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Customer Intelligence:
Life Without Intelligence: The Trials and Tribulations of a Start-Up Record Company

  Column published in DM Review Magazine
October 2004 Issue
 
  By Larry Goldman

I've come to the conclusion that when you spend a lot of time in the customer intelligence (CI) space, you become spoiled. You expect a certain amount of customer information to be readily available and accessible in order to make key decisions and investments. Recently, I've discovered that this is not always the case. Since starting my own record label, Burn and Shiver Records, I feel like I'm in the dark ages with no information. This experience has reinforced for me some of the basic powers of CI that many people probably don't take advantage of, even though they are lucky enough to have access to key information. These include:

  • Understanding marketing performance and effectiveness.
  • Knowing your customers and understanding your customer hierarchy.
  • Leveraging sales numbers to help influence marketing investments.

The deficit is threefold for me and Burn and Shiver. One, Burn and Shiver is a new record company with no historical data. Two, the company is releasing a record from a new artist who does not have any historical information. Three, the company cannot afford the right tools even if we had the information.

Understanding Marketing Performance

Understanding the performance of our key marketing investments, or what I like to call "bets," is the biggest challenge right now for Burn and Shiver. As we get closer to our national album release date, there are several questions that need to be answered:

  • What investments should we make to generate record sales? Should we invest in public relations? Should we invest in retail signage? Should we invest in magazine advertising? If so, which magazines?
  • Which channels are our customers most responsive to? Do they click on e-mail links for new music? Do they respond best to receiving the entire promotional CD, which is very expensive? Do they respond to phone calls?
  • What type of contact strategy will work the best? How often do we need to keep in touch with our customers? What combination of communication vehicles works best together?

Without decent intelligence on past efforts, we are forced to resort to anecdotal stories from competitors, retailers and distributors. The true challenge then becomes how Burn and Shiver can profitably test marketing programs but still generate sales. In many industries, the permutations of these possibilities are extremely daunting to understand until you find the right mix of programs. And then, there is that thing called a "budget" (which we don't have much of!).

After the CD is launched, we will experience problems with relating measurement back to key initiatives. For instance:

  • If we put a poster in Borders, did that really cause somebody to buy the record? Or, was it the disk in the listening station that did the trick?
  • If we get a music review in the newspaper, did that cause people to go to the concert? Did it entice them to buy the disk?
  • If we sent radio stations a package with the CD, did they open the package? Did they like the CD?

Like many consumer packaged goods companies, we are challenged to capture our customers' interactions and reactions to our marketing efforts. However, if we don't collect the information now, we'll be in the same position the next time we have to make key marketing investment decisions.

Knowing Your Customers and Their Hierarchy

Obviously, everyone would like to know who their customers are. However, when you are just starting out and have not yet sold one unit of product, how can you say who your customers are? Again, several questions need to be answered:

  • Who can help us with prospect lists? Magazines? Affinity Web sites?
  • Who can help us understand our potential customers? Do magazine demographics tell us anything? Do sales numbers for similar artists tell us anything?
  • What do our potential and current customers look like? Which songs on the disk do they like? What concert venues do they like?

The music industry has as complicated a customer hierarchy as any that I have seen. Music industry customers range from retailers, buyers, the press and media, online music stores, online download sights, music video channels and radio stations. Each of these customers influences sales. Servicing all of these customers, through all available channels with high value offers (such as free CDs) can be an extremely expensive venture. What is the right mix? What is the right message? What is the right investment for each customer type?

Micro-testing is probably the answer. Using very small, very targeted, inexpensive campaigns can help create a contest among our channels, customer types and offers. As sales numbers start to accumulate, we can quickly assess the impact of our programs compared to each other. Some trends we can watch for are:

  • Which geographies are selling better?
  • Which retail chains and independent stores are selling better? Which stores are more collaborative and willing to send us information?
  • Which marketing channels seem to have the most influence on sales?
  • Which offers and packaging seem to influence both retail and consumer sales?

Though the concepts described here may seem relatively remedial, I continue to be reminded of the lyrics from the '80s heavy metal band, Cinderella - "You don't know what you got until it's gone." Or, in CI terms - "Are you taking your information assets for granted?" I consistently see organizations struggling to leverage the information they have for its best use. Either from a lack of time, a lack of organizational clarity or trouble with data integration, organizations are still using anecdotal evidence to make customer-facing decisions and investments when real information is readily attainable.

Are you being as aggressive as you can be with your CI initiative? Have you become complacent? My experience was a good refresher of the true value of customer information. Rock on!

...............................................................................

For more information on related topics visit the following related portals...
CRM, Customer Acquisition/Retention and Database Marketing.

Larry Goldman is president of AmberLeaf, a customer intelligence consultancy. He has more than 13 years of experience in database marketing, business intelligence and customer analytics, as well as customer and marketing strategy, customer experience optimization, sales force automation and call centers. He can be reached at larry@amberleaf.net.

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