlocked the power of lookalike audiences within advertising platforms can attest to the value of first-party data.
The improved performance on your advertising campaigns can be dramatic. But even a small increase in the number of customers acquired per dollar spent is a powerful way to drive efficiency during an economic downturn.
2. You can increase customer lifetime value
Many times the quickest path to greater overall growth and efficiency is deepening the relationship with your current customers. Facing an economic downturn, CFOs and investors focus on maintaining current levels of profit or operating margin. This means keeping costs in line with slower revenue growth.
But an effective way to maintain cost discipline without sacrificing growth is enticing your current customers to spend more.
The additional revenue generated from increasing the lifetime value and average order value of your current customers costs less than acquiring new customers. That’s because you’ve already paid to acquire these customers.
Look for ways to offer greater value to your current customers, such as targeted messages and interactive email forms to provide real-time feedback. Engaging customers you already have a relationship with — and using personalisation to give them exactly what they want – is the ultimate efficiency. And you’ll likely get more business from them in the short and long term.
3. You have an always-on focus group
There’s one more important benefit of focusing on first-party customer data assets: the ability to test and learn from your customers efficiently.
The marketing examples around things like message testing and discount offers might be obvious, but there’s also a giant opportunity for the entire organisation to learn and improve.
For example, imagine allowing your product team to A/B test versions of a new concept with your customers before a launch. They could gain valuable feedback on things like pricing, packaging, and design. And this can also give your marketing team a better view into how campaigns might perform.
Just because you’re facing an economic downturn doesn’t mean you have to sacrifice growth for efficiency. If your organisation pushes for cuts because the economy starts to slow, know that investments in customer data capabilities are not at odds with discipline and efficiency. They are indeed a big part of it.
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