Where there’s smoke, there’s fire. If a company can’t get lifecycle marketing off the ground, it probably indicates deeper issues with the organization.
Most of y’all are probably familiar with the famous episode of I Love Lucy pictured above. A refresher: Lucy and Ethel start work in a candy factory, wrapping chocolate bonbons as they come down a conveyor belt. If a single chocolate passes by unwrapped, they will be fired.
As Lucy and Ethel start their first shift, the chocolates come by at a manageable pace. But the conveyor belt starts to run faster and faster, and hilarity ensues as Lucy and Ethel struggle to maintain their pace. They stuff chocolates into their pockets and start eating them to hide the fact that they’re no longer able to keep up.
Elizabeth Canon brought up this episode in a recent newsletter, in reference to our personal bandwidth and stress. But it’s also a great example of what NOT to do if you want to build a healthy, sustainable organization:
- No psychological safety: Lucy and Ethel know that they’ll be fired if they can’t perform the job successfully—no second chances and no exceptions.
- Misalignment between individual and firm incentives: the firm wants to make the most chocolate for the least money; Lucy and Ethel want to keep their jobs.
- Management are not operators: whoever decided on the “one strike and you’re out” policy and the ridiculous conveyor belt throughput was looking at metrics in isolation with no big-picture perspective on how the business works.
As a result this fictional chocolate factory probably lost more in damaged merchandise than it gained in cost savings.
Employee turnover is high; Lucy and Ethel walk off the job demoralized. No one is going to flag this issue to executive management until it gets really, really bad. Truly, this factory is an excellent candidate for some kind of PE roll-up.
Entertaining as this all is, this is an eCommerce, marketing and retail blog, not a candy manufacturing blog. In our industry the ability to run successful lifecycle testing is a great litmus test of organizational health. Here is why:
Lifecycle Marketing Requires Cross-functional Teamwork
In conventional digital marketing you try to do more of what works with ROAS as your guide. Most digital marketing analytics tools are built with ROAS as the north star.
Unfortunately, brands that pursue this path will find themselves marketing primarily to existing customers who already have a high likelihood of converting. Manage things like this for too long and sales will start to drop.
Winning over prospects and customers who are harder to convert require two things:
- Strategies that are carried out across multiple channels, over longer periods of time. You need more than one email or banner ad to truly change someone’s mind.
- New tools to understand different segments within your audience and measure the impact of a multi-channel effort on a given audience.
I’m not going to say “silos are bad” here. I think that specialization and expertise has its place, as long as teams are able to come together for a common goal. But if the leaders of various silos are territorial or simply hate each other, that collaboration will never happen.
For example—if whoever “owns” data in the organization secretly wants to run marketing, they may block any efforts from the marketing team to understand the customer in a new way.
If the head of retention and the head of acquisition are competing for a promotion, they won’t want to work together on an initiative where overall audience performance is more important than individual channel performance.
Maybe you want to build a bruising, Amazon-style culture like this. I hope you are also able to set the standard for pay, exit opportunities and equity upside. Because those are the reasons people put up with such underhanded bullshit.
Lifecycle Marketing Requires Deep Understanding Of The Business
I’m just going to go ahead and say it: if, after all these years, last click ROAS is still your north star, you do not understand retail. You do not understand where your traffic and awareness is coming from.
I’ve written a lot about customer file dynamics and the dangers of ROAS-first thinking so I’m not going to rehash it here.
A lot of retailers got away with a ROAS-first approach for a long time because decades of compounding brand awareness and a large physical footprint drove consistent top of funnel awareness. As we all know, that advantage is becoming less and less of a sure thing.
Part of being a retailer today is understanding how to generate your own traffic, and how to make decisions that balance payoff today with payoff tomorrow. A lot of retail’s executive leadership bench, unfortunately, does not understand this.
That doesn’t mean that all hope is lost, as long as those leaders hire people who do understand and are willing to let them put these programs in place. But the initial spark requires operators at some level of the organization.
If the company does not recognize this and nurture a culture of effectiveness and curiosity, things will continue to get done “like we’ve always done”. And issues with the ROAS-first approach will not come to light until they get really, really bad.
Lifecycle Marketing Requires Long-term Thinking
Some individuals are harder to convert than others, but it doesn’t mean you shouldn’t try.
Most single-brand or single-category retail businesses sell to a small, core group of enthusiasts and a large group of casual customers. If you don’t put in the work to convert casual customers into tomorrow’s enthusiasts, the business will never grow profitably.
Short term thinking concerns itself with “making plan” today, because there was never a solid strategy for “making plan” to begin with. Long term thinking concerns itself with converting high quality customers today, and building programs that ensure those customers reach their full potential. This may require foregoing a little benefit today for a lot of benefit down the road.
A healthy, well-managed organization gives itself the financial space, and gives its people the temporal and mental space, to balance short term and long term thinking. That’s how the organization survives.
If your marketing strategy lives and dies by last-click ROAS, and any marketing test can be derailed by a fire drill, then you’ll never be able to run a meaningful lifecycle marketing strategy. But honestly that’s the least of your problems.
Root Cause Analysis
When a firm can’t get these programs off the ground, or isn’t thinking about them at all, it’s usually because:
- There are no operators in management: if management doesn’t understand that their customer file is a leaky bucket, and that they must prioritize marketing to both warmer and cooler leads, then they don’t understand retail in the post-TOGU era.
- Bad incentives, both in-house and from agencies: If marketing teams are goaled on last-click ROAS and agencies get paid based on last-click ROAS, no one has any reason to invest time or money in programs that use other success metrics.
- Toxic management/low psychological safety: if no one has the courage to propose an idea that requires change and collaboration, it’s probably because they’re too afraid or disengaged to do so.
- Severe misalignment between firm goals and individual goals: if too many people have been promoted for the wrong reasons over a long period of time, short term thinking will always win out. It’s easier to create the appearance of effectiveness with short term thinking, and then leave others to pick up the pieces.