Customer World

How could we leverage those patterns from a marketing and experience perspective?

Here's an interesting perspective on relationship visualization by threeminds.

The key point that's being made is that now-a-days data, files, transactions, access and usage by customers is a lot more real time.  How can one get to know the behaviour and relationships between various dimensions to take action faster then ever before.

Use of all this information & data has to to get a lot more simpler, easier and flexible. That's where execution will move & get focussed in the next couple of years.

code_swarm - Eclipse (short ver.) from Michael Ogawa on Vimeo.

How are you taking care of your data in your organization?

There's an interesting report by Experian on how organizations are ignoring basis steps in taking care of their data. The report entitled, ‘Contact Data: Neglected asset seeks responsible owner’, surveyed 2,078 organisations worldwide, and revealed that the overall approach to data quality and integrity around the world is at best half-hearted and, at worst, cavalier.

Take a look at the topline of the report:

• Nearly a quarter of organisations (23 per cent) use data for strategic planning and decision making every day, responsibility for the upkeep of this data is passed from pillar to post.

• 59 per cent of respondents said that responsibility sits with middle management, from a CRM Manager through to an IT or Sales Manager.

• Only 50 per cent of organisations went on to say that data quality is championed by someone at board level.

• Organisations admitted that only half (52 per cent) of their employees have bought into the importance of data quality, revealing a lethargic approach to an issue that affects business success on a day-to-day level.

• Only 46 per cent of the same sample said they have a documented data quality strategy in place.

• 34 per cent said they do not validate any of the information they collect on their customers and prospects, whether that be name and address, contact number, e-mail address or bank account information.

My take: Looks like in many organizations, while customer data is touted as the most important asset, the efforts taken to  upkeep the quality leaves much to be desired. It needs commitment at the C-level, else it is not seen as priority by many operating managers. This must become a part of the KRA or KPI of every operating business head and CXOs must ensure compliance if they want their organizations to succeed in the future by leveraging this information.

Consistent customer experience is about organizing information

Marty  Mosely, in her expert opinion in Peppers & Rogers  writes about the importance of organizing customer information.

Master Data Management (MDM) software or systems enable organizations to strategically leverage and share those critical data assets. Deployed properly, MDM can provide organizations with complete, accurate, and real-time views of data spread across multiple systems or databases, even outside the firewall. This allows businesses to unlock the value of their data assets for competitive advantages or operational improvements.

Exactly how are businesses using MDM? Here are some quick, real-world examples of how organizations in the hospitality, retail, and technology industries are using MDM solutions to manage their most important data while adding to the company bottom line.

Increasing customer recognition and loyalty

Although an international hotel chain was using multiple systems to track guests, the company was only able to follow those enrolled in its loyalty program—about 10 percent of its customer base. This meant the company was potentially under-servicing 70 percent of frequent guests who did not have a loyalty program number. With mountains of complicated data from multiple systems, representing 5,000 global properties across eight brands, getting a handle on the data was a daunting task.

The company chose an MDM system that aggregated complex customer data without disrupting source systems, and seamlessly integrated with its loyalty program system. Once the MDM system was deployed, it was no longer a problem to identify frequent guests, even if they registered under different identities (variations on names and addresses without a consistent identifier), did not use their loyalty program number, or stayed at a number of the company's brands for a variety of reasons. By accurately matching guest information according to demographic and historical information, the company is now able to recognize guests across all brands in its portfolio in real time at the point of service.

Improving customer experience and top-line growth

Plagued by redundant records and an inability to properly recognize customers at any touchpoint, a massive retailer with a huge online presence and hundreds of brick and mortar stores knew it was essential to get a grip on customer data to help the company interact with customers in a more meaningful way. With its new MDM system in place, the retailer has created an accurate, real-time view of its approximately 40 million customer records from three disparate data sources. It can now recognize individual and household relationships, and has identified more than 11 million redundant records.

The retailer can now provide a complete view of transaction and customer history at the point of interaction, fulfill online orders at physical stores, better reconcile customer preferences, eliminate duplicate and inconsistent marketing campaigns, and remove the need to repeatedly ask customer loyalty program members for their personal information.

Understanding customer relationships and improving revenue and service

One of the world's largest technology companies was losing significant revenue due to incomplete software licensing information and territory assignment issues. The company needed to access composite views of all individual and organization data about customers, partners, and suppliers along with advanced B2B hierarchy management. The company used an MDM system to create a single view of customer and hierarchical data to help the organization address its licensing problems and operational inefficiencies, define the true and total value of every customer, identify the most valuable customers within an organization, and even know when a customer purchased through multiple channels.

The results were enormous. By properly managing organizational-level data, the company has found $139 million in new licensing revenue and recouped $47 million in operational cost savings. The MDM solution also helped improve field productivity since sales reps now can access synchronized data from across the entire organization (CRM, software licensing, and financial accounting applications) and gain a better picture of existing relationships and potential for cross- and upsell opportunities.

At the end of the day, what you sell or service doesn't matter. It is imperative to better understand your customers while improving the bottom line. With an MDM solution in place, it turns out that these two goals do not have to be mutually exclusive. Knowing your customers is the key.

My take: I  certainly think organizing customer information is the first step towards building consistent customer experience. This is the basic platform around which the rest of the customer marketing initiatives like segmentation, understanding customer value & profitability, analytics need to be built. Hence, getting this right is an important first step.

Preparing for a world when customer transactional behaviour changes!

