Over the last few years, the word ‘customer’ has been heard more and more often in publishing organisations in all sorts of contexts. In job titles such as ‘customer success manager’, ‘chief customer officer’, ‘customer data insight analyst’, and ‘customer experience manager’, in business models, ‘direct to customer / consumer’, in technologies, ‘customer data platform’ and in metrics, ‘average customer order value’ and ‘customer lifetime value’. But the single customer phrase that seems to be gaining ever increasing momentum within publishing’s senior management is ‘customer centric’ – as in, ‘we want to become more customer centric’. What does this really mean other than as a piece of MBA jargon? What does it mean in practice?
For publishers, it is reasonable to assume that ‘customer centric’ means a primary focus on serving the needs of a customer segment rather than searching for a customer segment for a product or product type. B2B publishers have had this sort of targeted customer focus for years but, increasingly, B2C publishers are catching up. Future have a multi-product strategy to super serve each of their customer interest markets and Dennis continue to invest to serve the automotive market through acquisitions ranging from selling cars (buyacar.co.uk) to creating car related social media video content (Car Throttle).
Investor decks, strategic plans, company town halls and annual reports can all reference ‘customer centricity’ with varying degrees of authenticity but the only real judge of how customer centric a company is can only be the customers themselves. How can this judgement be accurately divined, and can it be measured? Clearly, asking customers ‘how customer centric do you think company A is’ is not a goer. The use of net promotor scores (NPS) has certainly stood the test of time but has the disadvantage of not being directly linked to revenue and often ends up as a slightly obscure adjunct to customer satisfaction surveys.
An alternative and highly valuable measure of customer centricity is customer retention. It is obvious, but still worth stating, that if a publisher is not primarily focused on meeting the needs of its customers, it will have lower customer retention rates than a publisher that does. As a measure of customer centricity, customer retention has the added advantage of often being directly linked to a revenue line. For this reason, the degree of emphasis placed on customer retention by a publisher is a strong indicator of whether a publisher is truly customer centric or merely paying lip service to the concept and winging it.
What are the common characteristics of a publisher that is serious about customer retention and, by implication, serious about being customer centric?
An alternative and highly valuable measure of customer centricity is customer retention.
Here are five such customer centric characteristics:
1. Use of multiple measurements of customer retention
Any publisher who thinks the only important customer retention number is their subscriber renewal rate is missing an important part of the wider picture. It is vital to measure customer retention accurately throughout the entire marketing funnel. As well as the subscriber renewal rate, other customer retention measurements can be as wide ranging as:
- the proportion of website visitors that are repeat (ie. retained) visitors
- the proportion of app users that are repeat (ie. retained) users
- the average length of time an email newsletter subscriber remains active (ie. is retained) by opening the email newsletter reasonably regularly
- the proportion of e-commerce revenue generated by repeat (ie. retained) customers
- the number of event tickets sold to previous (ie. retained) attendees
All these measures are ultimately measuring the same thing. Do customers keep coming back for more or not?
One of the huge advantages of publishing today is the sheer quantity and quality of customer data available to publishers. Yet this treasure trove of customer insight data is often stored in such a way that it is inaccessible or not captured at all. Publishers who measure customer retention effectively structure data around a data concept of what constitutes a customer ID (anonymous or known) and record against this ID customer interactions over time subject to data protection legislation. Only by doing this can a publisher measure if a customer is retained and what behaviours are correlated to a customer coming back for more or not. If this sounds obvious, it is still surprising how often publishers find it impossible to track, for example, login behaviour by customers over time because the last login time stamp overwrites the previous login timestamp or to measure email open rates as a percentage of emails received by that customer because the data is just not captured and stored over time.
Publishers who are serious about retention and serious about customer centricity obsessively measure retention performance wherever there is the opportunity for customer interaction.
Customer retention and customer centricity in and of themselves are meaningless unless the customer relationships are profitable.
