eMarketer Webinar: Customer Acquisition—Marketers Focus on Data, Audience and Lifetime Value

© 2016 eMarketer Inc.
Made possible by
Customer Acquisition: Marketers Focus
on Data, Audience and Lifetime Value
Jillian Ryan
Analyst
October 13, 2016

Today’s agenda:
 How and why marketers prioritize acquisition efforts
 The various definitions of acquisition
 How marketers use data to acquire new customers
 Why creating an experience that focuses on the
audience is important for winning acquisition strategies
 The importance of lifetime value and finding quality
customers at the right price
 The relationship between acquisition and retention
#eMwebinar

Acquisition Remains
Essential

Customer acquisition continues to be a priority
for marketers
US marketing professionals who said expanding their focus on new
customer acquisition was a leading priority:
Q2 2016: 70.0%
Q1 2016: 66.4%
Q4 2015: 62.7%
Source: Direct Marketing Association (DMA) and Winterberry Group, August 2016
#eMwebinar

Acquisition’s importance is constant across all
types of companies, models and strategies
77%
of inbound marketers
said converting
contacts was a
priority
68%
of outbound marketers
said converting
contacts was a
priority
Source: HubSpot, May 2016
#eMwebinar

Marketers can use customer acquisition as a
measure to gauge the success of their strategies
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Focus on acquisition is likely to continue
 2 in 3 US marketing
executives surveyed
in August 2016 said
the acquisition of
new customers was
a customer-related
metric that they
expected to
increase in the
next 12 months
#eMwebinar

The majority
of US
marketers
allocated
their budget
to areas of
the customer
life cycle
which were
acquisition-
focused
#eMwebinar

Defining Acquisition

Many marketers continue to think in terms of the
traditional marketing funnel
“The funnel matters. It is a way to
describe audience members who may not
be aware of your brand or category or
people who are now aware and who have
taken some specific behavioral steps in the
process that the marketer can
identify.”
—Ciaran Bossom, Senior Vice President,
VaynerMedia
#eMwebinar

The funnel helps track awareness, a key part of
customer acquisition
 34% of US
marketers named
brand awareness
as a top strategic
priority
#eMwebinar

Awareness and upper-funnel tactics drive
acquisition
“Consumer
acquisition starts
with qualified
awareness. We work
to make consumers
arrive in a store and know
our products before going
through the door.”
—Luis Spencer Freitas, Digital
Marketing Director, Pernod
Ricard USA
“When a client is focused
on new acquisitions, the
funnel is important.
It represents a prospect
moving from
awareness to
becoming a
customer.”
—Marcela Maryniak, Vice
President, Activation,
ZenithOptimedia
#eMwebinar

Some take a less traditional approach to the
funnel—or have thrown it away completely
“For us, the funnel
has fluidity. Most
tactics live in
multiple levels of
the funnel, whereas
in the past you put
things in one place.”
—Ashley Wolf Berman, Vice
President, Acquisition
Marketing, Birchbox
“We really don’t
focus a lot on
funnel, because that is
an archaic way of
thinking about
acquisition.”
—April Mullen, Senior
Marketing Strategist,
Selligent
#eMwebinar

Other marketers focus on the moment when an
unknown user becomes identifiable
#eMwebinar

Marketers can consistently deliver messages to
known users
“We need means to
communicate with
a customer on a
consistent basis,
which is obtaining
contact information like
their email or mailing
address.”
—Jim Schuh, Director,
Digital and Direct Marketing,
Great Wolf Resorts
“Since you know who
that user is, mass
advertising or generic
experiences are not
necessary. Tailored
marketing
messages can now
be delivered.”
Marketing Strategist,
Selligent
#eMwebinar

Marketers work to detect individual customer
sessions
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 The website is the
centerpiece of digital
acquisition
 It is the hub where
users become known
 Detecting an individual
customer session is
still out of reach for
many marketers

For most marketers, acquisition happens at the
point of transaction
#eMwebinar

Soft conversions must lead to a sale to be an
acquisition
“Soft conversion goals,
like brand exposure, lead
capture and activating
users via behavioral
elements on the site,
lead up to a transaction,
but we want that
transaction.”
—Terri Rockovich, Vice
President, Acquisition, Casper
“Getting an email is a warm
lead on the journey to
transaction. I wouldn’t
classify that as a
customer. A customer
opens an account
and actually makes a
purchase.”
—Jordan Finger, Vice President,
Customer Acquisition, Freshly
#eMwebinar