The way customers pay and transact is undergoing a huge change. Today, most financial institutions have a trail of the payments, spends or usage in their transactional systems thro' many traditional payment methods. But, as these trends below show, there is a huge new revolution underway. If you are in the business of customer data & insight mining or in marketing to these customers, then get ready for paradigm shift in tracking & influencing their purchases.( Thanks David for this post)

Take a look at the trends:

1. Digital money
According to AC Nielsen, 90% of transactions in the US will be cashless by the year 2020. PayPal already has 63 million accounts, which makes it larger than most national banks,while in Korea during the month of June 2004, 300,000 people purchased cellphones into which you can insert a memory card containing all your financial data. So will physical money soon be a thing of the past? Most observers say yes, but don’t underestimate the power of human nature and tradition.

2. Contactless payment
McDonald’s is testing ‘contactless’ payment technologies in the US (and elsewhere). Just drive-in, grab your goods and drive off. Payment is made automatically by a wireless device on your windscreen linked to your bank account. Mobile phones can and will do much the same thing.

3. Pre-pay and stored value cards
10 million households in the US don’t have bank accounts and many of these use their pay cheques to buy pre-paid credit cards. Around 8.5% of households without bank accounts own pre-paid credit cards but this figure is expected to rise to 25% by the end of 2006. This is one reason why companies like Visa and MasterCard are getting into the act by signing up Rap moguls and singers like Russell Simmons and Usher to put their names on prepaid cards.

4. Private currencies
Pre-pay is a type of private currency in that you can restrict where people spend their money, in some cases to a single brand, outlet or service. This is good news for loyalty and also good (or bad) news for privacy depending on your point of view. For example, parents can give their children pre-paid cards with certain categories or locations locked off. However, the big news in private currencies is what’s happening in the air and in cyberspace. According to the Economist magazine, airmiles are now technically more valuable than the US dollar while over in cyberspace gamers are exchanging cyber dollars for the real thing.

5. Debt
The level of credit card debt in Britain has increased by 73% since 1997. The UK now holds 60% of all credit cards issued in Europe and has 75% of all European credit card debt. Spending on credit cards now represents 11% of GDP and 40% of people say they expect to use their cards more with the advent of new technology. Meanwhile, the amount owed to credit card companies in the UK now stands at GBP £53 billion. Figures for other countries such as the US and Australia are following a broadly similar trend. So what happens if (when) interest rates really go up? Trouble, that’s what.

6. Everyone is a bank
If everyone from supermarkets and search engines to phone companies and airlines offer banking services where does this leave the banks? The answer could be as back office low margin sub-contractors or maybe banks will re-frame themselves as ‘wealthcare’ businesses.

7. Micropayments
Once upon a time people used credit cards for big purchases like holidays. Not any more. Now you can buy a 99cent song on i-Tunes with your credit card or charge your hamburger at McDonald’s to your plastic. In 2004 the average credit card transaction in the US was $67.81. Back in 1999 it was $72.83. Add to this the possibilities created by contactless payment, stored value cards and pre-pay and you have a recipe for radical change in the financial services sector.

8. Proof of identity
With cases of identity theft going through the roof in most countries, there will be a boom for companies and technologies offering electronic and other forms of identity verification. There will also be an increase in products and services aimed at helping people get their identify back after its been stolen.

9. Mobile phones becoming wallets
Have you noticed how fewer people are wearing watches these days? Under the age of 21 a watch is almost a novelty as people use their mobile phones to tell the time instead. And so, the theory goes, phones will replace wallets too as people find it more convenient to carry their cash digitally inside their phones.

10. The death of cheques
  Seriously, who under the age of thirty uses cheques these days?

Planning for Enterprise Marketing Platform - Forrester's prescription

Suresh Vittal of Forrester released a report on successful implementation of Enterprise Marketing Platform couple of months ago. It had some interesting learnings for any enterprise planning to get this going in their organization. Here are some highlights:

• Pre-implementation planning should include a full data profiling exercise. Many marketers stop after a cursory audit of their potential data sources. But a basic data audit misses most of the data issues that marketers will encounter during the implementation. Profiling data early helps identify key data inconsistencies with sufficient time to solve them without any delays to subsequent phases. These inconsistencies stem from issues associated with data cleanliness, rapid acquisition of multiple data sources, and data-software incompatibilities. A leading retailer told us, "Our campaign management system likes data to be set up in a certain way. We spent one year structuring the tool to fit our data mart and then switched to organizing our data mart to fit the tool.
• "Major process and workflow revisions are par for the course. By their very nature, marketing automation tools make some processes obsolete and require the creation of others. As one large bank told us, "Marketers must realize that with automation they are capable of planning and executing 50 campaigns instead of three. This means that they will need to pay attention to workflow and analytics."
• Increased demand for analytical skills after rollout requires upfront planning. Traditional marketing practices place little emphasis on deeply understanding one's data — a required skill for using an enterprise marketing platform. As a result, the skills mix of most teams shifts after implementation, and on some occasions teams even undergo a complete reorganization. One large financial services institution found that, "The bulk of requests moved downstream. Marketers who originally dealt with campaign execution are now requesting campaigns and defining segmentation and offer requirements, with the production happening in the background."
• Technology support organizations are essential. Enterprise marketing platforms are complicated enterprise software, which require a technical background to install, configure, and maintain. Marketers should secure advice and assistance from their technology support teams for planning and defining requirements and dealing with integration issues and software upgrades post-implementation. One large insurance organization had its IT department write a portion of its request for proposal (RFP), while a large high-tech firm found great success in partnering with both finance and IT. In both cases, marketing retained ownership of the final decision, but it brought in experts for advice as needed.
• Change management and on-boarding takes longer than anticipated. With changes to process, technology, and skills, most marketing teams need time and resources to adjust. One enterprise-level, high-tech firm told us, "Don't try to shortchange the effort. Refresh it and keep it moving by focusing on process, culture, rewards, and behavior management." A large brand manufacturer told us "Scoping support was a challenge. We were taking a core tool used daily and completely replacing it with a new one. The team was busy just keeping up with campaigns, and now they have to make time to sit with the project team and learn the new tool."

