Blog Summary - marketing has become better at measuring response than understanding customers which is why we use acquisition to compensate for the loyalty it was helping to erode. Is marketing to blame?
Companies have never known more about their customers but customer service is hopeless. And yes, I’m talking to you Thames Water, ee and Amazon.
CRM systems record relationships, accounting platforms record transactions, websites and apps track behaviour, marketing platforms track clicks, responses and conversions. AI pulls it all together to identify patterns and predict what someone might do next. BUT customers struggle to get a straightforward answer, solve a problem or speak to someone who understands their situation. Personalisation is not understanding.
That is the paradox that I struggle with as a marketer. How is it that businesses know more about customers than ever before, but not understand them no better, what they value, what frustrates them, what they are trying to achieve or why their relationship with the company is deteriorating. Knowing things about customers is not the same as knowing customers.
On reflection, marketing has played a part in creating this problem. Over the past twenty years, we’ve argued for enormous investment into CRM, marketing automation, attribution, digital advertising, personalisation, performance marketing and conversion optimisation.
Much of it has improved marketing but Goodharts law wins out and measurement has also changed what marketing valued. British economist Charles Goodhart noted that any statistical relationship breaks down when people use it for control. People (and marketing departments) change their behavior to optimise for the specific metric rather than the actual goal, gaming the system.
Clicks, leads, conversions, acquisition costs and attribution are visible and defensible. So marketing became increasingly sophisticated at finding people, targeting them and persuading them to respond and less attention is given to what happens after we become customers.
Marekting Lesson - Acquisition can’t compensate for a deteriorating relationship.
When service gets worse, loyalty falls, churn rises and businesses have to acquire more customers simply to stand still. Companies put more pressure on performance marketing, more money into acquisition and more emphasis on conversion.
It becomes a vicious commercial cycle. The weaker the relationship becomes, the harder marketing has to work to replace it.
Businesses once understood customers through people and salespeople knew which accounts were unhappy. Account managers understood what was happening inside a client organisation because they had lunch together, met in person and discussed broader topics that product. When banks had high street branches, managers saw where customers struggled. Quant’ has always been easier than qual’ because it scales, fits neatly into dashboards and spreadsheets, and gives management something to measure. Qualitative understanding is slower, messier and harder to aggregate, but it provides the context that data misses.
Data and digital are critical tools to any mordern business but it lacks context. Companies collect way more customer data but have very few meaningful conversations with customers. Why?
There is a very human difference between conversations designed to understand somebody and technology designed to make somebody respond. Personalisation is not understanding.
A customer repeatedly searching for “cancel subscription” may not need a personalised retention offer. They may need somebody to understand why they are trying to leave.
Modern marketing has look beyond the campaign, channel and funnel and into the business to remove friction and undertand how to hold customers longer. Poor customer understanding eventually becomes a brand problem. Companies have now spent decades removing human contact, automating relationships and treating customer behaviour as something to optimise. Don’t be surprised when customers become transactional in return.
Customer understanding should sit at the centre of marketing again, helping to understand the market, connect what customers need with what the business delivers, and protect the quality of that relationship over time.
Technology helps, but the opportunity for marketing is to reconnect the signals with the human being behind them.