5 Methods to Find Your Best CRM Channels
If the goal of customer relationship management (CRM) is to meet consumers' needs on an individual basis, then there's not much more Hyundai could've done to help "Joe Sample" of "Any Town" arrive on time for the 45,000-mile service check on his Santa Fe. But Hyundai could optimize the channel used to contact Sample, and the auto manufacturer did so based on customer responsiveness, to the tune of double-digit reductions in print expenses.
So says Jeff Caplan, partner and vice president of 89 Degrees, a Burlington, Mass.-based marketing solutions provider. His company helped client Hyundai determine the best channels for CRM by letting customer preferences lead the way.
Agreeing with Caplan are: Gaurav Bazaz, president of San Jose, Calif.-based on-demand email and phone marketing services provider Pravega Inc.; and Patrick Surry, global solutions owner, customer analytics, at Pitney Bowes Business Insight, a Troy, N.Y.-based provider of customer data, analytics and communication software and services. Here's their advice on how they pick the best channels for CRM efforts:
1. Monitor customer response. At first, Santa Fe owner Sample heard from Hyundai in two channels, according to Caplan.
"We provided email and [direct mail] and observed who clicked, printed coupons, etc.," he says. "We used this data to identify e-responsive owners, and then reduced DM to them and increased [the] email stream. We got to know what types of behaviors were most indicative of e-engaged owners and, hence, who could be removed from DM. Once removed, we continued to monitor their activity, both with respect to e-activity and dealer visits, and made decisions on [the contact] channel from there."
2. Know the strengths of each channel for CRM. Bazaz says: "Direct marketers are still using all three main DM channels: Direct mail, telemarketing and email for CRM. … DM and telemarketing are still more powerful as customer acquisition channels, while email is far and away the most-used customer retention channel."
Caplan's opinion differs in one respect: He highlights direct mail and email as the main channels, but says they should be employed in tandem. Caplan adds: "In the end, I would say the main point is not that one channel is inherently better or worse than any other, but that the best marketers determine the combination of channel and content that is likely to yield the biggest bang for the buck."
Surry adds that while e-commerce has grown exponentially over the years, call centers and direct mail tactics will never disappear completely. At the same time, “new customer channels, such as those being delivered through social media networks, need to become part of this mix, not treated separately.”
3. Provide personalization. Content and offer should be personalized, and the next step is using customer history and preferences to inform communications, Caplan says. For a Hyundai owner, that means customized offers based on the model owned, the vehicle mileage and the owner response history.
So while Sample isn't a real person, other direct mail pieces from Hyundai show how specific the offers can get. For instance, a coupon for a $98.99 brake job includes a Tucson customer's vehicle identification number, as well as the nearest dealership where he can take advantage of the "exclusive savings"—Jim Click Hyundai East at 6420 E. 22nd Street in Tucson.
Also, Surry says, ensure the customer experience remains personalized and consistent across channels by informing all departments about new information in real time. He points to a case study in which Tesco Bank created a customer-centric environment with timely, relevant customer communications.
4. Realize that a case-by-case basis may be the norm. Certain industries have built up strengths in certain channels, Bazaz says. At the same time, customers have different expectations for communications in different channels. So, he says, "while there is scope for experimentation and changing the marketing mix, it's usually a company-specific initiative rather than an across-the-industry shift."
5. Test. Bazaz's comment brings the question of the appropriate CRM channel back around to Caplan's original point: The best way to determine which channel is appropriate is to test and learn. It's one main reason direct marketers can't change the definition of "customer relationship management" to "customer relationship magic."
"While in weak economic times, it can be hard to justify spending money on experiments," Bazaz says. "It's necessary to run these to drive your program towards greater optimization."
Hyundai had the benefit of a five-year steady return on investment, so results clearly showed how well tests stacked up against prior efforts, Caplan says. The key was "consistent structured testing" so he knew which offers performed better for which Hyundai owners based on their different stages in mileage, and their varying levels of loyalty.
"Marketers should isolate the variables they want to test (creative, channel, audience, offer, etc.) and set up the contact stream so the importance of the variables can be evaluated," Caplan says. "It is usually best (although not always statistically necessary) to change only one thing in different versions of a contact. E.g., test offer A [vs.] offer B, using the same creative and audience. But do not try to test offer A [vs.] offer B and test creative C [vs.] creative D and audience E [vs.] audience F. It can be done, but more often than not, over-complicated testing structures lead to inconclusive results."