Customer World

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.

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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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

Marketing - How is it changing?

Forrester, has come-up with some research around emerging trends in marketing ( ahead of their Marketing Forum 2008) - Engagement is becoming an important metric. Key highlights include:

Marketing leaders steer based on hard data. Measuring engagement will take the guesswork out of budget allocation. Engagement can drive awareness, transactions, brand preference, and loyalty. But each of these objectives requires a different approach and investment in people, processes, and technology.Marketing leaders from firms like CompUSA and BMW prioritized one goal, chose a very specific set of tools and vendors, and successfully moved the needle on transactions and loyalty, respectively.

Direct marketers and market researchers unearth deep client needs. Leading direct marketers already combine Web clicks with purchase and loyalty data to unearth a consumer's interaction with the brand. But BrandIntel went a step further and recorded the content that users generated and other consumers read.

eCommerce professionals drive online sales with personalization. More than a third of Web visitors will make a purchase after seeing a personalized recommendation. eCommerce professionals can boost online sales with one-to-one personalization.

Customer experience professionals innovate the brand. Whirlpool observed people at home and used the results to develop a new sub-brand -- Gladiator -- with fridges for men in their garages.To meet these uncovered needs, customer experience professionals will develop a disruptive strategy, simplifying the interaction, amplifying the service elements, and repositioning the brand overall.

My view:  Involvement, Interaction, Intimacy & Influence - 4Is as Forrester calls it, needs to be measured by marketers on a regular basis. This will increasingly make marketing more data-led. They need to be building programs around the 4Is using data. It is important that they start fusing transactional data with web data - clicks, blogs, social networks etc. along with customer service data. This will increasingly give marketers a peek preview into how customers feel, think and talk about their products and personalize their marketing efforts basis the degree of engagement they have identified with these set of customers. 

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.

Forrester's ladder of participation and impact on marketing

I was reflecting over the weekend about Forrester's Social Technographics Ladder of Participation. While it was focussed on emerging social technologies, I felt there were some trends, learnings and practices that can be applied from here to refresh marketing thinking, practices, evolving needs to embrace technologies that can make some changes happen and thereby make marketing more relevant to enterprises and CEOs. Let's take a look at this Ladder of Participation first:

I see the marketing eco-system too, taking a very similar shape(with either customers or prospects) in the years to come. The need to 'engage' and run marketing campaigns across a similar ladder is bound to become increasingly important. Marketing will need to 'bucket' its segments of customers or prospects across the spectrum of Inactives to Creators. The 'old world marketing' practice would have stopped with collecters - who I would define as repeat purchasers. Normally, marketing practices would have stopped there.

But, in the 'new world of marketing', customers will be more involved, participative and conversational. Thereby, customers will leave a 'trail of information' behind, in enterprises. For an enterprise, the creators will be the most loyal and demanding. They need to be recognized, valued and encouraged to converse. The ones who do it, will become identifiable and the most important. Also, products/brands will have to become 'information platforms' in such a world. This will also lead to customized design of products and services for them.

The critics are the ones who will have to be 'listened' to. With emerging channels or touch points, the enterprises must open a channel of communication to hear and rectify their problems. They are the ones who can potentially move-up the ladder of participation.

The collectors need to be 'prodded' to talk rather just buy again and again, get them to share their experience and frustrations with the product. And the joiners will have to be moved to become collecters.

This kind of marketing will combine a lot of information, analytical insights, real-time marketing automation to talk to customers in different behavioural states and stages in the ladder. And when enterprises talk of millions and millions of such identified customers or prospects, the need for marketing to deliver scalable, real-time, right-time marketing will only become sacrosanct. The ones who will practice it, will have the ear of CEOs/CFOs and the rest will be left behind.

 

    

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!

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!

The difference between CRM and CEM

Lauren Hoyt, Editor, SearchCRM provides some great perspective on the difference between CRM and CEM( Customer Experience Management):

First there's the question of a definition. I asked Lior Arussy, one of the thought leaders in this arena, to define customer experience management.

According to Lior, a customer experience is the total value proposition provided to a customer, including the actual product and all pre- and post-sales interactions with the customer. Meanwhile, CEM is the science and art of managing all interactions with customers across all touch points in order to maximize the value provided to customers.

