The application of CRM in addressing customer diversity and inclusion

When I saw Roy Gluckman (Diversity & Inclusions Specialist at Cohesion Collective) present on Equality, Diversity and Inclusion (EDI) at the Association of Association Executives congresses in Manchester in December 2017 it inspired me to consider how an organisation’s customer relationship strategy can encompass these important elements. And when I heard him again at the AAE World Congress in Antwerp in March 2018 it became clear that the techniques used in CRM, in data analytics and in data-driven processes can be directly applied to managing an organisation’s approach to EDI.

Gluckman says that “our thoughts, beliefs and opinions make up who we are and are central to our identities”. Hence “truth is just a perspective” – but it is our perspective and we carry on with our lives as though it is the only view that anyone can have, that it is “singular, universal and correct!”.

One of the main objectives for CRM that I encounter with the organisations I consult for is the need for all the data they hold about a customer to be available and reliable so that anyone in the organisation has a 360˚ single view of the truth.

In fact, in a survey run in preparation for the AAE World Congress in March 2018 showed that almost 55% of organisations said that their contacts will not receive the same answer to the same query however they communicate with the organisation and 61% did not have a single view of the contact. Hence no way to handle the contact in a way that relates to their expectation and their perspective of their relationship.

We all recognise that to turn the information into knowledge there must be a level of interpretation in the light of the user’s tacit knowledge – their personal experiences, local or topical facts and attitudes – that puts it into the context and setting on which to base the relationship management.

But, using the personal interpretation to build knowledge furthers the influence of that singular perspective that we believe is correct. However, the customer with whom we are trying to build a relationship may have a totally different set of attitudes, aspirations and views, especially regarding their relationship with the organisation, their view of the organisation and the relationship they envisage as existing between them.

There are three constituent parts to a CRM strategy: the Operational element concerned with process management, delivery and collection of information at touchpoints and strategic communications; the Interactive element concerned with tactical communications and social media to drive the relationship; and the Analytics element that aims to turn the information gained through the first into knowledge that can be used to drive the second. Only by analysing the operational and transactional data acquired through business processes and interpreting them with the benefit of psychographic data can a clearer view of the truth be achieved.

A great example comes from one of my clients in the events industry. As a major exhibition organiser, they knew who pre-registered for an event and if they attended or not. What they had not done was to fuse the data collected by the exhibitors through swiping a badge or using an electronic ID device to identify which exhibition booths the individuals visited.

When this was done, we identified an interesting contingent who had pre-registered and subsequently attended over several years but had visited virtually no booths in the exhibition. When their business profiles were examined it showed that they were all very small one- or two-man businesses and when a sample of these were contacted it transpired that they used the event as a market place to meet and network with other small businesses in the aisles, rest areas and café.

The organiser’s image of the show was the key forum for that sector, attracting the major names, whereas these visitors felt excluded as they were not able to do ‘big business’ but saw it just as the facilitator for their networking activity. So, the organiser was advised to establish a ‘small business forum’ in an empty part of the exhibition hall the following year, to consciously include these small businesses by especially inviting them to use it and benefited commercially with a lucrative sponsorship deal to support it.

This concept of data fusion is very important in adding the psychographic dimension to the customer’s profile so that one can gain a view of the attitudes and aspirations that drive their purchase decisions.

This will enable an organisation to pre-empt churn, identify opportunities for cross-selling as well as up-selling what they buy, understand why specific propositions are successful with certain types of customer, reveal preferences and increase the effectiveness of prospecting.

This is because the organisation will understand how to be inclusive in its messaging and in managing the relationships, leveraging the knowledge it has as to the beliefs and opinions of the individual customers to tailor proposition and communication.

This can be achieved through the fusing of the ongoing analysis of customer involvement derived across all the points of contact with the organisation along with targeted market research survey data to determine the true differentiators – to establish the individuals’ perspective through their viewpoints and beliefs.

The outcome can then be used to create communication strategies to ensure that no opportunity is lost, and that the customer is always confident that the organisation knows them, and they can continue to feel part of the group.

Consider the scenario where the information that is acquired through tracking responses and behaviours is matched to the researched view of attitudes and aspirations to create complete customer profiles.

These can be used to determine how best to move the relationship forward as well as flag up any potential danger signs:

·        Does their most recent action (or inaction) indicate possible churn?

·        Has their most recent behaviour been exceptionally different to all that that came before?

·        Are they approaching a major milestone in their relationship with the organisation which has traditionally been a jump-off point for customers like them?

Having insight into what motivates their behaviour can be used to generate a relevant communication or even to direct that customer to the right web page or telephone agent as part of a strategy to retain them or to upgrade into a new level.

Equally as important is to be able to recognise good, profitable customers who, by their profile and viewpoint may never become your top customers, but who seek a relationship where they don’t feel discriminated against and can feel comfortable buying on an ad hoc basis whilst avoiding being bombarded with sales propositions. Consider my concept of the ‘spectrum of engagement’ which states that customers’ profiles fall along a line between two points – at the one extreme are those customers who want to receive every proposition available and, at the other, those who will only make contact when they need something. The most loyal customers can be at either extreme or anywhere in-between. It is this aspect of diversity that needs to be addressed and knowing where each customer is on the spectrum is the responsibility of the organisation to determine this position and to use the knowledge gained to drive the relationship as well as the regularity and content of communications and direct which propositions are offered. In this way each customer will feel included and that their relationship is on an equal footing with other customers.

