Portals eNewsletters Web Seminars dataWarehouse.com DM Review Magazine
DM Review | Covering Business Intelligence, Integration & Analytics
   Covering Business Intelligence, Integration & Analytics Advanced Search
advertisement

RESOURCE PORTALS
View all Portals

WEB SEMINARS
Scheduled Events

RESEARCH VAULT
White Paper Library
Research Papers

CAREERZONE
View Job Listings
Post a job

Advertisement

INFORMATION CENTER
DM Review Home
Newsletters
Current Magazine Issue
Magazine Archives
Online Columnists
Ask the Experts
Industry News
Search DM Review

GENERAL RESOURCES
Bookstore
Buyer's Guide
Glossary
Industry Events Calendar
Monthly Product Guides
Software Demo Lab
Vendor Listings

DM REVIEW
About Us
Press Releases
Awards
Advertising/Media Kit
Reprints
Magazine Subscriptions
Editorial Calendar
Contact Us
Customer Service

Customer Dialog Builds Loyalty and Profit

  Article published in DM Direct Special Report
February 21, 2006 Issue
 
  By Michael Meltzer

Neglecting Existing Customers

Keeping your customers and finding new ones has always been tough. Many organizations have invested in technologies and sophisticated software to help them gain and retain who they perceive are their most valuable customers. However, we regularly read that one organization or another has apparently neglected some portion of its customer base. Relationship building should be on their minds, and dialog can form a basis upon which to create differentiated services and valued customer experiences.

Significant ROI on Classic CRM Investments

Organizations have poured literally hundreds of millions of dollars, pounds and euros into buying and using specialized software and hardware to effectively create one-to-one marketing. No matter how much money you spend on technology, unless your organization adapts to customer needs and behaviors, systems and processes can do little. Some of the organizations have actually done the right things, such as to have senior management lead the effort, to get the employees on side and to really measure their ROI on customer equity. If many of the services you offer have been commoditized, however, then how can you differentiate yourself from the rest? Technology is not a magic wand. Consider the enormous amounts of money spent on so-called CRM solutions that seem to go nowhere.

Many early investments in smart database marketing that evolved into relationship marketing have shown significant returns on the original investment - but times, they are a changing. What happens when everyone has learned how to better segment their customers using the standard approaches of geography, demography, psychographics, value and behaviors?

Authenticity and trust in an organization that it will do the right thing can make or break relationships with vendors, whatever they offer. Forrester Research suggests that the way forward for financial services firms is to build on "customer advocacy." They define customer advocacy as the perception that the firm does what's best for its customers, not just what's best for its own bottom line.

Forrester Research's statistical model shows that customer advocacy has the highest strength of association and the highest predictive power for cross-sell potential among banking consumers, outpacing other factors such as customer satisfaction with branches and cross-channel service interactions. Doing the right thing for the customer is profitable.

It is certain that customers are becoming more sophisticated in their approach to their purchases. The Internet, terrestrial publications and word of mouth has made the lot of the marketer more of a challenge to get the message across to the right customers. It is much more difficult today to just push product and hope people will buy. Yet, the role of the marketer could be more rewarding, Marketers can focus through the use of new technologies and methods on real customer needs, delivering real value to the customers and real differentiation to the vendor.

CURARE and the Customer Experience

To be successful in highly competitive markets, companies have to create innovative customer experiences that demonstrate they are putting the customer first. The cross-sell, up-sell, retention, acquisition, reactivation and experience (CURARE) approach is often cited as a means of targeting customers for more customer valued treatments. CURARE is not a poison dart approach, but a way of focusing on customer benefits and valued (customer) experiences. A company must create a particular perception backed up by real-world actions. The perception that is the customer reality is all about how they feel about the company, a set of expectations, a viewpoint, a positive or negative image and the impression they absorbed from their last encounter with the company, brand, advertisement or representative. Well-publicized philanthropy can help remove the tarnish of bad business practices.

Customer experiences have both emotional elements and physical components that need to be addressed across the spectrum of business interactions from the influence to buy, the point of sale and to the eventual service call.

Short-term gains destroy value, relationships and the trust that forms the foundation of the brand experience.

