Short-term gain, long-term pain: the danger of short-termism
Understand why the desire for instant gratification and real time results has replaced the pursuit of patience
By Rupert Harrison, Planning Director at Zeta Global.
Our world is becoming increasingly immediate. In the age of “same-day” and “on-demand” everything, the desire for instant gratification and real time results has replaced the pursuit of patience. Life used to transpire in sequence but in our present digital world everything occurs concurrently. Politicians, corporate leaders and the general public are regularly accused of adopting a short-term outlook – often seen as detrimental to society, the economy, the environment and human relationships.
And it looks like a similar mindset is taking hold in the world of marketing. New IPA analysis has found that 47% of a marketing budget is now spent on short-term activation strategies – up from 31% in 2014. Furthermore, a recent IPA report argues that marketers are under increasingly short-term pressures that make it “practically impossible for them to do the long-term job”.
But what is causing these competing priorities? The drivers may vary depending on the nature of the business, but the impact is very much the same.
First up, public businesses are subject to unrelenting pressure from shareholders to deliver healthy quarterly results. The result? They tend to focus on campaign strategies that deliver short-term results but have a diminishing impact over time, leading to attrition and reduced effectiveness.
Meanwhile, smaller businesses are adopting similar short-term strategies, but based on the need to rapidly acquire new customers and gain momentum, for example. This often results in firms neglecting to nurture and retain those customers – despite the critical role this stage of engagement plays in building repeat transactions, loyalty, and advocacy.
In both cases, marketers are focusing on short-term results while overlooking long-term engagement metrics that show how inclined a customer is to purchase time and time again. This leads to attrition, churn, and ultimately the erosion of brand equity.
What can companies do to create a more balanced approach?
Balancing short-term business results with long-term brand loyalty
Companies need to have an effective CRM system in place, allowing them to capture valuable engagement insights from touch-points across the entire customer journey. These systems help to build a clear picture of how customers interact with a brand before, during and after the point of transaction, guiding companies towards effective long-term relationship and loyalty building with their customer base.
The latest IPA study suggests that the best campaigns have a 60:40 ratio of long-term customer engagement and brand building versus short-term sales activation.
For many brands, this is easier said than done. Without the right systems in place, it is significantly more difficult to demonstrate an ROI for campaigns occuring after the transaction. To ignore the longer-term picture will inevitably have a damaging effect on business performance and long terms profits.
Customer experience: more than mere lip service
Customer experience is increasingly accepted as the point of convergence between the short-term target of driving immediate sales and the longer-term goal of fostering loyalty through repeat sales – the sweet spot between customer and business needs.
Businesses must avoid the trap of using ROI over a period of weeks as the primary indicator of success and instead address the needs of the customer relevant to the particular point in their lifecycle, balancing them with immediate commercial goals of the business. For example, rather than a hard sell, try targeting customers at the beginning of the buyer journey with information and inspiration. The requirement to measure performance in the short-term too often trumps the need to nurture loyalty, enhance customer experience and build brand advocacy for the long term.
Seeing the bigger picture: understanding customer lifetime value
Marketers need to understand the cost of acquisition vs the lifetime value of a customer. This will ensure that they consider their engagements with customers as a committed long-term relationship rather than a short-term conquest.
To achieve this, CMOs should take a considered look across the channel mix at which metrics are a true indication of engagement, and adapt their goals and strategies accordingly to deliver a mix of short, medium and long-term returns.
Automation plays a significant role in taking the burden of execution off marketing teams’ hands so planners and strategists can contemplate the bigger picture and make sure all activity contributes to broader, longer-term business KPIs. And pattern recognition tools such as predictive modelling will help drive continual incremental growth by maximising on customers with a propensity for purchase and refining targeting to prevent attrition on fragile customer relationships.
Customer communications: Less is more
Brands must avoid eroding customer loyalty with excessive or aggressive sales-driven marketing.
The proliferation of channels that connect us to the consumer results in a tendency amongst some brands to bombard customers from every angle, in the hope that something sticks. Equally, with so much data available to brands, there is a temptation to over-target a customer, using prior browsing or buying history to coerce them repeatedly down a path to purchase that they simply don’t want to take.
With the ability to understand and respond to indicators from the customer, brands will become better at indentifying when to attempt to close a deal and when to back off. Pummelling disinterested consumers with sales messaging will leave them feeling alienated and frustrated that a brand is not listening to them. It is essential for marketers to acknowledge that situations will not always result in immediate revenue. What’s more, knowing when to message commercially and when not to is a delicate balancing act.
Getting to know you
Courting is a fundamental practice of relationship building. Taking a little time to woo your partner will invariably pay off in the long-term, and for marketers, this means listening to customers, understanding their likes and dislikes and showing them that you can respond to their needs.
It takes time to construct a picture of a person, but creating a profile of a consumer based on how they engage allows brands to target them more effectively over their lifetime. Utilising data intelligently will enable a meaningful value exchange between brands and their customers, by way of relevant, personalized content.
“How poor are they that have not patience!”
In all the immediacy of the modern world, marketers would do well to remember Shakespeare’s cautionary line. The digital and data revolution allows us to understand and target individual customers like never before. However, striking a balance is vital.
An effective CRM system, a relentless focus on customer service and the introduction of smart metrics to better understand customer lifetime value will go a long way in helping businesses to prioritise better. Those who shun a longer-term approach in favour of short-term expedience in their marketing strategies do so at their own peril.