Yes, it is a double entendre if you didn’t catch it.

When was the last time you asked, “what is the lifetime value of our customers?” (also known as customer lifetime value ), or –more importantly— “what is the lifetime value we offer our customers?”

Is it smart to have one without the other? I don’t think so.

Is calculating CLV a normal event for your organization? I don’t know about you, but calculating ROI seems like child’s play compared to calculating CLV.

Let’s take a look, shall we?

According to Wikipedia:

Your job as a marketer is to gather all of those figures and then do the math! Easy, right? Roll up those sleeves and get down to work. (I don’t know about you, but my head hurts & my stomach feels queasy just looking at that formula!)

Here’s the formula for the rest of us:

So then… The bigger question is what is the calculation for determining the value offered to customers? Anyone?

Buelller? Buelller? Buelller?

marketing [m.o.]: How to calculate customer lifetime value

“Do you know how much profit your customers produce over their lifetime?  “Customer lifetime value”, or “CLV”, is a valuable metric that helps you target your most profitable customer segments and understand how much you can spend to acquire them.”

ClickZ: What Should You Spend to Acquire a Customer?

“Knowing your overall profit margin allows you to guesstimate how much revenue customers must generate for different goals to be achieved. Goals will vary based on what you know about your business. How would your customers need to behave for you to break even in the first year? Is that behavior reasonable? You can adjust goals accordingly”.

ClickZ: How Are You Measuring Customers?

“Around the time of September 11, lots of folks decided they’d give airplanes a miss and turn to alternative forms of transportation. Enterprise Rent-A-Car didn’t have a logistics system to offer or track one-way rentals. But it did have a customer-centric corporate culture. So, the local managers took matters into their own hands and made one-way rentals available. One regional manager explained, ‘We knew we had to do the right thing and worry about the rest later.’

The cost to Enterprise was the displacement of thousands of its cars — operational chaos. What was the benefit? In a struggling economy, Enterprise now leads its category and is stronger this year than it was last year.

Lifetime value is not difficult to measure; it’s just math. All you need is the courage to examine the customer lifecycle and call the end to a customer life. It really gets very simple after that.”

McKinsey Quarterly: Uncovering the value of brands

“Many marketers believe brands are important because they shape customer decisions and, ultimately, create economic value. Few however, would be able to back up their beliefs with facts and figures, as little attempt has been made to measure the actual value of brands.”

MarketingProfs Daily Fix: Loyalty and Lifetime Value [Leigh Durst]

“‘Sorry. We only care about what you’ve done for us lately.’ Should you say this to a frequent traveler who has slept in one of your properties for over one year? Should you say this to a customer who has chosen your airline consistently for a decade of travel? The seasoned road warrior doesn’t need a study to tell us that this type treatment may feel slightly punitive in a manner that goes far beyond the color of the membership card.

Unfortunately, most travel and hospitality loyalty programs fail to take the natural patterns of people into consideration. Beyond this, it isn’t evident that these companies actually forecast customer lifetime value or take into consideration a value a customer’s accrued value in the establishment of loyalty programs. Unless of course, those customers accrue an incredibly high number of points…”

Brands Create Customers: Value-based brands: Overview

“Attention and pizzazz is a not a basis for customer value, and neither is glitz, glory, flash and spin. They might blitz a few eyeballs, but they don’t have what it takes to grow and sustain customers.

Value-based brands are fueled by organic, customer-generated emotion, rather than artificial campaign-generated emotion. ”

Happy Reading!

[Image Source: Forbes.com]

As traditional marketers, we have years of experience understanding our markets, what products and services they need/want, how to communicate best with them, and how they regard our brands, right?

Well, maybe not…

We have often relied on marketing research (primary or secondary), sales team feedback, customer satisfaction surveys, etc. to provide insights into those areas. The issue with most of those forms of feedback is that they tend to provide the answers we want to hear or find necessary to meet our internal business goals (either as an organization or a professional).

Audience research, on the other hand, uncovers specifically how markets use products and services, speak about them, form communities, etc. It’s like watching a pride of lions in their natural habitat. Regardless if it’s a B2B or B2C market, when we take the time to watch people in their natural – or comfortable – habitat, we will see their true behavior and opinions surface. If you haven’t done audience research, it can be quite eye-opening. But more importantly, it can’t be fabricated. As an organization it’s your choice to ignore it (at your peril, potentially) or to embrace what’s really going on in the market.

So how can audience research help traditional marketing efforts?