Value Customer Perceptions

Organizations can stop the erosion of their brand and all the associated feelings that make up the customer experience. The first step is being aware of what your customers perceive your brand represents and the value the customer perceives. You must listen to your customer. But listening is not enough. You have to interpret and understand the subcontexts of what is being said. Furthermore, it may be necessary to ignore some of the voices, as you no longer wish to serve your historic customer base in the same old ways. You face increasing competition from businesses with lower-cost business models that are forcing you to continuously innovate- the elephant can learn to dance if survival depends on it. What you must do as a first step is make sure your strategic intents are clear to your employees, who will make or break your future. Unclear messages, poorly delivered without fair process leads to discontented staff who directly communicate their feelings and their frustration with the customer when the moment of truth arrives - and it will.

Use Technology Carefully

Technology has its place to support well thought-out strategic intent and practical tactical actions supported by senior management. Technology has existed for a number of years that can review purchase behaviors and identify propensities - including the propensity to defect to a competitor. Propensities can help organizations focus their activities on customers that have potential and have the ability to sway markets. You can couple propensities with tools and techniques to gather customer experiences and perception to further enhance the overall offer.

Word-of-mouth marketing has its place, as does so-called one-to-one marketing. The technologies that make this possible rest on the old, venerable scaleable data warehouse coupled with analytical extensions and, in some cases, real-time feeds. The real-time system feeds data marts that are focused, for example, on creating event-driven marketing.

Some believe that customers actually seek a learning and co-collaborative relationship with the organization that provides them with products and services. This may be the case for some, and a dialog-based relationship would benefit both the customer and the supplier. By taking up the position of customer advocacy (doing what's right for the customer), an organization can become a trusted advisor. This advocacy approach after an interactive dialog, machine or human based, may advise the customer to shop elsewhere for the product/service that meets their needs if they cannot fulfil their needs. To change the customer experience and expectations, you need to find the best solutions for your customers, offer transparency in partnering with the customer, provide quality products and services and offer a means of comparison to prove your overall superiority.

Dialogs

To some extent, the ability to have dialog and event-based relationships rests on the same database technology of old but with the added dimension of intelligent process engines and scaleable Web services. However, this data must be used with care, and keep the customers' interests in mind. Some of the older event-driven systems will only act when they perceive critical events occur (rules based). They believe their systems will be overwhelmed with data if they tried to track every event. Yet with better segmentation, these systems can be focused on those customers with whom the organizations want to actually have a dialog. You could use customer propensities more effectively and employ a more granular segmentation approach. With other customers you can create rules-based processes to identify times when intensified positive dialog will be required and valued. To have a dialog requires the time between awareness and action is commensurate with the customer need and profile. 

Notifications

Even a simple notification can turn into an opportunity for a valued dialog. For a financial services company informing someone of a renewal date for service and or product is an opportunity to focus on the customers' financial needs. The notification should require a response that can then form the basis of a valued dialog for both parties. So many direct mail, e-mail and SMS messages sent don't create dialog as their offer may not be strong enough or may not even exist. The customer must have a reason to respond. If you have an offer from a retail store that requires registration for a discount, a prize and or some valuable (to the recipient) offer you will more likely get some response. To really be worthwhile to the customer, your offer should be based on past purchases or behavior patterns that identify some worthwhile propensities to both parties that require a more direct dialog-based relationship. Some of the more useful dialogs are:

  • Acquisitions: To bring in more customers - from a wide to narrow focus.
  • Service follow-ups: A thank you, a satisfaction check, another offer.
  • Win-back: A special dialog when someone wants to close a relationship.
  • Reactivation: Provide dormant customers with a reason to communicate.
  • Event notifications: For focused marketing actions - category, theme, type or season.
  • Repurchase reminders: Use for consumables, subscriptions, toner and so on based on the average lifespan of the product they purchased.
  • Inventory and price alerts: They may be seasonal for clothes or when a new CD comes out by an artist the customer has bought before. For financial, it might be a new loan rate that has just become available.
  • Overstock or clearance opportunities: Identifying customers that have bought items like this before and inform them of an opportunity to pick up a bargain.
  • Defection interventions: Triggered by identifying purchase and usage patterns. This can fire off a win-back dialog.
  • Product/services development: Ask customers to help you design the future through co-collaborative solution developments.
  • Reward information: Keep customers appraised of what they have accumulated or could accumulate if they took advantage of a special offer.

The list above is a starter, as there are probably many other opportunities to create a valued dialog that can add to the total positive customer (brand) experience.

Build Barriers

Dialog-based relationships can help build barriers to poaching and create levels of trust that even allow for mistakes. The CURARE mindset places high value on building valued relationships one dialog at a time. The cost need not be high, given the sheer range of channels with which the customer and potential customer can be touched and motivated to respond to the corporate-initiated conversation. The cost of the dialog varies with the kind of customer with whom you want to interact, the experience you want to provide, their value to you, your value to them, the complexity of the message and the type of response required.

