Customer Centricity - the 2012 book by Peter Fader, a Professor of Marketing and the Director of the Wharton Customer Analytics Initiative, put customer centricity firmly on the map for all cutting edge marketers. While most companies focus on what they sell, customer centric businesses use their customer data to identify their best customers, and then firmly focus their products and services on satisfying them. Software companies, including Ometria, have been successfully following this strategy for years now, but online retailers are just starting to change their mindsets.
One unbelievable statistic in the book is that even in this day and age, 66% of marketing managers don't understand the lifetime value of their customers. They continue to make decisions based on gut instinct, and to belatedly measure the outcome of their marketing campaigns. Their actions are generic, and based on volume. Almost every ecommerce business that I've worked with has this kind of marketing strategy. As long as the number of people on the mailing list goes up, and the number of people placing orders goes up, the business is doing well.
But consider this. Farfetch has 150,000 customers and an incredible business. Just on that metric it is a huge success, and it has taken a lot of time and effort to get to that stage. That is not the the most interesting statistic though and what is amazing is that their top customer has spent $320,000 with them. Their biggest single order had a value of $35,000. If you could find that one customer, you could set up a pretty successful small business by selling just to them..
Imagine spending all of your time trying to attract customers who end up either browsing and leaving, or purchasing once and never coming back. Time is wasted, advertising budget is spent and not recouped, and true sustainable growth never comes. And now imagine knowing that a customer that you bring to your site is going to stay for many years, and spend hundreds of thousands with you. (How much more enjoyable would the marketer's job be if that was what it was about and not about constantly chasing their tail and coping with churn, but about finding those individuals and building truly long-term relationships with them.)
Mariam Naficy had already sold one company for $100 million when she decided to launch minted.com. She launched her new site, and no one came. In the first month, they made one sale. But instead of giving up, in this TechCrunch video she explains what they did as "we shut ourselves in for a minute and thought, let's look at our consumer analytics, let's focus on optimizing the site, and bit by bit we looked for signs of life." They realised that their initial concept didn't resonate with any customers but that a tiny part of the product range, crowd-sourced and crowd-designed stationery, showed signs of traction. She then proceeded to expand this into a business worth tens of millions, and her advice is that anywhere where you are addressing a consumer market and start to see a small sign of traction - this can be built upon and can turn into a multi-million dollar business with optimisation and work.
The vision behind any successful business today has to be a malleable concept that guides the strategy and motivates the team, but is itself driven entirely by traction in the market and what the customers dictate. Ecommerce businesses, and online retailers in particular, have a great advantage in that they have so much more information about their customers than most other types of business. They have access to data about how often their customers buy, what they like to browse, how often they come to the site and what channels bring them there. They have demographic information about them, collected at purchase. They know exactly where that vital traction is and all they need to do is to use all that data, to switch to a customer centric mindset, and to watch their business grow into a huge success.