2. Ability and desire to measure customer lifetime value
Customer retention and customer centricity in and of themselves are meaningless unless the customer relationships are profitable. Felix Dennis used to say, “the customer is always right so long as they are making you a profit”. Too true. Understanding what the customer lifetime value is, and is projected to be, by customer cohort or even by individual customer is the hard cash justification for customer centricity and customer retention. Publishers who do not have a grip on their customer lifetime value numbers and focus purely on customer experience run the risk of having very happy customers who lose them money. Publishers who do know their lifetime value numbers understand the power of customer retention to drive lifetime values higher. Increasingly, they also understand the importance of ‘expansion revenue’ to positively influence lifetime value. Expansion revenue is the additional revenue generated from a customer by upselling or cross-selling additional products or services. Expansion revenue can often be as inexpensive to generate as retention revenue by comparison to the marketing cost of generating new customer revenue.
The wonderful thing about upsell and cross-sell revenue is that it is often closely correlated to higher retention numbers. If a customer buys more from you, they tend to stay with you longer. Consumer magazine publishers who sell print and digital bundle subscriptions know this to be true. This simple correlation has the power to dramatically increase customer lifetime value as it increases both retention and average revenue per customer.
The wonderful thing about upsell and cross-sell revenue is that it is often closely correlated to higher retention numbers.
3. Processes built to enable successful customer outcomes
Publishing customers are no different to any other customer in that they choose to engage with a company because they expect to benefit from an outcome in exchange for their money and or time. This might be being entertained on the train home by a podcast or being congratulated on an excellent board report based on a white paper only available to business subscribers. If a customer does not experience a positive outcome, they are unlikely to come back for more. Publishers who measure customer retention subsequently pay a great deal of attention to making it as easy as possible for customers to benefit from the outcomes they expect (plus a bit more) from the time they spend engaging with the publisher’s products and services. This might be evidenced by dynamic website content based on customer profiles or previous consumption, one click e-commerce checkouts, personalised onboarding processes for new subscribers, highly targeted relevant upsell and cross-sell offers. And so on. The process of making this happen even has its own emerging discipline; customer journey orchestration.
No sensible publisher would admit to lacking respect for their customers, but this is not always borne out by behaviours.
4. A culture that (genuinely) respects the customer
No sensible publisher would admit to lacking respect for their customers, but this is not always borne out by behaviours. The most common and obvious example of ‘disrespect’ is charging long term loyal paid subscribers more than new subscribers. Click bait is another. Publishers who seek to retain customers have a strong internal culture that recognises that customer trust must be earned consistently over time. This is easy to say and harder to do especially if there are short term quarterly results to hit potentially at the expense of long-term customer trust. A useful gauge of the strength of an internal customer centric culture is the turnover and retention of customer facing staff. If customers are happy, the customer facing staff tend to be happy and staff retention will be high and vice versa.
Understanding customer motivations is undeniably complex but always worth the effort.
5. Ongoing investment in deep customer data insights
Measuring customer retention is one thing, understanding how to improve it is another. Customers stay or go for a vast number of different reasons. Understanding customer motivations is undeniably complex but always worth the effort. Customer centric publishers invest in multiple ways to listen to and understand their customers in order to serve them better and retain them for longer. No longer is this ‘listening’ confined to customer surveys, focus groups and customer reviews, important as these undoubtedly remain.
There has always been a difference between what customers tell companies (and themselves) they want and what they really want. For a truly shocking insight into how wide this gap can be read Everybody Lies: Big Data, New Data, and What the Internet Can Tell Us About Who We Really Are by Seth Stephens-Davidowitz. Informed analysis of customer data, particularly around content consumption, always provide publishers with powerful insights into how to best serve and retain customers. The Times have invested in a ‘digital butler’ known as James (Journey Automated Messaging for Higher Engagement) which uses AI to create individualised emails by predicting content that subscribers are likely to be interested in, then sending it in at the time they are most likely to read it. In a trial, this investment has reportedly delivered a halving of subscriber churn. This is a good example of customer centric data insights being used to improve customer experience, engagement and ultimately retention.
An obsession with customer retention is not the only feature of a truly customer centric publisher but it is an essential one. So, do you still think you are customer centric?
Julian is the author of the recently published InPublishing Guide to Retention Strategies for Publishers.
This article was first published in InPublishing magazine. If you would like to be added to the free mailing list, please register here.