Interview with Drayton Bird - " Internet has accelerated direct marketing"

Paul Dervan had a chat with Drayton Bird, one of the legends of the Direct Marketing industry. His answers are incisive and pretty telling. Take a look:

Me: What is the single biggest change you noticed in direct marketing industry in the past 15-20 years?

Drayton: More people are doing it, less well.

Here are some of the things that have had significant effect on the marketing industry over the last four decades:

• The  computer and particularly the speed with which data is available.
• Databases. Now all organisations want databases because they realise the value they hold. They have seen how easy it is to capture data via a website.
• Direct  marketing attracting more investment than general advertising
• Personalisation  and customisation has allowed more relevant communications to be  produced.
• The  decline in educational standards, especially literacy and numeracy
• The  internet
• The way in which the idea of the brand has come to seem important, even to people who have nothing to do with marketing – and who misunderstand it
• Inflation, especially in media costs, where it has far outpaced general inflation, leading people to seek new ways of marketing
• The greater desire for individual expression, frustrated by the move among those in power towards ever more centralisation. This mirrors what has happened in politics – e.g. the European Union.
• Compliance  – and the obfuscation of language in the pursuit of covering  the corporate rump.
• Changes  in attitudes to sex – greater openness, particularly in  advertising imagery.
• The  increasing use of marketing techniques – usually badly and  often dishonestly applied – by government.

                      

Me: There seems to be a blur between direct marketing, ATL advertising and digital marketing. Do you find this?

Drayton: Yes there is. This is a good thing. This is not a difficult business to master and people should be able to understand and practice all three, since customers switch happily between them. Customers and their motivations do not change even if the media do. Actually as I point out in the new edition of Commonsense Direct and Digital Marketing, the word “digital” is a misnomer. We have digital TV and radio, but marketers don’t think of them as digital.

Me: Is the future of direct marketing looking bright?

Drayton: Yes. My former colleague Shelley Lazarus, now CEO of Ogilvy Worldwide said at the DMA conference not long ago that today, all marketing is direct. This is because of the internet, which is accelerated direct marketing.

Me: What are the common mistakes made by marketers?

Drayton: Here are some I listed recently for another interview...

• Too  many amateurs in a business that calls for professionalism.
• They  fail to study the past – or read.
• They  “seek applause instead of sales” – Claude Hopkins  said that over 80 years ago.
• They forget it’s just salesmanship and imagine it’s a branch of the entertainment business. Entertain, by all means, but make sure it’s relevant.
• They  invest before testing – why guess when you can know?
• They don’t measure. If you can’t measure it, you can’t manage it. What sane person invests in anything without measuring return on investment? Marketers do every day. Why? Because firms see it as an expense, not an investment. That’s why they cut marketing expenditure in recessions.
• They  believe research will supply the answer – when it is only  indicative.
• They  don’t study business as a whole - all they think about is  marketing.
• They  fail to explain clearly to their colleagues what they are doing –  maybe because many don’t really know.
• Over-optimism  and a naive belief that marketing, especially advertising will solve  business problems.
• Hiring marketing directors and senior agency people without checking their credentials. There is too little due diligence in our industry.
• Uncritical  acceptance of “gurus” who are often just recycling old  truths. Me, for instance.

               

Me: What advice would you give anybody starting off in marketing?

Drayton:

• Read. It’s a very agreeable feeling when you walk into a meeting knowing more than anyone else.
• Study people. They are the only profit centre in your business. If you really understand your customers you multiply your chances of success.
• Constantly ask yourself: “What if?” - that is how ideas are born. You need an inquiring mind to succeed in this business.
• Take an interest in as many things as possible outside marketing, which is a very dull subject. If you think about nothing else you will end up a tremendous bore – to others and yourself.

Learning from Clive Dunhumby

Independent has a nice article about Clive Dunbumby, a pioneer in data-led marketing. His involvement in the success of Tesco's loyalty program is legendary.Here's a chance to learn from his experience on how to use data:

If knowledge is power then Dunhumby founder Clive Humby is a very powerful man indeed. Every year, the Londoner's data mining firm peers into a mind-boggling 100 million shopping baskets. The contents of those baskets are sorted by codes, fed seamlessly into powerful spreadsheets and analysed by a team of dedicated number crunchers.By the end, Dunhumby has an eerily complete picture of individual shoppers.

• "If you want to have a dialogue with customers, you have to have permission," says Humby, "we have permission".

• Humby says responses to tailored vouchers are far more positive than reactions to mass market campaigns, which ultimately means better value for customers.

• "Voucher redemption (for tailored messages) is 20 to 30pc -- mind-numbingly high," he says. "If something relevant is sent to customers, they're much more likely to use it.

• "Tesco without Clubcard is unimaginable," he says. "The loyalty data is such a valuable set of insights that it's used with a light touch everywhere.""

• Promotions on coffee don't work because people tend to be loyal to one brand, while beer promotions are a winner because shoppers are happy to try many varieties.

• Tesco's "Supplier Insight" programme is largely used as a bargaining tool, with the supermarket giant offering "blue data" to suppliers tracing general trends with no personal information, but Tesco also uses the scheme to encourage promotions for frequently overlooked customers like older age groups, in a nod to social responsibility.

