In the battle of man vs. machine, companies that rely only on marketing technologies to strengthen their customer relationships risk losing big


New Bain & Company research finds the care and feeding of customer relationships requires a human touch

San Francisco – Aug. 8, 2017 – There’s no question that new digital technologies allow marketers to approach customers with surgical precision, unlike the blunter instruments of just five years ago. But the rush to invest in new technologies designed to boost the return on investment (ROI) of a single purchase or channel often misses the basic – and arguably more important – goal of identifying target customers, what they’re worth to the firm, and how they behave. While shifting to a more customer-centric approach generally leads to better economics, a company that relies only on marketing automation to do so could lose in equal measure.

“Marketers know there is tremendous financial benefit in creating more promoters among their customer base. These are people who spend more with the company, stay longer and generate more referrals,” said Laura Beaudin, who leads Bain’s Marketing Excellence work. “But the care and feeding of these valuable customer relationships still requires human a human touch.”

A Bain & Company survey of roughly 500 companies detailed in a new brief, Customer Lifetime Value: A Better Compass to Guide Your Marketing Automation, found that marketing leaders exhibit a few characteristics that set them apart from the bottom 25 percent of companies. The leaders are:

  • 3.5 times more likely to embed employees in marketing who specifically focus on understanding the customer’s journey;
  • 1.9 times more likely to align their strategy with customer needs rather than channel needs; and
  • 1.9 times more likely to scrutinize customer lifetime value in addition to more traditional last-touch metrics such as ROI, customer acquisition cost and click-through rate.

Simply put, marketing leaders go beyond simply acknowledging that customer lifetime value matters; they actually focus their spending and staff resources accordingly. Specifically, they adhere to three key steps:

  1. Build smart, targeted segmentation based on a customer's overall value. Not all customers are created equal, and gaining a thorough understanding of the variations among customers allows marketers to gauge how much to invest in each one. Bain found that even minimum viable data such as demographics, frequency of purchase and average purchase size is sufficient to reach customers effectively. Applying a lifetime value lens also helps to identify the individual customers who merit the highest and lowest levels of investment.
  2. Use technology to develop a deeper understanding of customers’ priorities and how best to address them. After a company has built a smart segmentation scheme, the next task is to determine how best to connect with target customers at a personal level. Marketers must understand an individual’s needs and wants throughout the entire journey – from product awareness to research to purchase across hundreds of online and offline touchpoints and various channels. New technologies can help marketers fill out the picture of how people behave before they make a purchase.
  3. Develop data-driven hypotheses about which technologies to use in order to acquire and retain customers. Once a company has identified which high-value customers to address, defined their lifetime value, and drawn a profile of their priorities, the marketing leaders then make informed hypotheses on which media levers to test first. Knowing someone’s shopping history, location, media preferences and at least some of her expressed views would be enough information to, for instance, push marketing messages to certain websites on her cellphone during her morning train commute.

“As marketers adopt increasingly powerful artificial intelligence tools – whether for one-to-one or segment marketing – they will want to direct those tools and related ROI metrics to deepening customer relationships,” said Brian Dennehy, an expert vice president in Bain’s Customer Strategy & Marketing Practice. “Marketers who utilize their machines and metrics as well as their minds to improve customer lifetime value create an even greater advantage – the ability to prioritize enduring customer relationships over immediate channel results or a single transaction value.”

Editor's Note: To arrange an interview, contact Dan Pinkney at or +1 646 562 8102

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