How well do you really know your customer? What effort do you need to execute into your marketing initiatives in order to achieve greater results? Nauman Sheikh talks about the Business Perspective involved in getting to know your market better than your competitor!
Unlike other IT systems which are process centric and where technology automates the flow of information through the processes, a KTC solution is partly process and partly analytics centric. The organizations processes to collect and manage customer information through marketing and service functions is the process component; while the analytics on that data to identify trends, patterns and opportunities for better sales and service make up the analytical component.
For a strategic implementation of a KTC strategy, the marketing department has to take the lead and identify and assess the readiness of the organization to embark on managing a customer relationship proactively. Listed below are the 5 steps of developing this capability at the process level before IT is engaged to automate the process of data collection and then deploy the analytics.
Author’s Note: This is the 3rd article in the series. The first two articles covered the concept and the current state of knowing the customer strategies in the Pakistani market. The remaining two articles will cover the technology and implementation roadmaps from IT and business perspectives. This article will cover the business implementation roadmap of a “know thy customer” KTC strategy. One can argue as to why the emphasis is on a business implementation roadmap rather than a technology roadmap; but the response to that question, which shall soon be clear, carries the most important take-away from this series of articles.
Information Assessment
• How many touch points does a customer have with the organization?
• What is the context of each touch point (sales, support, complaint, etc.)?
• What information is currently recorded at each touch point?
• Is that information enough to profile a customer?
• Do different divisions capture different information?
• How the information is verified or authenticated (income, address, etc.)?
• Are the customer touch points centralized or geographical?
These and many other similar questions are used to assess the overall readiness of the organization. From a primitive analytical standpoint, the information set is then evaluated to see if the right information is being captured. Typically that won’t be the case and thanks to Murphy’s Law, it is highly likely that the most prudent information on a customer is not being captured and recorded properly. This will lead to the next step in the KTC strategy.
Information Capture
The information which is relevant and essential for the KTC strategy has to be captured on an ongoing basis and that is why this is a business process challenge. If it were a 1-time information capture, it would’ve been much simpler but the customer touch points need to monitor and collect customer interactions throughout the length of the relationship.
The business processes that have a customer touch point therefore need to be restructured, modified and enhanced to accommodate the KTC strategy. This is easier said than done, since numerous departments, regions, vendors and potentially systems may be involved; and an across the board change can not be easily authorized and implemented. To facilitate this information capture requirement in the existing business processes, marketing must make a ROI case for the benefits of the KTC strategy.
This is the third step to formally document the details to demonstrate the value to the organization. Before the information assessment phase the marketing team’s KTC strategy needs to have a broad outline but in the third step below more detail needs to be formally added.
KTC Analytics
The Know Thy Customer analytics is a collection of different types of analyses performed on the data for specific results leading to relevant actions. Most organizations in Pakistan should adopt the well known and established analytical themes, and as they master the art of knowing the customer, they can move on to innovating newer analytical strategies. There are three typical goals that make up the categories of reports and analysis that can be carried out: cross-selling, up-selling and loyalty.
For each of these goals specific data sets are required and specific analytical reports are run. For cross-selling the idea is to analyze what the customer has and try offering something from a different product range. For example, an auto loan customer should be offered a credit card, a life insurance customer should be offered an annuity and a TV customer should be offered a DVD player. The Up-selling is lightly different where having sold an initial product, an upgrade is offered after some appropriate time has passed.
For example, if initially a 1000 CC car was sold, 2-3 years later a 1300 CC car should be offered. If a 26-inch TV was sold, a 36-inch TV should be offered. The appropriate time frame before a new offer is made either has to have some realistic measure according to the customer’s need and taste, or an understanding of the product’s life. Both analyses can trigger an up-sell offer. The loyalty, retention and ‘bring back’ analysis is typically carried out on established sales trends that show an unexpected dormancy or disappearance on part of the customer.
For example, a customer flying or staying in a hotel at least once every 2-3 months suddenly disappears for a full year. The marketing department has to reach out to that customer. Another example could be that of a dormant bank account which was used “fairly” regularly but then stopped for an “unusually” lengthy time.