• Humby stresses that while data mining works well in "high transaction businesses", it will never hold the key to retailing success."If you're stores aren't right, if you haven't got the prices right, then people won't shop," he says, "You can't exploit a loyalty card without the fundamentals."

My take: When you have data, you should first know what does it have as information & how to use it.Don't collect data that you don't know where you are going to use. You should also know what works & does not work - measure & understand everything that you do. Lastly, you should know it is not a magic wand for you to get customers to come back or buy more. You have to get your product right.

Future Corporations - A world without HQs. Only HUBs

C.K. Prahalad and Hrishi Bhattacharyya write about a new world order that is transforming corporations:

Growth prospects for multinational corporations (MNCs) are expanding enormously. In Asia, Latin America, Africa, and Eastern Europe, there are more than 4 billion new potential customers whose rising incomes and aspirations have created an unprecedented market for all manner of goods and services. They want to own homes, to eat nutritious food, and to have varied entertainment options. They want toothpaste, cell phones, and motorcycles. To cater to these needs, business-to-business enterprises will be called upon to provide chemicals, cement, machine tools, electricity, and much more.

Many corporate leaders recognize this opportunity, but few are developing the capabilities or the management focus that they will need to realize its full potential. They persist in thinking of these new markets as “emerging markets,” separate from their existing customers in the industrialized world. Many companies have not reorganized their operations to serve a fully global economy.

Currently, most companies attempt to “go global” in one of two ways: centralization or decentralization.The gateway–hub structure represents a third alternative: a hybrid that reduces the tension between global integration and local responsiveness. Corporate leaders who are based in business unit–style organizations in selected gateway countries have a natural base from which to extend their footprint into nearby markets.Together, the 20 gateway countries — 10 from the industrialized world and 10 from emerging markets — account for about 80 percent of the world’s economic activity, and 70 percent of its 6.6 billion inhabitants. An MNC could most effectively expand its operations around the world by making it a priority to set up hubs in these gateway nations.

A gateway–hub structure can be flexible. A Chinese hub could manufacture goods for Greater China, other Asian markets, the Middle East, Europe, and the U.S. Conversely, a vibrant consumer market need not depend on a single hub: A hub in the U.S. could draw in goods from Brazil, China, and Mexico. All the hubs would probably be involved in manufacturing, but only some might incorporate research and development.

I personally think, we need to use markets/countries (effectively basis their strengths) that can add competitive advantage to various functions to an organization and get them to work in a networked manner. The challenge is to move these processes seamlessly across countries and that is what will make or break this structure.

The emerging BIG switch

I was reading an article in DM Review, on the emerging applications of business intelligence tools and the transformation expected in the future as 'information inventory' in enterprises gather pace over the next decade. While there are interesting trends on how BI applications will grow( which I have put together as a presentation), I would likely to slightly digress a bit and pick-out some thought-provoking points that has been made in the article:

I found a particularly interesting point that can have a profund impact on many business models which many business managers tend to dismiss or miss many a times:

"This is the trend that Nicholas Carr identifies in his book “The Big Switch: Rewiring the World, from Edison to Google” (W.W. Norton & Co., 2008). This refers to the trend of businesses switching from the internal deployment of software to the outsourcing of large-scale information processing systems, also known as software as a service (SaaS).SaaS is normally thought of as a simplification and economization of the installation, management and maintenance of software.

Carr’s argument is simple: during the industrial revolution, every factory had its own power plant – initially, water wheels and subsequently steam engines. As electrical service became widely available, a big switch took place, and as we know, few factories today have their own power plants because it became more economical for them to use electrical power supplied by utility companies. Carr’s point is that in a similar fashion today, most industries operate their own computer systems but soon will switch to having them managed by outside parties because it is more economical."

How's the BIG switch going to affect your business?

Is it possible for you to envision the big switch in your business that can become a game changer? I personally think this is happening to the so called analytical and marketing applications that I work with everyday. It's increasingly all about finding common business issues across business verticals, developing a common methodology to develop insights, identifying a platform to capture trends that the enterprise business users can access and getting them together quickly to create business impact. We need to have the ability to combine mass customization with scalability in our analytical marketing business.Am sure it's applicable to your business too!

THE BIG switch in BI applications

Coming back to the topic where I started,the article goes on to mention that Diagonal BI applications will substantially extend the benefits of SaaS and will accelerate the outsourcing trend in BI.

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Personal recommendations are more authentic

As many channels start to converge, the chatter among customers about products, benefits, uses, problems, referrals is increasingly gaining a lot of attention. It's so easy  today to get on to the web and know what customers think about your products. The ability to fuse this data along with your transactional & attitudinal data that lies within your organization and doing analytics on this information is going to be the next inflection point for marketers.

Here's a presentation by Paul Isackson that brings out the power of this chatter and influence on customer behaviour.

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Inside Steve's Brain- customer-centric design thinking

Here's an overview of the new book that's just got released - Inside Steve's brain ( Nishad sent this to me a few hours ago). Personally, it tells me a lot about the way the man is thinking, pushing( the people around him), acting-on( his instincts) and executing( without being worried about what the world thinks about him). Customer-centric enterprises need to have customer-centric design thinking - the way their products need to be conceived, designed and delivered. Steve just does it with impeccable perfection and style.    Here's the preview before you rush-out to buy:

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Lead management - Involve before you start!

A recent study from the Sales Lead Management Association (SLMA)  shows that many companies are ignoring their sales lead management.

