By Sandra Gudat
CEO, Customer Communications Group
Achieving a completely customer-centric business still sounds like utopia - and it's hard to chase utopia when today's agenda is all results, all the time.
Results are the name of the game, no matter how far your company has evolved past product-centricity. But many companies have found that results for the short term and profitable customer-centricity for the long term aren't mutually exclusive. It's simply a matter of mastering the steps before you go out and try the dance.
The following 10 milestones show "proof of concept" and build acceptance of customer-centric ideas. Achieved more or less in order, they propel you toward a customer-centric approach to business and keep everyone tapping their feet in time with the music.
Step 1: Collect customer data.
Your customers leave clues about themselves at every touchpoint. And each morsel of data you collect helps build a
picture of your customers' behaviors, motivations and intentions. If you aren't already, you should be warehousing:
To kick-start its database, Payless ShoeSource tested a frequent shopper program married with demographics and lifestyle information. This allowed Payless to see how the data could positively impact merchandising and promotions while continually refining the company's best customer profile.
Step 2: Combine multiple sources of data.
Assembling disparate pieces of information will lead to revelations about your customers. Information from each contact should be combined across channels, departments and divisions to help you get a better handle on each customer and create a seamless experience across all touchpoints. When retailer Eddie Bauer combined data from its catalog, store and Internet silos, it was able to create communications and benefits that helped increase profit per customer, spending per customer and sales channel penetration.
Step 3: Analyze customer relationships.
Now's the time to start mining your data for transactional, attitudinal and behavioral patterns that get you closer to the right message/right customer/right time ideal. Louisiana-based Hibernia National Bank found striking differences in the reasons why certain customers were profitable. This sparked a customer segmentation initiative that helped the bank break out of product-driven thinking and, among other things, identify the products customers want versus those the bank wants to sell.
Step 4: Identify your best customers.
Enterprises everywhere are reaping greater ROI simply by focusing on most profitable customers. Online flower purveyor Proflowers.com's exploratory data analysis included lifestyle data-appending that revealed who its best customers were - and who would become best customers. This insight drove new communications that boosted these customers' likely-to-buy rate by 56 percent.
Step 5: Provide avenues for customer feedback.
Rarely does one-way communication garner the insight you need to become more profitable. Consider all possible touchpoints: e-mail, Web, POS, call centers and even quick surveys nested into promotional materials. Then invite feedback via the most appropriate channels for specific customer segments. You'll underscore your company's view that each customer's opinion matters - an important way to nurture and deepen relationships.
California-based retailer Mervyn's probed customer opinions before launching its best-guest program, setting a benchmark for measuring program results. Mervyn's now conducts the survey annually to help gauge the program's ongoing impact, and to monitor changes in customer behavior, attitudes and purchase patterns. Results help the retailer redefine objectives and keep the program performing at its peak.
Step 6: Talk to customers like customers.
The more you speak to customers in a way that reflects their unique needs, the more you'll create relevance for them and give them reasons to be "bonded" to your company. A large regional bank tackled this step by using customer data analysis and segmentation findings to refine its approach to home equity marketing, sending a hybrid newsletter/check package versioned by six core customer segments. Targeting the message to specific groups netted a 26-percent increase in average check amount, for a projected $3 million in incremental revenue.
Step 7: Test personalization.
Personalization has been shown to generate a 300-percent ROI in a single year, notes Jupiter Communications. So it's worthy of testing on your customers. When farm-and-country retailer Quality Stores tested personalization in a Mother's Day newsletter, creative was versioned by 25 customer segments, with personalization including name and targeted offers based on purchase history and demographics. The results: a 51-percent boost in sales per customer, 28-percent incremental response rate growth, and an 18-percent incremental lift in spending per customer.
Step 8: Recognize your best customers.
Simply acknowledging your best customers is a high-impact way to promote the right behavior and build loyalty. One Japanese bank installed ATM software that alerts branch managers when a most valued customer is using the branch's machine. The manager can then "bump into" the customer in the lobby, spurring a conversation about the customer's immediate needs.
Don't be too quick to dismiss recognition as too costly or high-maintenance. There are plenty of cost-effective ways to recognize customers. Take Dillard's department stores, whose sales associate training includes simple ways to acknowledge customers who have earned the retailer's VIP Rewards best-customer status.
Step 9: Say thank you.
This obvious yet often-overlooked gesture is cheap and effective. And it can take many forms - from a simple card to a special service, such as private shopping hours.
One Canadian retailer mailed a simple thank-you card to best customers to remind them of their MVP status, and saw a 20-percent lift - no offer necessary. One caveat: Avoid rewarding the wrong behavior, as supermarkets do by offering express lines for low volume customers but nothing for those who fill two baskets every other week.
Step 10: Create an ad hoc customer committee.
Forming a committee or position that focuses solely on customers and your interactions with them solidifies and protects the customer-centricity you've achieved. Just ask retailer Pier 1 Imports, which tasked its committee with finding ways to recognize its top 2,000 customers.
The committee devised a plan to help store managers acknowledge these customers in their stores and open dialog to identify purchase needs. Top customers also received handwritten thank-you letters from Pier 1's chairman. Integrated with Pier 1's overall CRM program, tactics like these have rewarded the company with a 17-percent increase in annual per-customer spending.
Keep it up
By the time you've reached the customer loyalty stage, your organization is customer-centric from the inside out. But CRM is a continuous process. Revisit, refresh and refine each step to uncover new opportunities and reframe objectives. Then watch as the small steps you take today lead to big returns tomorrow.
Sandra Gudat is the president and CEO of Customer Communications Group, a full-service relationship marketing agency, offering expertise in strategic consulting, data-driven research, as well as creative communication and multimedia solutions ranging from print production to Web site development. Sandra can be reached at 800-525-0313, ext. 103, or firstname.lastname@example.org or visit http:www.customer.com.
Copyright 2003, Customer Communications Group, Inc.
Use this outline of Gartner's five-stage customer-centric continuum to pinpoint which of these action steps should be your next milestone.
Stage 1: Customer Awareness
Know your product, but not your customers? If you have no access to a customer database, you're just beginning to explore who your customers are. Read Steps 1 and 2 to get the ball rolling!
Stage 2: Customer Focus
Now that you have a grasp on your customers' purchase histories, you can begin simple analyses to start zeroing in on most profitable customers. See Step 3 to learn how other companies in this stage of CRM are moving forward.
Stage 3: Customer Relationship
You're beginning to see which customers make up the lion's share of your profits. In Step 4 above, read how one firm put a face on those customers with impressive short-term results.
Stage 4: Customer Value
Now you're tailoring messages to key customer segments. It's time to ask why they buy and how purchase behavior is linked to lifestyle data and customer opinions. Steps 5 through 7 explore value-based action other companies are taking.
Stage 5: Customer Loyalty
You've collected, enhanced and analyzed your data. Now integrate it throughout your organization to maximize customer contact in every department. Follow the lead of forerunners profiled in Steps 8 through 10.