Data’s Role in Digital
Acquisition

Data is a common component of winning
acquisition strategies
 Nearly half of US CEOs used data and analytics to find
new customers. Source: KPMG, April 2016
 Another half of US senior marketing executives
believed that new customer acquisition was a metric
used to measure the effect of their data-driven
marketing initiatives. Source: Forbes Insights, September 2015
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Customer
acquisition was
named most
frequently—by
42.4% of US
marketing
executives—as an
area where they
used marketing
analytics to make
decisions
#eMwebinar

Using data beyond the basic principles
“Today’s acquisition needs to be 100
percent data-driven. If not, you’re not
doing it right. And that doesn’t mean the
basics like traffic measurement, but
having data on conversion paths
and attribution modeling to know
what conversions and revenue
were made via different channels
and touchpoints.”
—Matthew Capala, Founder and Managing
Director, Alphametic
#eMwebinar

What is attribution and why is it important for
acquisition?
 Attribution is the practice of assigning credit to any
advertising- or marketing-driven interaction or other
brand-imposed touchpoint across channels and devices.
 Nine in 10 US digital advertising professionals are
concerned about attribution and measurement.
Source: Mixpo, July 2016
 Just 44% of senior marketers worldwide said they used
attribution to measure marketing effectiveness.
Source: Econsultancy, March 2016
#eMwebinar

Major investments in internal data systems are
critical for this analysis
“We are at a tipping point with CMOs having
access to technology teams to build
internal, custom data systems. The more
data you have, the more you know
[about] your customers, and the
better you can market to them.”
—April Mullen, Senior Marketing Strategist,
Selligent
#eMwebinar

Marketing and
media executives
are still figuring
out the best way to
leverage marketing
technology in order
to optimize the
value generated by
the use of
audience data
#eMwebinar

Creating an Audience-centric
Experience

Marketers strive for a single view of the customer
 Built by filling data gaps, this
single view merges all data
points into one holistic
record about the customer’s
preferences and behaviors
 67% of business
professionals believe such a
customer view is an area
where tech will have a
positive effect in the next
two years
#eMwebinar

Using data to map the customer journey
 Mapping the customer journey
helps solve for the current
fractured moments that many
prospects experience on their
path to purchase
 That means knowing:
– Who the person is
– When is the best time to send
– Appropriate device/channel to use
– Type of message to serve
#eMwebinar

Audience
Marketers are
becoming less
brand- and
product-centric
and focusing on their
customers’ lives and
preferences
 This means putting their
audience at the heart of
their acquisition
marketing strategy
#eMwebinar

For both agency
and client-side
markers worldwide,
the drivers for
implementing
omnichannel
marketing solutions
are varied, but the
main reasons tend
to be tied closely to
acquisition efforts
#eMwebinar

Differing approaches to audience-centricity
#eMwebinar
Traditional vs. Digitally-Native

Working towards audience-centricity
“We look at … visitors to
our site and adjust
both creative and
site messaging
differently based on
their familiarity with
the brand and affinity
to our product offering.”
—Terri Rockovich, Vice
President, Acquisition, Casper
“We consider the
touchpoints involved in the
audience journey. The
goal is to understand
role and relevance of
touchpoints to know
what content is right
for each journey
phase.”
—Antonio Sciuto, Chief
Marketing Officer, Nestlé Waters
North America
#eMwebinar

Brands are still building their customer
experience expertise
 Only 3 in 10
executives in North
America said they had
a thorough, up-to-date
view of the customer
journey
#eMwebinar

Marketers are far from achieving their digital
priorities
 Although marketers
have digital
priorities related to
audience-centricity,
only a small
percentage actually
have the capability
to execute
#eMwebinar

Partial data solutions may be better than none at
all, and can still help reach customers
“There is no concrete answer to the
problems of acquisition, or a perfect tool
that can execute these strategies. But
data can still help marketers
revolve around the human-being
element of acquisition: the
audience.”
—Zach Morrison, President, Elite SEM
#eMwebinar

Customer Lifetime Value

It isn’t about volume; focus on cost and quality
“We’re very cost-
focused when it
comes to acquiring
a customer. We have
a goal of $85 per
customer, and we look at
each customer as worth
about $1,800 to us.”
—Jennifer Stamper,
Interactive Marketing
Manager, Extra Space
Storage
“You can run sweepstakes
or buy names, but the
quality won’t be there.
You won’t be reaching
the people that you
really want to reach—
quality prospects.”
—Jim Schuh, Director, Digital
and Direct Marketing, Great Wolf
Resorts
#eMwebinar