Their 2nd annual Sales Lead Management Study, conducted with 144 businesses in Southern California, revealed the following results:

• 68.8% don’t qualify leads before sending them to their sales teams
• 52.4% have no formal process for compiling sales forecast reports
• 82.8% don’t track ROI for lead generation investments
• 55% rated low satisfaction with their SFA/CRM system, at 5 or less on a 10-point scale
• 52.1% use no SFA/CRM system to track the lead process

My View:  The gap between sales & marketing departments has only grown over the years.Sales has had a siloed process in enterprises and in my experience getting sales to see & appreciate good quality leads is always big problem. On the other hand, I have always found, lack of understanding what a good lead is the problem of most lead generation programs. Often there is a mix of science, logic and an intuitive feeling in the salesperson's mind which a software or a process cannot replicate. But, my belief is that right at the inception of a lead generation program, you need to have the buy-in of the sales team. The lead generation team must be 'considered' a part of the sales team and may be that's the reason there's a term coined as 'inside sales'! Nevertheless, the lead generation team, the software and the process must be seamlessly integrated to succeed. It has to start before the program is implemented and announced. That's the key to its success.

CMO council releases study on 'Leveraging Customer Data and Analytics'

Only 50 percent of global marketers report having a strategy for further penetrating or monetizing key account relationships, reports the Chief Marketing Officer (CMO) Council in a new research study, Business Gain From How You Retain . In addition, a surprising 45 percent rate the effectiveness of customer relationship management (CRM) systems as deficient or needing more work, with only 15 percent of companies rating themselves extremely good or effective at integrating disparate customer data sources and repositories.

 

Conducted in late 2007 and early 2008, the CMO Council's Business Gain from How You Retain study undertook a wide-ranging evaluation of where and how marketers are "operationalizing" customer intelligence and insight to reduce customer churn, increase lifetime value, improve the customer experience, and increase the effectiveness and targeting of marketing spend.

More importantly, marketers are struggling to gain a true and timely view of the customer due to inadequate or incompatible IT systems and databases, siloed data in functional areas, and a limited strategic focus or management mandate on Customer Data Integration (CDI). Compounding the issue is a lack of formalized data-sharing policies and practices in the organization, combined with internal political or cultural barriers and IT obstacles and objections to data integration.

 

"We are seeing a fundamental need for marketers to be more effective at tapping the valuable vein of customer data that runs deep inside all organizations," notes Donovan Neale-May, Executive Director of the CMO Council. "Investing in integrated systems that harvest customer insight is critical to driving both marketing and business performance," he adds.

•       Only 15 percent of marketers say their companies are doing an extremely good or effective job of integrating disparate customer data sources and repositories; 55 percent note there is room for improvement or a deficiency in this area.
•      More than 31 percent of companies surveyed had customer churn rates of more than 10 percent and 32 percent reported turnover of five to 10 percent. In comparison, more than 62 percent said they desired or expected a churn level of less than five percent.
•      Respondents believe customer churn significantly impacts business performance through revenue loss (59.9 percent), reduced profitability (39.6 percent) and greater marketing and re-acquisition costs (36.3 percent). 
  
•      While churn is a big issue, nearly 67 percent of those surveyed say they have no system for re-activating dormant or lost customers, while just over half of respondents have a strategy for further penetrating or monetizing key account relationships.

•       While more than 35 percent of respondents report that the CMO or marketing department (38.9 percent) has primary responsibility for the customer analytics function, they are not leveraging its value. Over 31 percent of those surveyed do no data mining at all and 63 percent are only doing moderate levels of data mining for intelligence and insight.

•             The top six strategic applications of customer information by marketers include:

                        - Up-selling and cross-selling
                        - Segmenting and targeting
                        - Driving retention, loyalty and promotional programs
                        - Identifying new opportunities and unmet needs
                        - Improving customer service
                        - Shaping personalized and customized communications

•      Key initiatives to increase customer retention include improving customer communications (65.2 percent); addressing complaints, problems and pain points (51.8 percent); and enhancing the customer experience (54.8 percent). Unfortunately, fewer marketers noted their companies' willingness to modify business practices and policies to accommodate customer needs.

How do measure Customer Engagement?

MarketingNPV provides an in-depth point of view on measuring engagement. This is a complex and evolving subject in marketing. The key however is to start small, keep defining & redefining it, see the results and keep improving it all the time. I think customer engagement must include all touchpoints beyond just net, blogs. It should include store visits, branch visits, call centre, product usage, cross-product holding, depth of features & benefits used by the customer etc.

Take a look at how they see it:

Two Types of Engagement

There are two generally accepted engagement “types”: emotional engagement and behavioral engagement. The former is more popular; the latter is more important.

Behavioral Engagement

It’s important to note that behavioral engagement is not limited to a purchase of a product or service; it encompasses all the interactions that a prospect or customer has in relation to a brand. There are any number of pre- or post-sale activities that can be (directly or indirectly) predictive of a future purchase or re-purchase; they include visiting a Web site, downloading a whitepaper, calling customer service, recommending a product, or even commenting on a blog.

There’s plenty of data available to track how customers or prospects are engaging with a company; the key is to synthesize it into a clear model for demonstrating either short- or long-term economic benefit.

To probe more deeply into these drivers, your next step will be to identify places on the map where you have good data and where you don’t. Look beyond the traditional customer survey information, brand-tracking studies, and the CRM system. What Web analytics are you capturing? Do you have access to point-of-sale data or call-center transcripts?

The key to measuring engagement is:

a. Develop a vision
b. Create a methodical testing process
c. Look for predictive validity of upstream behaviours
d. Leverage your engagement drivers

Personalized communication - Is it lack of data or resolve?

The CMO council in its new global survey, "The Power of Personalization"  has some interesting pointers on potential opportunities that enterprises have in exploting this approach and strategy.