Product and Service Development: If we build it, they will come… Not always. And more often “not” is the outcome (unless, of course, you are Apple). Many times startup companies fail or new products or services fail because they are built from the internal premise that people actually want to buy your product or service. And throwing your marketing communications budget at it isn’t going to help move the buying needle. Why not start with your customers and prospects and identify what their needs/wants actually are? If you aren’t a ‘social’ company, audience research is one way to tap into what’s being said online while standing on the sidelines. If you are a social company, why not just simply ask and then collect the data that the audience shares?

Communication: There is large misperception in marketing that people respond specifically to tactics (i.e.  ads, direct mail, messaging, emails, etc.). That is not the case. People respond only when they have a brand relationship (see below). When there is a brand relationship, people are open and receptive to receiving your message. Your task is to make sure you send the right message, at the right time, in the right format. Audience research can help you to determine receptivity levels.

Branding: While organizations do control their brand identity and messaging, what they don’t control are the relationships that people form with brands. Are you aware of how people (customers, prospects, clients, employees, stakeholders, shareholders, etc.) see and talk about your brand? Do you know what the sentiment (positive, neutral, negative) levels are for your brand? You might just be surprised! The  goal of using audience research is to understand how people perceive your brand(s), to take that feedback internally and to adjust your branding efforts accordingly.

What would you add to the list? How have you used audience research in your marketing efforts?

[Image Source: BG-Hotel International]

*NOTE: This post was originally posted on Endless Plain, the Serengeti Communications blog.

Last night on our weekly PR 2.0 chat on Twitter (anyone can join this weekly chat Wednesdays at 8pm EST. Search on hashtag #pr20cat and join in!),  we discussed branding and PR 2.0 and why PR folks (and marketers, that’s a topic on integration for another day!) need to understand branding and how it affects their interactions with constituents (or publics). 

If you’ve hung out in social media circles long enough, I am sure you’ve heard “you don’t own your brand, your customers do.” Nothing can be further from the truth and why we need to be very careful with how we phrase this as marketers, consultants, agencies, etc. 

FACT: You do own your brand and brand messaging
FACT: You don’t own relationships customers have with your brand 

I kicked off by asking people’s definitions of branding and a lot of people responded with a brand relationship definition, which is great but I think it also leads us to, as marketers implementing social media, to want to easily hand over the keys to the castle a little too easily. 

For some people it’s a chicken and egg situation. Do you love the logo or the company that produces the product/service first? Vanessa French asked me (paraphrased) “what if your mom gave you Pepsi as a kid, you’d have a relationship with Pepsi (based on emotion).” My response was “what if your mom served you Pepsi in a plastic cup and you never saw the bottle?” 

People tend to identify with a brand (i.e. logo, message, etc.) first and then they relate to it. I think it explains why there are so many fake bags (Gucci, Louis Vuitton, Kate Spade, Hermes, etc.) not to mention other products on the market. It’s not that people relate to the company that owns the brand it’s that the brand (in this case a logo) gives them a perception of inclusion without the sting of the price tag. If they truly had a relationship with the brand they would never by fakes. Unfortunately, the perception of others is what spurs on the fakes market. 

From “Driving Brand Value” by Tom Duncan & Sandra Moriarty (what I shared during the PR 2.0 chat): 

Brand relationship is driven by: 

• Trust
• Consistency
• Accessibility
• Responsiveness
• Commitment
• Affinity
• Liking

(Sounds a lot like what we talk about with social media, huh?)

Five Levels of Bonding:

• Awareness
• Identity
• Relationship
• Community
• Advocacy 

I think we also tend to mixed up brand perception with branding and brand relationship. My perception of a brand comes after my relationship with the brand. For example: 

I bought a Jaguar and it was a piece of junk that could never be fixed. The Jaguar dealer and Jaguar wouldn’t do anything about it. I bought based on the brand (awareness/identity), my relationship was affected by lack of trust, consistency, accessibility, etc. My perception is that Jaguars are bad cars. I am sharing my story (WOM) on my blog (social media). 

So, if you are Jaguar’s PR folks and I had consistent blog about this and chatted on forums, you might want to pay attention. I would hope.

The tenets of branding are still viable, but just like everything else with social media they are more visible today and brand relationships and perceptions are out in the open. 

But we DO have control over our brand and messaging! You might want to reconsider using “trust” in your brand (logo) or messaging if the case is that the brand relationships and perceptions indicate that you are not an organization to be trusted. 

