It’s About LTV…Not CRM

A while back, I ranted about how Salesforce isn’t CRM. I made the case that Salesforce (and worthy competitors) are fantastic platforms that manage and facilitate CRM, but that testing and learning—which must take place at every customer moment of truth—can’t yet be managed by AI. Until it can, human intelligence and years of hands on LTV marketing expertise will be required to execute CRM to its fullest.

But let’s step back.

What is the purpose of CRM? Forget your answer if it is not: to maximize average customer lifetime value (LTV). How each brand gets there may be different; Apple and Tesla through innovative technology, Nordstrom and Four Seasons through service, Zappos and Amazon through ease/simplicity, and McDonald’s or Walmart on low-cost. Regardless of the path, each strives to constantly generate new customers, keep existing ones, win-back potentially valuable ones and grow the value of all to the company.

In order to maximize LTV, (and believe me, it needs to happen at every moment of truth along your customers’ journey) you must be testing messaging, design, offer, and channel. Add in segmentation and/or vintage testing within each touchpoint, and you have a real test and control strategy designed to maximize LTV. In this scenario, there could be as many as 823,543 tests at every touchpoint. 

Still impressed by those doing A/B testing?

In fairness, even the finserv and telecoms who have been doing response marketing for generations don’t go to that extreme in number of tests. But I can assure you that I have designed and executed test matrices for forward-thinking retail, pharma, telco, finserv, fintech, CPG, etc., that had dozens of tests at each contact point—each designed to maximize performance of that individual communication, and combined, to maximize LTV.

If you are concerned that what I describe sounds like hard-selling your customer base, be assured it is not. If your customers are turned off with irrelevant messaging or the quantity of communications you send, you will definitely see a drop in performance. Your customers will always let you know what motivates them. That is why, in 2017, I am still shocked to awake to email offers from companies I have long-standing relationships with, who are guessing at a promotion that couldn’t be further from my interest. And to be honest, if I weren’t in the industry, I would have unsubscribed long ago.

In the end, your CRM systems don’t exist to increase revenues; they exist to more easily execute well thought out and ongoing marketing testing. And that testing needs to be designed to maximize performance at each touchpoint so that cumulatively, you will have maximized average customer lifetime value.

Isn’t it time to change your focus to LTV from CRM? Let’s talk. 

#LTVnotCRM