Market research: when does marketing generate the greatest profits?

In an international study, Salesforce examined the direction in which marketing is currently developing and which activities in this area generate the greatest profits. Since the market and consumers themselves are evolving rapidly, the study also checked which methods for measuring the effectiveness of marketing activities are currently most readily used.

The Salesforce report "Trends and Tactics Driving Marketing ROI", prepared on the basis of a survey of companies from many countries, shows that to operate effectively, marketing needs new, more sophisticated tools, while at the same time companies must combine all sources of data about their customers (including integrating software), as well as ensure the best possible cooperation between business departments that have contact with customers. What is the reason for this?

The modern customer is evolving

The modern customer is evolving

The market is changing, among other reasons, because people's expectations toward companies and brands are changing. Once again, the Salesforce study demonstrated an important piece of information – currently, for customers, the way they are treated by companies is just as important as the usefulness of the products purchased or the value derived from the services bought (this thesis is confirmed by as many as 84% of customers).

For companies, this means that all the values attributed to the products offered are only half of business success. The rest depends on the way the customer is "guided" through the entire sales process, cooperation with the company, or product use. In other words, because the quality of contact, relationships, and service is becoming as important to people as the products themselves, companies can build competitive advantage not only by improving and developing their offer, but also through the entire soft sphere related to managing relationships and contacts with customers.

That is precisely why marketing is evolving in this direction – in addition to traditional lead generation or building a strong, distinctive brand, marketing is primarily meant to deliver good experiences to customers (Customer Experience – CX) at every stage of their contact with the company or the brand they use.

The bar is set really high, because people quickly get used to positive experiences and, valuing convenience, they want good experiences to be a common standard. 73% of customers who have had one positive experience in contact with a company expect it to be a standard also embedded in the actions of other companies.

This shows a very interesting space in which companies can compete with one another – entirely outside the sphere related to product usefulness. Add to this the fact that as many as 71% expect companies to provide them with the possibility of real-time contact in their chosen communication channel, and we will see what challenges modern marketing faces.

3 main challenges for marketing

3 main challenges for marketing

Three general challenges facing modern marketing emerge from market research:

  • The first challenge concerns managing dynamic, dispersed data, the sum of which makes up complete information about the customer. To be able to provide positive customer experiences at every point of contact with the company and at every stage of cooperation, both employees and the systems handling customer contact should have such integrated and up-to-date information.
  • The second challenge concerns improving employee cooperation and communication within the organization itself, especially in those areas that maintain contacts with customers at every stage of their cooperation with the company – from sales, through marketing, customer service, and any service or logistics areas with which the customer may have contact. This cooperation is necessary to maintain consistency and logic in the company's communication with its environment and to ensure appropriate standards at the subsequent stages of sales and service.
  • The third challenge concerns the integration of the software and applications used in the company to enable the achievement of goals such as proper service, sales, and providing customers with positive experiences.

Timely tactics

The study showed which tactics for managing Customer Experience bring the greatest return on investment and which indicators marketing most often uses now and will use in the future to measure the effectiveness of its work. The information collected in the report makes it possible to identify three main trends:

  • Meeting customer expectations, including ensuring real-time interactions, requires implementing internal initiatives in companies aimed at changing existing models of cooperation between teams and working based on relatively new indicators such as customer value over the entire period of cooperation (Lifetime Customer Value - LTV). Such an approach goes far beyond the very process of acquiring leads and focusing on sales. According to forecasts, the scale of LTV use in companies will more than double (107%).
  • Companies are working on a large scale on integrating data about their customers, and this is a very dynamic process. According to research, the number of systems and applications collecting data that have or may have an impact on customer experiences continues to grow year by year. Moreover, Customer Experience (or the quality of interaction) depends on how quickly the company responds to customer contact and to what extent it is able to use contextual knowledge about that customer so as to ensure high quality and personalization while not losing sight of its own business goals (sales, appropriate service standard, etc.).
  • Enterprises practically have no possibility of obtaining a complete picture of their customers without effective integration of the solutions and communication channels they use. Data integration is necessary not only for this reason – equally important is the proper measurement of activities based on information obtained from available sources. Without effective performance measures, after all, it is difficult to speak of improving marketing campaigns. Improvements in measurement can be achieved through the use of tools for analyzing multiple data sources, such as Data Management Platforms (DMP) or innovative cloud-based solutions that aggregate and make available in one place, in a convenient way, data from sales, marketing, and customer service, and even information imported from domain systems such as ERP.
  • From the perspective of ROI (return on investment), the best investment in marketing is currently tools based on artificial intelligence (AI). As many as 88% of marketing leaders using artificial intelligence recorded a large or at least moderate return on this investment. Companies admit that AI generates profits throughout the entire customer cooperation cycle and is used in many ways: from managing personalization in relationships at scale, through predicting events and customer behavior, to optimizing segmentation.

