If CMOs don’t know their retention and profitability metrics…
How many CMOs at big companies don’t know their customer retention rate, customer profitability and customer lifetime value?
According to the CMO Council, almost 50%.
Andy Beal over at Marketing Pilgrim provides a nice summary of the CMO Council’s findings, along with some great commentary (I chuckled at his incompetence references).
Is it a surprise that most Chief Marketing Officers stay on the job for less than two years? It’s obvious that CMOs aren’t on equal footing in the Fortune 500 executive suite. Maybe a contributing factor is a lack of business and financial skill?
I don’t mean to pick on CMOs. Clearly these metrics are more challenging to determine at a global consumer product company than at a $15,000,000 lumber distribution company. But then again, most CMOs are paid big bucks, have big budgets and access to an army of MBAs. What’s the problem?
The takeaway for consultants serving midsize to small businesses is this: if almost half of Fortune 500 marketing leaders don’t know important metrics like customer lifetime value, customer retention and profitability, it’s a good bet that most of your clients don’t know them either.
You don’t have to be a math whiz to determine most of these figures. Even a ballpark figure is better than making decisions blind. If you understand these metrics when you’re planning marketing campaigns, you can:
- Better determine which customer segments to pursue;
- Determine your maximum acquisition cost to profitably acquire customers; and
- Intelligently determine how to allocate the marketing budget between new customer acquisition and customer retention programs.
Ask your clients if they have these metrics. If not, show them why they’re important and how to calculate them. Use them for guidance during your next planning session. Don’t settle for the low bar your big company CMO colleagues have set.
Your clients will thank you for it.
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