Peppers & Rogers Group calls this measure "return on customer," a metric it says is more beneficial in determining the real cost of a direct marketing investment.
It's time, Rogers asserts, for companies to define themselves by their value to their customers, rather than by the products they make. Products easily are copied, but customers who see value in doing business with you are hard to poach.
How can you develop this value? Rogers suggests direct marketers think about the services they can wrap around their current business model.
For example, she explains, "the difference between customer service and relationship is a memory." By remembering what customers tell you about themselves and then building your products, services, communications and more around this dialogue, you can better anticipate and meet their needs.
With a product- or campaign-focused approach, you miss out on big opportunities to build customer equity. Rogers points to her annual holiday shopping experience. She's been buying presents exclusively via catalog and online channels for the past six years. Only one of the businesses she frequents sends her a list of who she bought for last year, complete with addresses. How hard would it be for the others to do the same thing, and perhaps make some gift suggestions based on prior purchases, she asks?
Companies are missing out on big opportunities, she says, because they have not adapted to this new, customer-centric mind-set. The benefit of being a customer--centric organization is saving money because you're not flooding the market with junk and then trying to fix what doesn't work on the back end.
Disappearance of the Mass Market
Three major demographic trends are contributing to the challenging marketing climate. Presently, direct marketers are faced with the aging of the baby boomers market, growing cultural diversity and a decline in the number of households with married couples, notes J. Walker Smith, president of Yankelovich, a New York-based consumer research and consulting firm.