How to boost your businesses’ revenue during COVID-19
Running a business is hard. Growing it during a recession is harder. While the speed and scale of COVID-19’s impact on commerce is unprecedented and is forcing companies to make critical decisions with incomplete or inaccurate information, we believe many companies are using the opportunity to acquire and keep their most loyal customers ever.
At Retina, our mission is to enable businesses to better empathize with their customers and boost sustainable revenue. Some of our customers include Capital One, Chegg, GoDaddy and Backcountry.com. Over the past few months, we’ve seen first hand the impact that COVID-19 has had on supply and demand curves. The global scale of this crisis makes it particularly challenging for businesses to manage rapidly shifting consumer demand as well as procurement. We’ve all seen the empty aisles at grocery stores and storefronts boarded up. Imagine you are a florist in Los Angeles. It’s a sunny day in April, but very few customers stop by — even with your best social distancing practices in place. Maybe a few regulars stop by, but as far as you note, the drop in on the way home from work customers, or the passerby, who you relied on to meet your revenue goals, has disappeared. The escalation of normal-time traffic is unlikely to increase for months. This experience is true whether you operate a flower shop or a high-tech software business.
Here is what our experience has taught us:
We believe that in this environment it is more critical than ever that companies effectively target high-value customers who want the products the company can currently deliver. The challenge is that it’s hard to decipher which new and existing customers to prioritize given that prioritization must happen.
Consider the scenario where a certain demographic actually needs your service more today than they ever needed it but your marketing still focuses on a general population including other types of customers that no longer reflect who is most demanding of your product.
In a past life, I would’ve told you that this is an optimization problem that will make your top line incrementally better. However, during this crisis, this might be a matter of life and death for your company. If your products and marketing are catered even 10% incorrectly to the wrong market you might be driving the company to a clear path to bankruptcy. Where should you start? Below is the framework we are seeing successful companies use to get unstuck.
Focusing on the following three factors is very important to get unstuck.
- Determining your supply chain constraints
- Understanding your customer segmentation
- Knowing with very little data which customers are your potential high versus low LTV customers
Determining your supply chain constraints
The first one might seem difficult but it is a matter of accounting and forecasting the supply of product that is currently available in inventory and likely going to become available over the course of the next 2 to 3 months.
Understanding your customer personas
This next one can be difficult or easy depending on the first-party data that you may or may not have collected. In addition, the segmentation activity can become easier if you also have third-party data such as Experian or Axiom to join too. In the digital world, you can also use live ramp data. Using this dataset you want to understand what are the naturally occurring personas available in your customer base. This is not as simple as assigning a persona by demographics but the important thing here is to look at combinations of attributes that make the most relevant personas. For example, if you track categories of purchases, one persona might be an account owned by a couple that purchases from categories such as men’s grooming and women’s jewelry.
Knowing with very little data which customers are your potential high versus low LTV customers
Lastly, you want to be able to forecast out the LTV of every single current customer and new lead. The only requirement you should consider is that you cannot afford to wait for multiple transactions of the individual customer level to predict us. And you cannot rely on models created over the last three years because that date is not reflective of future buying. This is likely the most difficult part of the puzzle where you have to rely on very little customer buying behavior along with your instincts to modify the models to predict the future of the customer.
What you’ll need
Time is of the essence in this case and quick executive decision making will be required. In addition to this, you’ll also have to think through the logistics of how your data science and logistics teams may coordinate to solve this problem.
- You’ll need a system that can seamlessly connect to your supply chain database.
- You’ll also need access to your CRM system that houses the attributes of your customers. This can be your data warehouse, your payment system and/or your marketing automation system.
- You’ll need an effective model that accurately predicts early lifetime value of the leads and customers down to the customer level.
- Lastly, you’ll need a team that glue together a solution within a matter of days and deploy it into your media buying process and systems.
How do you measure the ROI on this effort
To compute the ROI for prioritizing your service and fulfillment by LTV we have created a simple calculator that can help you assess the impact on your business. Click on the image below to download the original excel file and see how this can drive an outsized impact in your organization.
While businesses around the world are experiencing unprecedented challenges and running an uphill battle to stay alive, we are hopeful that with this systematic approach to identifying and maximizing customer lifetime value, it will better equip you to weather the storm. As always, we believe now more than ever, that it is important for us to work together. And that together, we will make it through these challenges and come out stronger. To that end, we invite you to reach out with any questions, or just to chat. We’re happy to help.