The global pandemic forced much of the world into isolation and gave many people a lot more discretionary time. People chose to do a variety of things with this excess time. Some learned a new skill through online classes. Others dove deep into entertainment binge-watching marathons. And some focused on improving their health by joining new online workout classes. Regardless of how they used their time, one thing is clear: Consumers reward brands they like with activity.
As the chief growth officer of a company that offers a CDP and omnichannel activation platform, I've found that the more a brand can provide relevant experiences to a consumer, the more likely that consumer will be to reward them with activity. These active customers can drive significant growth for companies, and the more active customers a company has, the more growth it will likely attain. This concept of active users is not new: In fact, ad-supported businesses like social networks and publishers often report their growth in monthly and daily active users as the bedrock of their valuation.
Only recently have transactional product-supported companies begun to make this shift as well. Wayfair, in a recent investor presentation, mentioned that its loyal customer base was growing and represented 58% of orders in 2020. Nike, in a recent conversation, mentioned that one of its main focuses is driving consumer connections through its NikePlus membership program because members spend three times as much as guests on the company website.
So, what is an active customer? All customers exist on a fluid spectrum that ranges from inactive to active across three important categories: breadth, depth and frequency. Breadth simply means how widely a customer interacts with a brand's offerings. If the brand is a fashion retailer, does the customer only search, wishlist and buy shoes and ignore the rest of the catalog? On the inactive end of the spectrum, customers are transactional and suffer from tunnel vision. They tend to focus on a few offerings and ignore the vast majority of the brand’s products, content and so on Active customers tend to explore multiple offerings and fully digest the brand's complete buffet of products, content and services.
Depth refers to how much a customer interacts with a brand's offerings. Does the customer purchase a single item or multiple items? Does the customer spend hours on the app reading or viewing content? Or do they check out a quick five-minute article and move on? Active customers tend to dive deep and spend a lot of time on each interaction.
Frequency is how often a customer interacts with a brand’s offerings. Inactive customers tend to interact episodically and infrequently. They may come to your brand for a specific purpose, and you won’t see them again for a while (if at all). Active customers make your brand a part of their regular cadence, whether that means waking up and joining their favorite workout class or adding items to their ever-growing wish list. Your brand is a part of their routine.
Activation marketing is a new methodology that brands can use to identify, focus on and create intentional experiences that drive the interactions that lead to high activity and increase active customers. This requires a new approach. The traditional marketing approach is channel-based: Companies use channel data to optimize channel performance. Activation marketing focuses on using customer data to optimize the entire customer experience across all channels and touchpoints. Traditional marketers send generic messages that drive customers to a more relevant experience. Activation marketers use AI to make the message relevant to each customer. Finally, traditional marketing is often confined to siloed communication that is separate from events or interactions from other sources. Activation marketing involves an omniscient perspective and uses real-time interactions to create the next best experience every time.
The traditional marketing growth flywheel consists of the following stages: awareness, acquisition and advocacy. This paradigm suggests that brands need to create awareness about their product and offering, acquire customers through performance marketing campaigns and then provide a good transactional experience that those customers will advocate for and tell their friends about. This approach is accurate, but I believe it's incomplete. It is missing a beneficial fourth dimension.
The growth flywheel consists of four parts: awareness, acquisition, activation and advocacy. The new member of the group, activation, helps make advocacy happen. Activation is providing consistently relevant experiences to all acquired customers so that their experience is so intuitive and seamless that they become natural brand advocates.
In order to shift your marketing team to an activation marketing approach, you need the following things in place.
First, you should work to understand your customer by unifying all of their data in an easily digestible format that marketers and other customer-facing teams can use. Second, you should make sure you can react to customers' real-time activity. For example, you can help customers select the best-fitting product and avoid drop-offs after they view a product by promoting various relevant alternatives. Or you can showcase other products from customers’ favorite brands or sellers. You can also give customers a reason to buy sooner by alerting them when prices drop for recently viewed or carted items or for products that match their category affinities.
Lastly, you should connect the entire customer experience so that each communication is omni-aware of every other communication and marketing teams can act in concert — not in competition — with each other.
For example, you can help the customer service or support team promote cross-sells and upsells by providing easy access to transaction and browsing history, as well as recommendations tailored to each customer. For the email marketing team, you can pull recent customer activity from the mobile app or website into the platforms they work in so they can present relevant offers inside their email campaigns.
Consumers expect these experiences and will likely continue to reward brands that provide them with more activity, attention and ultimately more revenue. In fact, 2018 research from Epsilon and GBH Ventures (via McKinsey) found that 80% of respondents wanted personalization from retailers. This means that brands that ignore this trend may find themselves losing market share.