"There are quite a few differences between [CRM and CEM]," Martha said. "If we look at CRM, that's how a customer looks to a company. And if we think about CEM, that's really how the company looks to the customer ...we're talking about making it worthwhile to do more business with us because we become more worthwhile to them. It's taking the time to see their point of view, understanding how to be reciprocal with them, understanding how to be trustworthy."

"CEM systems and CRM systems serve different, although complementary, purposes," he said. "While CEM is about creating the best customer experience, CRM is about managing relationships while focusing on maximizing revenues. CRM is tools geared to manage and analyze customer information, while CEM is tools geared to enable and enhance customer interactions."

Forrester’s 2007 Customer Experience Rankings

Bruce Temkin writes about the recently released Customer experience rankings by Forrester:

#1 ranking in Forrester’s 2007 Customer Experience Index (CxPi)…

The 2007 CxPi ranks 112 firms across 9 industries: Banks, Credit Card Providers, Health Plans, Insurance Firms, Internet Service Providers, Investment Firms, Retailers, TV Service Providers, Wireless Phone Carriers. The CxPi is based on consumer evaluations across three areas: 1) usefulness; 2) ease of use; and 3) enjoyability (see the methodology section below).

Here are the full 2007 CxPi rankings…

Costco took the top spot in the CxPi rankings - just barely beating out Borders. At the other end of the spectrum, Charter Communications landed at the bottom of the CxPi rankings. Here are some additional insights about the overall results:

• Retailers take nine out of the top 10 spots. All but one of the top 10 firms in the ranking is a retailer - and the only non-retailer isn’t a single company but a segment of banks called credit unions. Interestingly, all three wholesale clubs - Costco, BJ’s Wholesale Club, and Sam’s Club - made it into the top 10. Another retailer, Walgreens, came in at No. 11 to round out the firms that received an “excellent” rating.
• Communications firms, health insurers, and banks dominate the bottom. Four organizations ended up with “very poor” CxPi ratings: Charter Communications (for both TV and Internet), Medicaid, Cablevision/Interactive Optimum, and Aetna. Two other health insurers (United Healthcare and Anthem), two large banks (Citibank and JP Morgan Chase), and Sprint filled out the bottom 10.

CxPi Results Across Industries

We also looked at the overall results for the 9 industries included in the CxPi. Here’s how they did across all three components of the CxPi … 

Our 27 retailers significantly outpaced the other industries with an average overall score of 78%. Retailers owned the top spot in each of the three underlying customer experience categories as well, winning both ease of use and enjoyability by wide margins.

Experience is marketing

In s+b magazine, James Gilmore and Joseph Pine II write that:

Companies in consumer and business markets now pay more and more to reach fewer and fewer households and executive decision makers.

What companies need, therefore, is a new approach to demand creation that actually enables — make that forces — a company to be what it says it is. To borrow the phrase architect Jon Jerde made famous, that discipline is placemaking. Places are what provide the primary means for companies to demonstrate exactly what they are for both current and potential customers. Companies that embrace placemaking understand a fundamental dictum for contending with authenticity: The experience is the marketing. In other words, the best way to generate demand for any offering — whether a commodity, good, service, other experience, or even a transformation — is for potential (and current) customers to experience that offering in a place so engaging that they can’t help but pay attention, and then pay up as a result by buying that offering. Stop saying what your offerings are through advertising, and start creating places — permanent or temporary, physical or virtual, fee-based or free — where people can experience what those offerings, as well as your enterprise, actually are.

Bank Customers Say Give Me Some Respect

According to a recent survey report by Allegiance - Pulse of America Survey, there are 4 key areas banks need to engage with customers.

Helpful Service:  Customers like doing business with a bank that saves them time and money. Banks have focused on wait times, and overall, they are meeting customer expectations. But saving time is not limited to waiting in line. For example, online banking services should be easy to use and understand, which creates a strong avenue to build engagement.
Clear Communications: Customers are reluctant to rely on banks for unbiased financial information, yet they thirst for knowledge about the newest and best products and services available to them. Customers are saying you can connect with me emotionally by telling me about a product that is relevant to my situation. 
Personal Connection: Customers say that their one-on-one experiences with bank representatives (tellers, loan officers, or managers) have a meaningful effect on their engagement, both positive and negative. Banks should not underestimate the power of each one-on-one experience in building lasting engagement, and they should establish training and processes to establish best practices. 
Respect:  Banks must do better at making customers feel respected. Engaged customers cite bank reps who deliver service with speed and confidence. Dissatisfied customers cite bank fees as causing stress, which makes them feel less respected. In particular, some customers feel disrespected when banks game the system to increase bank fees wherever they can. The message to banks: Engaged customer are also savvy customers and expect to be treated fairly.