Figure 1 is my attempt to show how the cost of interaction, conversation initiation and desired dialog can vary dependent on the technologies applied and the numbers of customers you are trying to communicate with. The initial cost of setting up some of the more sophisticated Web-based systems that have the power to engage a customer could be high, but the volume they can handle lowers the unit cost dramatically. Whilst the cost of using specialists may appear high, it all depends on the products and services on offer and the potential value of the relationships you are trying to support or build.

Figure 1: How Conversation Costs Can Vary Depending on Technologies and Customers

Touchpoints Only Have Value in the Eyes of the Customer

The value of touchpoints varies according to what the company is trying to achieve and the value perception that the customer has of that touchpoint. Any attempt to have a dialog with actual and potential customers provides an opportunity to capture valuable information that can be used to improve or create a new product or service and may even help to resolve future problems. Unsolicited contact with the expectation of a positive customer response normally just does not happen unless the source is well known; then a level of trust already exists. When contact is actually made the recipient normally has a set of hidden expectations for the encounter:

  • There will be value of some kind to come out of the dialog,
  • Any information provided is timely and useful,
  • There is some level of personalisation just for them,
  • Any information they provide will not be misused,
  • They feel a degree of comfort with the means, method and mode of dialog, and
  • There is a set of actions that will proceed from this dialog.

Customer-Initiated Dialog

Customers and potential customers will more likely respond to communications if they see the value in it for themselves. One of the newest ways of creating opportunities for dialog is through Google. AdWords have become a very useful way to gain visibility in a crowded market but as their popularity has increased so has cost and value to the company placing the AdWords.1 Google continues to innovate, enabling even small companies to take advantage of the Web, even if that company does not have a Web site. Some AdWords have started to appear with a telephone icon. By clicking on the icon, a box appears in which you type your number and click on 'dial for free.' Google will then dial the advertiser and when you pick up your phone, you can hear the phone ringing at the other end. There are no call charges for landlines although Google says it may charge for calls to mobiles. Thus we have a customer-initiated dialog.

Dialogs Can Build Relationships

Marketing dialogs have value in building relationships and helping to differentiate organizations from one another through the pertinent and careful use of customer information and propensities. The customer is an asset to the business, and their potential lifetime value should be carefully weighed against any short-term sales plan. To sell short-term is a way of destroying future earnings. By becoming a customer advocate and provide value for money, products and services serves the business and the investors interests.

We are Not Prey

Customers are not mere targets; they are valuable business assets. They require nurturing and investment over time. Customers and potential customers must be offered valued services and a valued brand experience. Negative images and word of mouth coupled with real-world fiascos do little to make customers loyal and retain their trust. Trust is built on valued interactions, and with it comes forgiveness. Customers forgive the blunder and will allow the organization a second chance. Even here some customers are finding that organizations are trying to take advantage of them. An uninvited or valued dialog starts through a mail or telesales person relating the unfortunate incident and how that organization rectified it. With that, they attempt to sell another product/service. The sales psychology may be right, but the ever more sophisticated customers see the ploy for what it is.

Get the reason, method and advocacy-based dialog right, and you will build a loyal customer base. Play psychological games and target individuals as if they are prey, and you are asking for real trouble.

References:

1. Google AdWords let the customer create its own ads, choose keywords to help Google match the ads to the intended audience and pay only when someone clicks on the ad.

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

For more information on related topics visit the following related portals...
Business Intelligence (BI), CRM, Customer Intelligence and ROI.

Michael Meltzer is the cofounder and a managing partner of Active Management Techniques that specializes in advising organizations on the human aspects and benefits of relationship management in all its forms. He is a hands-on partner who has experience spanning general and IT management, financial services, public sector, telecommunications, education and retailing. He has specialized in applying the human aspect approach to support internal and external customer relationship management, change management, customer knowledge and organizational design where innovation and learning can flourish. He is a respected author, speaker, educator, consultant and experienced business manager. You can reach him at michael.meltzer@amt.eu.com.



E-mail This Article E-Mail This Article
Printer Friendly Version Printer-Friendly Version
Related Content Related Content
Request Reprints Request Reprints
Advertisement
advertisement
Site Map Terms of Use Privacy Policy
SourceMedia (c) 2006 DM Review and SourceMedia, Inc. All rights reserved.
SourceMedia is an Investcorp company.
Use, duplication, or sale of this service, or data contained herein, is strictly prohibited.