Quality usually means more than a single
transaction; it certainly means positive revenue
“You go out and acquire
a whole bunch of
people to buy product
A. But if the people
who buy product A
don’t ever buy from
you again, how
valuable was that
acquisition?”
—Zach Morrison, President,
Elite SEM
“If $100 is spent to acquire
a customer, and then you
continue to spend more
to try and keep that
person, that means
you’ll never get a
profit—you’re
marketing at a loss.”
Marketing Strategist, Selligent
#eMwebinar

Lifetime value is a formula that marketers need
to perfect
 Build a mathematical
equation that factors in:
– the cost of the product
– how much money it takes to
market to a customer through to
conversion
 Be smart about allocating
your budget accordingly
#eMwebinar

Smart brands are willing to spend more to
acquire better customers
“For a quality user,
I absolutely will
spend more to reach
that audience in a
particular country or
a segment that I know
will double down on
revenue for me.”
—Ken Suzuki, Director,
Acquisition, IMVU
“We try to appeal to the
right audience to
increase the
percentage of power
users with a higher
lifetime value, but
sometimes that comes at
a higher cost to acquire.”
—Jordan Finger, Vice
President, Customer
Acquisition, Freshly
#eMwebinar

Finding your ‘best’ customers
 6 in 10 marketers in
North America use
data about their
customers to find
similar audiences
#eMwebinar

Lookalike audiences to the rescue
“Shortening the sales
cycle is about
cultivating better
and more
richly-informed pools
of audiences that have
taken specific actions
along the path to
purchase.”
—Ciaran Bossom, Senior Vice
President, VaynerMedia
“Our in-house analysts
help the marketing team
understand the attributes
of our current customers.
We make sure we’re
targeting the right
people who can
become our best
customers.”
—Nancy Richardson, Chief
Marketing Officer, Coastal
#eMwebinar

The Retention Relationship

The data shows retention is just as important
Two-thirds of US marketing professionals are expanding
their focus on customer retention. Loyalty and
relationship management were other priorities.
Source: DMA and Winterberry Group, August 2016
#eMwebinar
For 45% of marketers, increasing revenue from existing
customers was a marketing priority. Source: HubSpot, May 2016
Retaining customers, driving loyalty and activating and
upselling current customers were the other budget areas
US marketers focused on. Source: AdRoll, January 2016

Acquisition and retention must work together
“We acquire a
customer, but
that’s one step in
the life cycle. We
need to engage them
deeply from the
beginning so they
become a loyal
customer.”
—Jocelyn Kolkin, Senior
Director of Digital Marketing
and Loyalty, Flywheel Sports
“At the end of the day,
if you acquire bad
customers you're
not going to be
able to retain
them. That’s why
acquisition and
retention strategy really
go hand in hand.”
—Jerry Jao, CEO, Retention
Science
#eMwebinar

Retaining customers has its benefits
 32% of executives in
Europe and the US got
referrals and
recommendations from
existing customers
 20% were able to drive
incremental purchases
from existing customers
 14% saw increased
revenue per customer
over time
#eMwebinar

Quick recap
 For marketers, acquisition is an essential strategy. But
depending on a company’s business model, product and
purchase cycle, acquisition can have different definitions
 User and customer data must be harnessed for marketers
to be more audience-centric in their approach to
acquisition
 Locating audiences that will result in the highest lifetime
value is critical for success
 Acquisition doesn’t work without retention; both
strategies need to be aligned to find and keep quality
customers
#eMwebinar

Customers are different
They are not following the usual funnel

© 2016 IBM
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Jillian Ryan
Analyst
Customer Acquisition:
Marketers Focus on Data,
Audience and Lifetime Value
 The Customer Experience Mandate: Brand Strategies to Meet
and Exceed Customers' Always-On Expectations
 Cracking Cross-Device Attribution in 2016: Data Quality,
Blended Models and Merging Online-Offline Data
 Making Multichannel Marketing Work: Four Tactics Required
for Omnichannel Marketing Success
 Marketing Technology: The Six Developments That Matter the
Most in 2016

eMarketer Webinar: Customer Acquisition—Marketers Focus on Data, Audience and Lifetime Value

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