Bill Gates, often a prophet, said in Business @ The Speed of Thought (Warner Books, 1999):
The best way to put distance between you and the crowd is to do an outstanding job with information. How you gather, manage and use information will determine whether you win or lose.
He might have added, had he really understood how to create and optimize customer loyalty, that what information—particularly what customer-specific information—a company collects and how it manages, shares it and applies it to the customer will determine how successful the company can become.
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Realization, alone, is not nearly enough. They fail to act, and that equals disaster.
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A marketing director at a major wireless telecom supplier in Venezuela complained that she had agreed to restrict loyalty program communication for more than eighteen months while IT management and the CRM software vendor worked through the company’s massive customer database problems. In the meantime, the telecom suffered classic “leaky bucket” loss, with established customers rapidly defecting to telecom suppliers that offered better value and regular communications with them. Lack of regular, targeted content was a major contributor to the turnovers; and the director realized, far too late, that keeping at least some semblance of contact over that period was essential to maintain continuity and interest. Updated customer data is the foundation of communication program design.
Similarly, and to a somewhat lesser extent, the effectiveness of traditional customer loyalty programs—most of which are principally designed to simply encourage more frequent spending with the sponsoring supplier(s), is increasingly coming into question and review. Recently, for example, several major supermarket chains in the United Kingdom abandoned their long-standing loyalty programs in favor of price discounting strategies. Their reasons revolved around the question of the continued economic viability of these programs.
Retrenchment
We’ve also witnessed loyalty program consolidation and retrenchment in the U.S. airline industry, where economic conditions have forced US Air and United to merge their frequent flier offerings. Parenthetically, none of these programs are, or were, especially adept or focused on generating customer data that could be applied for multiple marketing and customer relationship objectives.
Using loyalty programs to generate customer profile, and other relevant, data that can be converted to greater operational efficiencies and more targeted marketing programs and new services is where really successful organizations, such as Tesco, have differentiated themselves.
Many companies have soured on CRM and customer loyalty as a result of stories like these; but a select group is gathering, managing and using customer data in a financially positive, holistic manner. Executives and professional staff want to know—and need to know, how this happens. At every CRM and customer loyalty conference around the world, these questions are asked over and over by attendees: “Tell us how to fix what we’re doing. Tell us what works and who is doing it. Help us make the best use of our resources to build customer value. Help us develop the tools for creating the highest levels of perceived customer value.
Affordable
Relationship marketing and CRM are now at the point that micro-segmentation, data integration and personalized software are both available and affordable, even for smaller and midsize companies. Yet, it’s clear that few organizations have taken the right course. Many CRM programs have crashed or receded because of data quality issues, taking with them the opportunity for closer customer relationships.
For smaller and medium-size companies (SMEs), the challenge is particularly daunting. Frequently lacking the resources or the knowledge to gather, store and apply even the most basic customer data puts incredible pressure on them. They often realize the importance of having current, applicable customer information; but realization, alone, is not nearly enough. They fail to act, and that equals disaster.
Consider these results from a study of 1,000 SMEs in the United Kingdom, conducted by Sage, a supplier of customer data management software to this market:
- Forty-six percent rely on verbal customer feedback, while only 7 percent say they’ve used the results of customer research or complaints to help improve their service levels. And 12 percent do nothing at all.
- More than half of the SMEs—54 percent—have no record of new or lost customers; and of those who do, 40 percent keep this information on a manual basis.
Yet SMEs have data management software tools and other resources that are every bit as cost effective and efficient as those sold to their larger cousins. Green Hills Farms, an upscale single supermarket in northern New York State, for instance, has an extensive customer profile database; and the organization can assess the effectiveness of each marketing program and promotional event on almost a customer-by-customer basis. So any company, of any size, can do this.
What’s required is awareness and discipline on the part of companies as to the importance of current customer data.
To paraphrase Alison Bass, senior editor of CIO Magazine, unless a company can
effectively practice CRM fundamentals, such as defining and understanding customer segments; gathering and interpreting customer needs; and learning how to collect, clean and qualify, store, collate, manage and apply customer data—and target the data appropriately—success will be elusive. Conversely, doing it well can differentiate any company, positively and strategically, with customers.
In Gorgias, one of Plato’s lesser-known morality plays, he stages a debate (featuring Socrates as moderator) on the nature of rhetoric, or public speaking. Is public speaking art or science? Is it good or evil? Socrates wonders. Through Socrates, Plato concludes that public speaking is “not an art but a knack gained by experience.” Those who take the best of art and science are like gourmet chefs. They know what they are doing and why it works, and they can distinguish between good and bad results. If marketers had similar capabilities with data, customers would be better served.