It is important to note the two quoted words “fairly and unusually” carry a lot of subjectivity and deeper analysis is required by the marketing analysts to asses what do they mean for each segment of the customer population. The purpose of analysis is to identify customers that need to be touched. But once the customers have been identified through the above, it is of prime importance to craft the right message and deliver the right incentive; this brings us to the most critical step of the business implementation of KTC.
Promotion
The promotion or the offer to the customer is the most important step as this will determine the success of the data collection and analysis phases. The RIGHT coupons, discounts and offers, as well as the RIGHT language and the creative part of the delivered message will not only guarantee a sale but will also build the goodwill of the brand. Traditional marketing professionals and advertising firms are very good at this.
If a marketing analyst provides them the theme of the message from the goals we discussed in the previous step, the creativity of marketing professionals will do the rest. It may not be a bad idea to partner with a forward looking advertising firm to assist in this process the first few times and then develop the capability internally. The discounts are calculated on the basis of the competitive landscape of the market as well as the psychology of the typical customer.
A customer survey or focus group may not be a bad idea to asses what is the right discount that increases the chances of a customer paying attention. Buy 1 Get 1 free, 20% off, 1st top-up free, gift packs and bonus miles or points etc. are all established incentives used in consumer marketing the world over. Normally, organizations do have budgets for these programs. What KTC is doing is delivering the same offer or discount in a customized and creative message especially for an individual customer. This makes them feel special. Even thank you notes, New Year calendars and season greetings are valuable tools in KTC arsenal to ensure the loyalty of the customer.
Campaign Management
The cost element of this entire exercise is of prime concern to the organization and therefore a formal Campaign Management Program has to be planned and executed with a specified budget. This is the final step of the KTC implementation from a business perspective. Each campaign is supposed to have its own budget, and even if it’s a modest budget (only a dozen or so customers can be offered the Buy-1 Get-1 Free discount) marketing should carry it out. Once the sale results from the dozen or so customers come in the next few weeks, marketing can prove to the executive management the success and penetration of such a campaign and get the budgets increased for subsequent campaigns.
This is an extremely powerful aspect of direct marketing over advertising where it is not easy to determine how successful the advertising campaign was. In order to calculate the ROI on the campaign, the ensuing sales from the customers who were reached out have to be closely monitored. As the campaign proves profitable and its budget is increased, marketing has to balance a three dimensional cost structure:
• Cost of discounts
• Cost of creative
• Cost of production & delivery
All three costs make up the total budget for each campaign. If the overall ROI on the campaign was encouraging, marketing can simply repeat the entire campaign frequently further saving on creative costs. However it should be ensured that customers already approached with a particular message should not be targeted for at least 1 year. Seasonal campaigns are extremely cost effective as they can be run near festivals and national holidays year after year.
Most campaign management systems like Unica, Clarity Blue, NuEdge and Siebel have the ability store all these details on a particular campaign and also perform ROI analysis. Sometimes a campaign delivers great results on large volume campaigns but are cost prohibitive for delivery to small number of customers. The results or performance of each campaign allows marketing to constantly tinker with the customer selection or profiling criteria, as well as the discounts themselves and the creative idea in order to have a constantly improving cycle.
E-mail and SMS on phones are extremely powerful avenues of delivering the direct marketing message instead of spam. Similarly ATMs, kiosks, call enters and websites are also very cost effective delivery channels where promotions can be carried out for large number of population.
However, each of these delivery mechanisms have to know who the customer is so that carefully crafted messages with appropriate offers are only delivered to the relevant customer and not everyone is spammed with the message.
In the final article, having established the complete business and requirements’ scenario in the previous articles, I will cover the technology implementation to help marketing departments to move towards a KTC strategy allowing them to gain a clear lead and establish their brands against the competition. The Information Technology implementation always starts with the word Information and I believe that the content covered so far covers all critical aspects of the said ‘information’ and therefore we can move towards exploring the technology angle with final article in this series.•
About the writer
Nauman Sheikh is the CTO at a technology startup involved in consumer profiling for risk, sales and marketing.
