Using CRM Effectively to Grow Customer Sales
Congratulations! You convinced your senior management that your organization needed to shift its focus from a product orientation to a customer orientation. You recognize that customer relationship management (CRM) is not just a marketing function, but instead, it's a business process that puts the customer at the core of your organization. You obtained the corporate support to initiate the required changes to begin this evolution within your organization. Your company's individual business units are on board, too. Your teams are ready to work in concert to cross sell and up-sell your company's products and services.
You know that CRM leverages cutting-edge technology, so you likely have already built your relational marketing database, and you may even have the requisite tools for decision support, business and web intelligence, as well as campaign and contact management. You know the tools are supposed to automate and simplify the management of your marketing efforts.
You also recognize that CRM integrates strategic planning and analytics with up-close and personal marketing techniques that will actively deepen the knowledge you have of your customers over time. You know you need to use that knowledge gained to customize your business and strategies to meet those customers' individual needs.
Your web site is attracting visitors, getting hits and generating some sales. Your direct mail is achieving reasonable response rates. You have your sales and revenue goals for the coming year identified. You feel like you've put together a solid CRM infrastructure and strategy.
So why aren't those customers flocking to your company to buy more products and services?
It's a matter of putting the pieces all together in the best way. A database alone won't do it. Decision support and campaign management tools alone won't do it. Solo direct marketing campaigns won't do it. A predictive model won't do it. But when you put those components all together, with intelligence from you as the marketerthen you will begin to have a positive impact.
A Customer Focus
Now that you have that corporate focus toward the customer, you're moving in the right direction. By combining data examination with the database technical infrastructure and the right tools, you as a marketer can make CRM come to life. Your marketing strategies, when focused on understanding what your customers want, delivered in the way they want them, are the core to drive stronger relationships with your customers. Remember the mantra: Send the right message, at the right time to the right person? Sound trite? No, it's good common sense, and that's what CRM is ultimately all about.
There is something more to consider though, which is this: The landscape has indeed changed. Control of communication is shifting to customers, who have the power to determine both the frequency and point of contact with providers of products and services.
The implication to you as a marketer is that the delivery of relevant messages at the appropriate times is critical to cross-selling products, gaining greater share of customers' wallets and building loyalty.
Improving Customer Experience
Products and services in nearly every category have become commodities. It is the "customer experience" that differentiates, drives renewals, encourages purchases of other products and creates a sustainable business advantage for you. And, that experience can be improved, tracked and modified with customer relationship marketing practices.
A customer-centered design will impact both long-term customer loyalty and near-term shareholder value. It will guide investments in infrastructure (i.e., process, hardware, software and people). It will improve your understanding of customers across the customer lifecycle, which will provide opportunities to leverage information across your organization's enterprise as appropriate.
Customer understanding will help you develop marketing programs that generate top line growth and increased customer profitability. It will enable one-to-one interactions with individuals, with treatment based on the expected return on investment a customer represents. It will increase the relevancy of communications by tailoring offers and messages to customer preferences and feedback. It will increase marketing efficiencyby identifying expenditures that are not yielding sufficient return on investment. And, it will redefine the infrastructure (business processes and supporting technology) needed to support building profitable customer relationships.
Your goal is to organize, analyze, distribute and use customer information to devise marketing programs that are meaningful, appropriate and relevantthat is how you use CRM to grow your customer relationships! Don't let anyone over complicate things.
Now, this doesn't mean that it's quick, and it certainly doesn't mean that it's simple. But it is methodical. Don't get side tracked by fancy terms or tools. Use them both intelligently. Make CRM a part of your arsenal. Remember your goals as a company and as a marketer, and then use CRM to achieve them. Here's a high-level road map:
Step I: Scope Definition: Begin with a clear understanding of your marketing goal as it relates to your customers' wants, needs and risks. Develop a clear and precise statement of the problem(s) or opportunities you will address, and ensure that your strategy is consistent with core company objectives and strategies.
Step II: CRM Planning: Proper design of CRM strategies includes fielding and/or reviewing research, performing data discovery, development of predictive and/or descriptive models, identifying the appropriate customer segments and drafting the strategies and interventions.
Step III: CRM Program Development and Implementation: Devise a detailed experimental design to evaluate the effectiveness of the CRM program and the individual elements. This method entails scientific comparisons of the behavior of customers who have been treated with communications to the behavior of customers who were suppressed from program communications. You should be able to determine the particular message, creative and incentive strategies that are most effective. Leveraging this insight, you can then select the investments that maximize the value of customers.
Step IV: Tracking and Evaluation: Fully evaluate the impact. Specifically, examine the net improvement in treated customer/portfolio behavior vs. non-treated behavior. In addition, comparisons could be made among multiple communication elements to determine the most effective tactics for rollout or ongoing program implementation. Statistical methodologies should of course be applied in analyzing program data. Examples of potential analyses include overall results and segment results.
CRM in Action
How have others used such a process, with the appropriate CRM infrastructure and customer orientation, and demonstrated success? Consider the example of a bank with several million customers and a broad array of financial products across its retail, credit card, brokerage and mortgage business units. The initial CRM objective was to create a customer-centric and system-driven process to leverage the full range of products, thereby increasing the number of customers, the number of products per customer, as well as their profitability.
CRM Technical Infrastructure Development: When the bank began, there was no existing "base" system to provide even an imperfect view of each customer's relationships across the bank's strategic business units. Instead, the database had to be designed from the ground up. The bank performed its first "householding" process, consolidating data from all product feeds into one record per household, with a consolidated view of each of the customers across all business units, at the account, individual and household levels.
A by-product of the creation of the consolidated marketing database was a tremendous amount of data discovery. This data discovery, in turn, altered the strategic and tactical objectives that were established at the beginning of the project. This is because the bank was exposed for the first time to the possibilities of a consolidated database, which generated additional marketing and creative ideas.
Business Intelligence and Analysis: One of the benefits of the technical infrastructure was the ability to provide periodic outputs from the consolidated marketing database in the form of marketing reports that provided valuable cross-sell and service-mix insights. The value of these reports was seen quickly. For example, the bank owned almost six hundred thousand mortgages and about fifty thousand home equity lines of credit (helocs). Nevertheless, only a tiny percentage of helocs were associated with customers in which the bank was the originating mortgage lender. The original reporting output revealed that the bank's mortgage-to-heloc cross-sell program was in need of drastic overhaul.
The bank then used data mining effectively, with a well-coordinated program of models constructed for predicting next most likely purchase.
Marketing Cross Sell Program: With the information in hand from the analysis provided by the business intelligence tools and modeling, the bank was ready to increase cross-sell performance.
The bank developed a direct mail program for customers with a home mortgage, which included:
* A relationship-building welcome program, to set the stage for subsequent cross-sell efforts.
* Product inquiry fulfillment and follow-up.
* Valuable attitudinal information appended to customer records.
* A cross-sell program, offering tiers of products to qualified customers: heloc, brokerage accounts or credit card.
This program achieved an impressive cumulative response rate of more than 26 percent.
By putting together all the components needed to support CRM within an organizationtechnical infrastructure, business intelligence, analysis and smart marketing strategy, like our bank exampleorganizations can have a positive impact on increasing cross-sell ratios to increase customer value and longevity. nn
Gayle Davey has twelve years experience in the direct marketing and database marketing industry and is Vice President and Account Managing Director at KnowledgeBase Marketing, responsible for directing a group of strategic consultants and account managers dedicated to serving the relationship marketing needs of various industry segments. Ms. Davey can be reached at (919)969-5228.