By the way, Driving Brand Value was written in 1997, and yet offers lessons that we still have not learned. It’s available on Amazon starting at $0.38 USD. I suggest you snap up a copy. 

Also, grab Integrated Branding by LePla and Parker while you’re at it… 

What do you think?

[Image: David Armano]

At last night’s Social Media Club Philadelphia we had Duncan Alney from Firebelly Marketing come speak to us on the corporate mullet (didn’t know mullets were back in style, did you?).

You can image the conversation, right? Business in the front (traditional marketing & corporate mindset) and party in the back (social media & mindset). Rather than me ramble on… here’s Duncan:

After the meetup we met for dinner and had an interesting conversation around how the Gen X and Gen Y folks in the room reacted to Duncan’s presentation. Here are the thoughts of business professionals who understand the corporate mullet (in order of appearance): Valeria Maltoni, Gloria Bell, Eileen O’Brien, Duncan, and Bill Lublin:

What do you think? Have you seen a noticeable difference in how both groups approach integrating social media? If you are a Gen Yer, what do you think of the assessment? Why do you think there’s a gap in professional social behavior as compared with Gen Xers? Or, are there Gen Xers that could also use a filter?

[Image: 80stees.com]

After discussing the inauthentic nature of PR in my last post, I hope you know that I do respect and enjoy being part of the PR profession (well, except those PR areas that are broken) and truly believe that most PR folks are engaging in PR in a way that is effective. That said, I still believe that ghostwriting from PR pros (or profs) isn’t necessary or authentic (I am not sure that there’s much that can convince me…but I’ll keep an open mind, I promise).

I thought it might be a useful conversation to discussion how PR 2.0 will keep you SO busy providing strategic services/counsel for your clients or employer you won’t need to worry about ghost blogging and tweeting as a source of income or a way to show value for one’s job. And I know for a lot of PR agencies and pros that might not truly understand the nature (dare I say, culture) of social media, those are areas of concern. I get it, I really do. 

While this might not be as interesting as a debate, perhaps it will prove to be more useful. 

Today’s typical and traditional PR person does a lot of the following tasks: 

• Builds relationships with third-party resources (usually the media, sometimes bloggers)
• Maintains existing relationships
• Does research
• Listens/Analyzes (usually online/print pickups)
• Writes plans
• Provides counsel
• Creates targeted messages
• Conveys timely news with constituents (but typically media and maybe bloggers)
• Builds a brand’s reputation
• Maintains a brand’s image
• Deploys crisis communications
• Clips or tracks pickups or mentions
• Provides measurement of campaigns
• Handles some marketing communications (including collateral, website content if a marketer isn’t part of the team)

 With PR 2.0 you can add the following to your skills, deliverables and job description:

• Monitors brand in real-time
• Listens/Analyzes online conversations or mentions in real-time
• Responds promptly
• Conducts primary research in real-time
• Engages in two-way conversations with ALL constituents (in-house PR folks)
• Participates in social networking in a value-add way (in-house PR folks)
• Develops new online skills (blogging, wikis, RSS, etc.)
• Understand the importance of building relationships with all constituents (media, bloggers, employees, investors, fans, friends, followers, detractors, etc.)
• Responsible for Search Engine Optimization
• Identifies & engages with influencers and brand evangelists (in-house PR folks)
• Manages communities of constituents (in-house PR folks)
• Integrates new technologies into PR plans
• Shares industry information, not just key messages
• Builds communities
• Engages evangelists to help create word of mouth
• Understands that engaging in PR 2.0 will help at time of crisis
• Stays up-to-date on trends
• Trains management, co-workers and/or clients constantly 

I don’t know about you, but to me that looks like a pretty busy job to me! All without having to ghostwrite or tweet (sorry, I couldn’t resist).

I cannot take complete credit for these lists. While I have been engaged in PR for a long time, some people just say things more succinctly than I do…and I like to give the credit they deserve. So, please, seriously, if you haven’t read PR 2.0 by Deirdre Breakenridge, add it to your reading list. She makes the transition to PR 2.0 crystal clear, easy-to-swallow, and provides a lot of proof points (i.e. some of the list information is from her book). John Bell at Ogilvy is another source of great information when it comes to the PR pro of the future (be sure to read John’s post when you get a chance). He’s the guy behind this post’s image and some of the items on the PR 2.0 list. 

I am sure that I am leaving things off of both lists, so please be sure to add where necessary if this is too simplified.

Thoughts? Opinions? Objections?

[Image: John Bell]