CDI: Can Marketers Dance to the Customer’s Tune?

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Over the last few years, marketers have been wondering what CRM is really all about; and they have invested billions of dollars trying to find out, and trying to make the “Holy Grail” promise of CRM work for them. Essentially, though, CRM whittles down to this: creating customer-centric discipline, on a company-wide level and a set of processes and methods that enable marketers to enhance communication and relations with customers. The objective: building and sustaining sufficient value so that they get most, if not all, of the customer’s attention, commitment and expenditures for the product or service offered.

Succeeding at CRM is sort of like learning, and then using, all the dances and steps the customer knows, when and how the customer wants them to be used. When the music starts, the customer leads, and then constantly creates new steps as the dance proceeds. In relationships with customers, it’s true what the philosopher Heraclitus said: “There is nothing permanent except change.” The customer calls the tune, the dance and the steps.

Most suppliers quickly discover that the customer doesn’t really care what dances and steps the company already knows. The only thing that counts is having sufficient awareness of every dance and step the customer knows and desires to be offered, and then responding to (and anticipating, if possible) the customer’s step patterns for each. This is equivalent to customer database and database application.

Looking at the customer’s arsenal of dance steps and getting some sense of how the customer actually uses them brings you to an often ignored element of the dance, CDI—or customer data integration. CDI isn’t just another set of letters consultants dredge up to confuse everybody. This is where information from the data sources—all the steps from all the dance styles—are brought together to create a single, integrated view of the customer. In surveys, Forrester Research has found that, while 92 percent of companies say having an integrated customer view—in other words, bringing together all that is, or can be, known about customers on an individual level—is critical or very important, only 2 percent have fully achieved this, and only 10 percent have even partially met this goal.

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The problem is that, even with faster computers, more advanced software and better processing methods, CDI technology hasn’t really evolved much in the past 15 to 30 years. Most companies, large and small, are still using traditional merge-purge technology for customer segmentation. Related problems are assuring data quality and completeness; the accuracy of both content and grouping (customers and activities); and the speed of data access. After all, if a company makes the effort to obtain high-quality customer data but it takes weeks or months to pull it out of the system to formulate programs, how effective can the efforts be?

Some companies, however, have solved—or, at least, are solving—the complexities of managing CDI. The Royal Bank of Scotland, which I and Jill Griffin profiled briefly in our book, Customer WinBack, is a good example. But since then, the bank has gone well beyond its early value-centric relationship programs with significantly more longitudinal and in-depth customer data and good data management integration methods.

Royal Bank has several million customers, so there are definite scale challenges. Through advanced customer research techniques and integration methods, bank executives found that their customer base doesn’t break out into neat segments. As a consequence, they modified one-to-one approaches to build customer groups from an individual basis. Their head of marketing operations, Ian Wilson, has said: “We think customers fall into groups for certain things but can be in more than one group at any one time.”

They’ve used a software solution that enables Royal Bank’s marketers to execute personalized, multi-channel offers to individual customers. First, they test creative material on representative customer groups. When trigger criteria have been met, they can send out a print campaign to relevant customers within 48 hours. Three or four years ago, most of their mailings were to more than 300,000 customers per program. Now, the average print run is just 20,000. For the company’s event-driven promotions, as few as four or five people can be included in a mailing.

Wilson has found that the bank’s most relevant and timely campaigns can elicit previously unheard of response rates of 75 percent or more. He’s concluded, “We are trying very hard to move from a traditional product push to a customer requirement approach.” The bank’s success depends, absolutely, on effective CDI. Royal Bank intensively studies customers’ ever-evolving dances and steps and combines this knowledge with both transactional and publicly available demographic and lifestyle data; and it is making the most of the insight. Other marketers would profit by following its lead.

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