How much is a customer worth?

How to measure effectiveness?

Most marketing teams, in addition to classic indicators such as tracking web traffic and return on marketing investment (MROI), also monitor the level of customer satisfaction and the customer retention (loyalty) rate. Alongside these measures, LTV has begun to enjoy great popularity, as it refers not so much to individual transactions as to the full perspective of cooperation with the customer and to future values.

In 2018, already 43% of large and medium-sized companies worldwide used the LTV indicator, and another 46% plan to apply it in the near future, so the forecast growth will be 107%. Interest in LTV corresponds with the global trend of companies focusing more on customer satisfaction at every stage of cooperation (the so-called full-funnel strategy).

Interestingly, almost half (45%) of marketing leaders say that their department leads initiatives in their companies aimed at ensuring positive customer experiences in the case of contact with employees from other departments (or participation in processes for which other departments are responsible).

How to use marketing trends to build advantage?

This is a significant increase from 2017, when only 24% of marketing teams carried out such activities. This trend means increasingly frequent sharing of goals by heads of business divisions. Currently, 53% of CMOs have shared goals with customer service, and half with the sales department.

Other indicators often used in marketing include Net Promoter Score (NPS) and customer satisfaction score (CSAT), as well as measures available on social media platforms.

Do companies have too much data?
The number of company data sources continues to grow, and this applies to companies of every size. For small businesses, this number increased on average from 6 in 2017 to 12 in 2019. In medium-sized enterprises – from 10 to 15, and in large ones – from 12 to 24. Marketing still too rarely has access to all information aggregated in one place.

Currently, 47% of companies admit that they have a fully unified and complete view of their customers' data. This percentage is clearly higher among companies satisfied with their investment in marketing tools (so-called High-performers) – 55% compared with companies dissatisfied with their investment (Underperformers) – 35%. However, because data sources and information themselves continue to multiply, for as many as 88% of CMOs, unifying customer data sources is still a priority.

Still relatively few marketing teams use advanced technologies (such as DMP or marketing analytics platforms) that provide insight into data collected from multiple sources. Only four out of ten teams use measurement based on data science (extracting knowledge and insights from structured and unstructured data) and attribution modeling (understanding the steps taken by the customer before conversion based on a set of rules).

Online customer communities remain highly valued by marketing as a tool for acquiring and retaining customers. However, the ROI from investment in this channel differs depending on the company's profile. Activity in social media is one of the best ways to acquire customers in the B2C segment, but it does not occupy such a high position in B2B, where sales take place in longer cycles.

In B2B, affiliate marketing is much more effective, based on cooperation between an advertiser (seller) and enterprises, where sales are often supported by building the reach of messages generated by the enterprise.

Artificial intelligence still on the rise

Artificial intelligence in practice

The use of artificial intelligence in marketing is growing rapidly. 29% of marketing teams currently use AI, and an additional 46% are in the pilot phase or plan to use this technology within the next two years (which means a 157% increase in use). Among teams already using AI, as many as 88% confirm a large return on this investment.

Artificial intelligence is currently used mainly for personalization at scale and optimizing customer segmentation. Marketing departments that used AI to work on brand building confirm its effectiveness in 95% of cases. AI also receives similarly high marks in the service of lead generation (88%) and customer acquisition (85%).

It is worth emphasizing that companies from the High performers group use AI 2.7 times more often than companies from the Underperformers group. Interestingly, customers themselves have no objections related to companies using AI to improve Customer Experience. In 2018, 62% of customers declared this, compared with 59% in 2017.

Summary: conclusions from the report:

  • 88% of marketing departments using artificial intelligence recorded a large return on this investment.
  • The scale of use of the Lifetime customer value (LTV) indicator in marketing will increase by 107%.
  • 45% of marketing leaders lead initiatives in enterprises to improve customer experience. In 2017, this percentage was 24%.
  • 53% of marketing teams have shared goals and performance indicators with customer service, and 50% with the sales department.
  • The integration and unification of a growing amount of customer data is a priority for 88% of CMOs. Fewer than half, or 47% of them, have complete information (view) about their customers.
  • IT tools used in marketing are integrated with business systems, most often with customer service software (60%), analytics systems (53%), CRM and ERP (52%), and platforms supporting advertising management (41%).
  • 62% of customers are open to the use of artificial intelligence to improve their experiences.

About the report:

The data used in the report come from the fifth edition of the annual "State of Marketing" study conducted in 2018. It was attended by more than 4,100 marketing leaders from B2C and B2B companies from North and Latin America, Europe, Asia, and Australia.

The surveyed companies were divided into three groups according to the levels of marketing effectiveness they achieved: high performers, in which marketing teams are fully satisfied with the results and return on investment; underperformers – teams dissatisfied with their effectiveness; and moderate performers, constituting a group with average results.