According to the survey:

• Inadequate customer data is the key obstacle facing top marketing executives in their adoption of personalized communication techniques.
• Many CMOs feel the process of developing individualized marketing messages is still largely under-utilized and under-tested.
• More than 55 percent of respondents plan to allocate 10 percent or more of their marketing budgets towards personalized communications, despite their reluctance to declare their personalization efforts successful in the past.
• Many marketers' programs have been deemed unsuccessful because of a lack of actionable customer data used in campaign planning -- as well as because of inadequate analytics used in assessing post-campaign effectiveness.
• 55.1 percent of respondents plan to increase their 2008 marketing budget allocations for personalized communications by more than 10 percent.
• 49.1 percent of respondents blamed "inadequate systems and infrastructure" for limiting personalized communication initiatives.
• "Lack of customer data and insight" and "cost and complexity" were also cited as major contributing factors by 46.2 and 43 percent of respondents, respectively.

My View: I personally believe that many marketing departments in companies are struggling with this new order of availability of customer information, left-brain marketing techniques(viz. analytics) and competency to leverage technology tools. Earlier they had to just "inform", now they need to use customer information to "interact". The traditional job roles and responsibilities need changes, as marketing departments need to have people who understand data, technology and interpret individual customer behaviour.I think marketers must learn to use simple tools, extract whatever data is available and show quick-wins rather than wait for technology infrastructure to be perfect to adopt this approach as they scale-up this kind of marketing. Also, product managers must also have under them customer information managers/ executives who could effectively lead this process. It is also important that the silos in organizations have to be brought together by the CEO to ensure information is used effectively for the enterprise rather than a particular line of business. May be new accounting methods of attributing income, because information of a line of business is used for the other, should be designed for wide adoption of such practices in enterprises.In my opinion, personalized marketing is more than just the 'intent', it is the 'intensity' that can make the needle move!    

Do you onboard your customers?

I am not always excited if somebody tells me I have acquired a new customer. I always look at what is in the plan of the marketing & product teams to make these customers use all the features and benefits of the product, so that these customers can be with them for life. Not too many companies pay attention to onboarding customers. They acquire and forget. Or they pay a lot of attention to how to acquire customers but not do enough review of what is done to keep and grow these customers. Kevin Zimmerman, Sr. Editor, at Peppers & Rogers writes:

Consumer electronics companies and retailers are finding out the hard way what happens when you don't educate customers. Take, for example, the recent situation involving the purchase of popular high-definition televisions (HDTVs). According to Forrester Research Analyst James McQuivey, 20 percent of the sets sold have been returned in some U.S. regions, in large part by consumers who didn't realize what they were buying. Per an ESPN/Knowledge Networks/Statistical Research Inc. study, only 64 percent of homes with an HDTV have HD programming via broadcast or cable, and 13 percent of people who own an HD set do not know if they receive an HD signal. McQuivey forecasts the 20 percent figure will drop moving forward, as more retailers see the need to educate customers about the format if they want to avoid such massive returns.

Who's responsible for customer education?

Henry Choy, senior analyst at Jon Peddie Research says ""The store should do a better job of educating customers, the documentation inside the box must be better, cable companies can get more involved,"..

For a moment, if we as marketers think like customers, then count the number of times we would have read an operating manual, the number times we would have used the features that we primarily bought the product for, the number of times a company that we bought the product from, called to tell you if you have understood the features and used them. In my case, it is close to zero. That's the opportunity waiting to be tapped - Onboard your customers and you will realize there's profits to be made for life.

Do you know how to build analytics from conversational databases?

Peter Kim of Forrester has written a thought-provoking article on the future of the advertising agency. The report argues that consumers now rely less and less on marketing messages when in buying mode. Instead they seek guidance from family, friends and others in their respective communities to guide them toward purchase decisions.

Peter’s views via AdWeek

(Agencies are) “in “a world of hurt” because consumers are tuning out the messages the industry is predicated on producing. Instead, it believes shops need to be organized around communities, not disciplines. What it is calling “the connected agency” would not only know certain communities but also be active members of these groups. Pushing messages would give way to encouraging voluntary engagement, and ongoing conversations would replace time-based campaigns”.

My View:

As communities & conversations become more and more important, there is a need to understand how to build analytical models around huge "conversational  databases" that will emerge. The ability to mine data and conversations together, will become a  huge competitive advantage for service providers. The ones who will succeed are the ones who will be able to overlay the traditional transactional data with conversational data. This is a skill that needs to be built and nurtured if brands and service providers have to succeed in the future.

Why developing customer relationship is so hard

Ron got my attention with a lovely post on this topic. He has some very thought-provoking points on various facets of building customer relationships. He picks-up a quote from John Gottman who says:

“Good relationships aren’t about clear communication — they’re about small moments of attachment and intimacy.”. He gives an example of  a 'small moment' that built a relationship with  a customer -

An IT executive traces his loyalty to USAA back to a single phone call. He called the firm to cancel a credit card and insurance policy. The rep said “I hope I’m not overstepping my boundaries, but we’ve found that many customer often cancel products because of events that aren’t related to USAA like a divorce or other family matter. We’ve set up a special department to help customers with these kinds of matters, is this something we might be able to help you with?” Since he was in the middle of the divorce, he took USAA up on that offer and has been a loyal customer since.

He further writes, Gottman also says that:

“Successful couples look for ways to accentuate the positive. They try to say ‘yes’ as often as possible.”

He writes - Gottman’s comment echoes my sentiment that building a relationship isn’t simply about saying “trust us” but saying (and demonstrating) “we trust you.”