I quite agree with personal connection as an important engagement pillar, as technology is taking away personalized service from banking. Hence, banks need to identify ways of building personal connection with customers as they invest more in self-service technologies.

Getting your customer data or information in order

Businesses today talk about CRM, Customer experience etc. but  I think there is a need for companies to get down to basics and get their house in order in terms of how they store & update customer information - more precisely, the quality of the information they hold. Louise Druce writes:

Businesses are built on data but it can be a rocky foundation if you don’t look after it. Even something as simple as getting a customer’s name wrong could have massive implications further down the line, such as affecting billing, product tracking and all-important customer loyalty.

Sorting dirty data

Ownership was traditionaly something left to the IT department. But in recent years firms have come to realise that IT staff don’t necessarily understand the elements that make good data ‘fit for purpose’, according to Colin Rickard, managing director EMEA, at data quality specialist DataFlux.

“If you are working on a customer data project, an IT manager is not in the position to understand how a marketing data record should be organised or the values it must contain,” he points out. “It is important for the business user to be involved in the process.”

"It’s not just about technology. It’s about having a strong culture for data quality in place,” adds Wrazen. “In some ways, that’s the hardest part because no one wants to own it. It’s quite a complex process to build into an organisation and infrastructure – it’s cross-platform, cross-technology and cross-business discipline as well.”

I can't agree with this more. Somebody in the organization has to get into the act of plumbing it right. Else, it will always lead to poor information decisions about an organization's customers.

The end of marketing as we know it

Nishad pointed me an interesting post from Zeus Jones on the trend of convergence of marketing & operations.

They believe two themes seem to be emerging:

• The increasing focus on customer experience and usability within companies. Smart companies now realize that their core offerings shouldn't be wrapped with a customer friendly veneer. Instead usability and experience should be built in from the ground up.
• Marketing's move from creating images towards creating experiences.  The best marketing today are tangible proofs of company values and ideals. People look past propaganda and focus on what companies actually deliver.

I personally think this is increasingly felt as a need amongst CMOs/CEOs. The current siloed structure of organziations creates huge challenges for the CEO to make this happen as there are divergent objectives and agendas in the company. In the future, there will be more budgets allocated for change management, customer experience mapping etc. as business heads, operations and marketing need to collaborate to make customer experience come alive. This needs ground-up thinking and execution amongst these stakeholders.

Consumers - Which mediums do they trust the most?

Consumers have problems trusting online advertising, according to a global study by the Nielsen Company.  The survey claims messages in traditional media such as television, newspapers and magazines generated more confidence among consumers than those in web searches, links and banners.

Nielsen says 63% of respondents trusted newspaper ads, while 56% trusted TV spots and magazine placements. This contrasted with just 26% who trusted banner ads and 34% for search ads. Results for mobile ads, often touted as the next big thing, were disappointing as only 18% of those surveyed claimed to trust them.

Consumer reviews posted online were more favorably received with 61% of respondents trusting them, while 60% trusted brand websites. Personal recommendations scored highest with 78% of those surveyed expressing confidence in them.

Consumer-generated media in general scored highly. Globally, 61% of respondents said they trusted blogs and other forms of CGM, while the figure in North America was even higher at 66%.

Credit Card marketing in Facebook

Rob Walker has an interesting article on how Chase has developed a credit marketing  program in Facebook.

“We felt Facebook would be a good partner for us, since they had such strong credibility in the students’ world,” explains Sangeeta Prasad, who oversees branding for Chase Card Services. “And we felt, you know, financial institutions lacked credibility. Students don’t see credit-card issuers or financial institutions in general as meeting their needs.” Thus the company started offering a new card it called +1, primarily by way of a “sponsored” Facebook group.

The +1 program was largely devised by Noise Marketing, a company that specializes in reaching young adults with nontraditional branding tactics. Making Facebook central to a college-focused effort had obvious advantages. “Everyone talks about the fragmentation of the media,” observes Noah Kerner, the C.E.O. of Noise Marketing. “Yet there’s never been such a concentration of people from one segment in one place before.” The Chase + 1 group has attracted so many participants in large part because of a rewards-program scheme. One tweak of this fam