How can one institutionalize this process? - My view:

Companies don't necessarily disagree with this philosophy but the truth is getting it working in the trenches(in the marketplace across channels) - that's always the challenge. Companies need to build a robust Customer Interaction Architecture (CIA) that can capture this "pain point' and 'enable' it with tools and triggers to make a difference. I certainly believe every  transaction or complaint or query is an opportunity to build a "Small Moment Customer Interaction Architecture (SMCIA)'.

To make this happen, there is a need to increasingly integrate technology with every marketing processes.

Treat data with respect

According to a research released by Royal Mail, an estimated 90 per cent of companies fail to exploit data they already hold  on their customers!

It was really disturbing to me as I went thro' some highlights of the report as to how companies value data. In my opinion, in the coming decade, data is going to be every enterprise's only competitive advantage and companies can't take this data casually given the value it can derive, as this research shows.

Take a look at the topline findings:

• Only 15 per cent of companies declare their data as an intangible asset on their balance sheets.
• Data is proven to be a fundamental asset. A firm understanding of a customer database can significantly bolster the bottom line and add value to the company itself, potentially adding millions to a sale price.
• Huw Davis Partnership founder Huw Davis says that clients have increasingly been asking him to value databases over the last few years, and he would recommend more businesses to do so.
• Most companies are getting less than half of the potential value from their customer
  data.

By addressing the data problem, enterprises could potentially increase their value by up to 30 per cent. It is imperative that enterprises look at ways and means to design a customer data strategy road map and extract value from it.

Understanding the power of customer lifecycle

David Baker provides some interesting insights on customer lifecycle. I quite like the idea of identifying "switch points" when a customer is likely to switch to another product/brand or is ready to move to a product in the higher tier. The key question to me though is the ability of companies to identify such "customer states" or "behaviour states". Marketing needs to quickly start learning that art of using customer information, drill down and observe these changes in customer patterns and take appropriate action.

He writes:

If you are like most people, you have stages of life and all things around you; people and environments change dramatically over time. We have an early life stage where we learn the primary elements of surviving in this mixed world, the basics, as we could call it. This is where we form our basic judgments, values and shape who we are and the paths we'll lead. This is where we learn to develop our community of generations, or simply break out and build our own communities. We have many milestones that we go through: high school graduation, college for some, young adult life in the working force, family development and planting roots into a community. We then drift into the middle stages of our life, where many foster these communities and evolve the next stage of life till we get to the celebrated later stages of our life and bask in our wealth and watch our families grow up.

A customer lifecycle is just that. It is the foundation of consumer involvement with your brand over time. A customer lifecycle can shift over time, as consumers come in and out of different lifestages.

The key to marketing exactness in developing a lifecycle program is to identify "switch points" when a customer is likely to shift away from your brand, consider new alternatives and potentially develop some brand affinity with your competitor. Many in the marketing space trigger off of key income milestones. We graduate from college, we get married and have dual incomes, we start a family, we invest in our first home, we buy our first automobile, we consider life insurance as a means of protecting our family, we look more closely at investment options. All are viable triggers.

Don't purge that consumer from your database or program if they don't respond; don't purge them if they don't buy. Look deeper and see if a lifestage is influencing their involvement with your brand. That's the essence of marketing!

NYSE CEO Report 2008 - Focus on the customer

Frank Capek drew my attention to a recent report  on how customers & devoting signifcant executive time on managing customers will be central focus of CEOs during 2008 (Report)

From the executive summary:

”The first theme is that this may be a year in which there is renewed vigor around the customer - 2008 may be a year where many CEOs put the customer at the top of the long list of issues on which they must focus. Why?  Simply stated - customers are at the core of growth.  Here are a few points from this year’s study that are the foundation of this theme:

• CEOs are planning greater investment, both budget and time-wise, on customer relationship management.
• The importance of sales growth as a performance measure has increased since the prior study. Customers are the engine of sales growth.
• Brand, reputation, and investments in corporate social responsibility are more important this year - all efforts that are focused on the winning the hearts and minds of the customer.
• While many CEOs say it is easier to attract customers than it used to be, many, particularly outside the United States, say it is getting harder to retain customers. CEOs recognize that losing customers can be costly.”

Key take-out: It's heartening for me to note that managing customers will be on top of CEOs' agenda. To make it a reality,I think they will have to spend significant time in driving it down the organization - amongst their business heads and their ranks. This has always been a key challenge as there are a lot of issues regarding channel conflicts, change management, marketing budget allocation, linking performance incentives wrt customer management goals, technology investments, profit & cost allocation etc. that will need their focus, to drive this kind of a culture in an organization. Also, they will have to invest significantly in identifying metrics and measurement dashboards around how customers are being managed real time in an enterprise and drive this relentlessly across lifecycle of their customers over the next couple of years once they make a start in 2008.

 

Eight predictions for marketing in 2008

We are coming to the end of 2007 and dawn of another new year. It's time for predictions again, I presume! Chief Marketer has some predictions:

1. There will be an ongoing emphasis on “engagement” measures. This is getting harder and harder to measure using models that had already lost their efficacy in 1985, and when you combine that with the power of today’s “bionic” consumers, born hot-wired into the Internet with an iPod in one hand and a TiVo controller in the other, engaging them will be the only way of guaranteeing loyalty and profitability.
2. More “brands” will become “Category Placeholders.” As brands become more and more enamored with and enmeshed in “new” media like social networking and messages beamed into consumers’ living rooms from outer space, marketers need to ensure that their brands actually stand for something in the mind of the consumer.
3. Companies will have to move from saying they’re ”Green” to actually being “Emerald City Green.” Playing in the environmental arena won’t be an option in 2008 and brands and holding companies will have to find ways of positioning their offerings in ways that meaningfully support a sustainable future.
4. Media planning will become more touch point focused and personalized.
   Planners will still classify touch points as “above-the-line,” “below-the-line,” and “new,” but planning will be based on three critical considerations: a) which touch point best reinforces brand values, b) where the brand + media equation yields real engagement, and c) where the plan is seamless, believable, personalized, and authentic.
5. Behavior will (finally) trump attitude.More marketers will come to realize that “to know you is not necessarily to buy you” (or, for that matter, even like you). Loyalty and engagement metrics – particularly those configured to provide brand-to-media engagement measures—will be used to identify behavioral “hot buttons” that marketers can add to their toolboxes and their search efforts.
6. Consumer expectations will once more grow.Brands are only barely keeping up now. Expectations remained stable for a short time, but only while consumers were catching their breadths and adopting –then devouring – the newest of the new technologies and innovations.
7. Personal health management will impact brand engagement and loyalty.U.S. obesity is at an all-time high, with Americans among the fattest people on earth. This increase is primarily the result of consuming more calories, that behavior the direct result of technological innovations making it possible for food to be mass/fast prepared far from the point of consumption, and coconsumed with lower costs of preparation (even if you factor in marketing costs).
8. Innovation and loyalty will matter more. What is clear is that the ever-expanding universe of brands will require an informed action plan – one that makes sense to the people on the brand and marketing side of the equation, but one that also accurately identifies and capitalizes upon what people on the consumer side really feel, really want, and really believe. nsumed with lower costs of preparation (even if you factor in marketing costs).

What are the icons of your customer service?

If you are obsessed with customer-centricity in your organization, it make sense to have some icons that serves as a benchmark for the organization to emulate and live-up to. CRM Buyer has an interesting article on how Lands' End did it:

Motivation can take many forms. At Lands' End these days, it has taken the shape of a London taxicab parked in front of the company's headquarters, its black paint buffed to a mirror-like shine, its grille festooned with a Christmas wreath.

Historic Return Policy

Lands' End, now a division of Sears, has built a reputation for 44 years on customer service. The London taxi, returned by a customer in 2005, has become Lands' End's version of a well-known Nordstrom legend, in which a customer was allowed to return tires even though Nordstrom never sold tires.

However, in this case, Lands' End really did sell the car, back in 1984. The London taxi was featured on the cover of Lands' End's holiday catalog that year as a special luxury item. The cab, complete with a right-side steering wheel, and filled with classic English cashmere clothing and gifts, was sold for US$19,000 to a Kansas native. The woman bought it as a gift for her husband, who was a car collector.

In 2005, the man called Lands' End and invoked the company's unconditional guarantee policy that allows customers to return any item that they are not satisfied with for an exchange or refund of the full purchase price. He got the $19,000 back, and Lands' End got the car.

The taxi would be worth between $10,000 and $12,000 now, according to Richard Lentinello, editor of Hemmings Motor News, a monthly publication for car enthusiasts based in Vermont.

It's more than a cab. McCreight says the taxi is a valuable symbol.

"For thousands of employees, or new employees, to say, if you're designing a product, and you're going to need to stand behind that product 21 years later, how dearly and how much attention do you take to design it," McCreight(President of Lands' End) said.

I personally think this is a lovely quote from McCreight and one that is extremely relevant. Many companies develop products or policies, sell or run it for sometime, only to later revoke it! Companies need to realize that such revoked products or policies leave customers confused, frustrated and miffed. It pays to plan just in case your customer returns after 21 years!

Capital One's Card Lab - Get your customized credit card

Capital One recently announced the launch of Card Lab.  Ron Shevlin writes about this:

Capital One launched Card Lab, which it claims is the first “do-it-yourself” credit card offer. It’s an interactive tool that lets prospective card applicants choose among a number of options to build their own card package. Not surprisingly, you can’t get a 25% annual bonus and 2 points per $1 charged and 1.25% back on purchases and….you get the picture (otherwise see below).

My take: Card Lab is a winner because it:

1) Builds up versus narrows down. Card Lab’s approach puts prospects in charge, and presents the options in such a way that they can easily see the tradeoffs they make when selecting certain options.

2) Engages with interactivity.Card Lab, on the other hand, is a great demonstration of the interactivity the channel is capable of delivering. Serious prospects can play what-if to their hearts’ content in order to understand the product features and tradeoffs available to them.

3) Yields actionable data.The web analytics folks at Cap One are going to have a field day with Card Lab. Analyzing the usage, trends, clickstream, etc. should help Cap One marketers get a really good understanding of who’s looking for cards online, what their preferences are, which features are most popular, and so on.

I agree with Ron completely. It's a great idea and extremely customer-focussed.But, CardLab sounds a little intimidating to me.Another key issue though is actually the process of accepting or rejecting applicants - that is, how customer-level data is connected real-time for approving and disapproving an application as credit cards are fraught with credit-risks. Am sure Capital One has the process taped-up for this.But, this is a key factor for positive customer experience and product adoption. 

Here's one more product that fits-in with all the advantages what Ron is talking about:

Closer home in India, my example is HDFC Bank's NetSafe card for customization,customer-centricity and the method to manage the process well. It's a lovely little product. In fact, it works on the fear of Net Security which is a primary concern for credit card customers using their cards online.

NetSafe, is a unique online payment solution that offers complete security while shopping on the Internet. With NetSafe, customers can shop online through a virtual credit card, without revealing their actual HDFC Bank Credit Card number. What's more,they can use the HDFC Bank Debit Card(Check Card) also for online purchases. Customers here choose their account limit for this specific card - Value of credit limit, date of expiry of the card etc.! Customer can create as many online credit cards as possible(subject to the overall accepted credit limit).