Armed with this knowledge the organisation will be able to ensure that its marketing strategy addresses any such issues to drive the relationships most effectively thus offsetting the potential for decline.

©Michael Collins 2019

The grey area between fundraising and marketing is grey no longer!

As a marketer specialising in data-driven techniques I spend a lot of my time helping charities understand the relationships they have with their constituents through analysis of their data so that relationships can be developed in a way that will be most productive for the charity and most acceptable to the constituent. The management of the relationship is a marketing function.

It is evident that not everyone that a charity benefits from is a donor; some constituents need to remain at arm’s length and are happy to buy merchandise, attend events or even organise appeals but will not ever be or want to be seen as donors. However their activities still raise funds for the charity. Any attempt to convert them – even from ad hoc donor to committed giver – can put them off altogether. This is what was meant by delivering the right message at the right time to the right person.

We don’t have to go back  too far in history to find the definition of Marketing, only about 50 years: “the identification of a need and the addressing of that need through efficient and effective use of an organisation’s resources, to make a profit”. For nfp’s read profit=funds. I don’t necessarily agree that fundraising should necessarily be a part of a marketing department, but marketing techniques certainly support fundraising ; however in a smaller charity fundraising  will sit most comfortably within a marketing environment rather than finance, admin or general management.

Scoring your customers

Companies must continue communicating with their customers through a consistent strategy that is driven by customer insight. Rating current customers is not solely based on how much they spend but has as its basis the classic RFM (or RFV in the UK) model that creates a score based on recency, frequency and monetary value. My recommenation is not to stop there but to add more elements such as Returns, Complaints, number of enquiries, length of time they have been a customer and create a contact plan that reacts to the dynamics of these scores.

Often we will identify cohorts of customers that represent bad business. The solution can either be to review the business process for how you do business with them, e.g. relegating them to an ‘exclusive’ on-line relationship where the cost of managing them is reduced rather than taking up the time of a salesman or telephone agent; alternatively the bullet might have to be bitten and you resign the account.

However, building segmentations or communities of valuable, profitable customers by profile and comparing their behaviour will also drive the communication; but don’t just use it to determine when to make contact. Customer insight should also drive the ‘next best proposition’ for each customer so that the sales person can be proactive in establishing opportunity. What you know about your customers can also be used to drive new customer acquisition by comparing prospects’ profiles with your customers and determining the best proposition.

Customers rate companies with whom they deal by the quality of the communications and this means relevance, personalisation and timeliness.

Where does the provision of marketing information belong?

There has been much debate about whether the business or IT should lead information provision. IT is unlikely to be in a position to fully appreciate how the business could take advantage of the data because they are not involved in the daily process of sales and marketing of their company’s products and services. But equally, the business not really wanting IT to be involved in analysis and reporting, do not fully comprehend the nature and nuances of the data that is available to them, after all it was IT that designed the systems in the first place!

Without a thorough understanding of the data it is highly likely that irrespective of who performs the analyses the wrong conclusions will be reached.  Despite some product vendors exploiting this divide of opinion to their own advantage, it has been proven beyond doubt that the greatest successes come from those organisations that have created a culture where business and IT truly work together with complementary objectives and common business goals.

This is by no means an easy recipe for success with possibly years of divided working practices and politics to overcome but with strong leadership and active project sponsorship at the highest-level of an organisation success will be inevitable.

Travel companies are lucky….

Travel businesses are luckier than many other sectors. They have data on their customers and their customers’ enquiries and purchases and so can derive tremendous benefits from analysing these vast amounts of data, uncovering hidden nuggets of opportunity among their data, once they know how to go through it systematically and leverage the effect on profitability. Analytics software is useful, but some concept of what should be analysed is also of value.

We will often create a RFV model for tour operators or travel agents, combining Recency (of last booking), Frequency (regularity of bookings) and Value (either total spend or average booking value, for example) to create a score for each customer. We have found that adding additional elements expands the score from the 3-letter acronym to a multi-letter acronym such as RFVCIA where you add on the instances for example of Complaints, Introductions to friends or relations and Abandoned on-line baskets committed by the customer.

This score then becomes a comparator between customers, a selection criterion for campaign or proposition and changes in the individual’s score over time become a valid measure of success of the relationship.

Applying demographic, lifestyle and psychographic profiling provides an even more granular segmentation and the ability to apply the concept to prospects, with the benefit of making relevant offers to convert them to customers.

This leads us no to the second most frequent model we create: the market basket model. Knowing what destinations or types of travel different customers prefer is fundamental in programme planning, product development and in driving cross-selling or up-selling opportunities. Being able to compose and analyse the combination of travel products that customers buy will enable the travel marketer not only to determine how best to develop the business with those customers, but, by extrapolating this information, estimate the buying potential amongst the remainder of the customer base.

The often-cited (and some say apocryphal) “beer and nappies” story is an illustration of what can be achieved. Those that don’t know the story can read it at www.dmcounsel.co.uk.

This type of analysis is certainly not the exclusive domain of supermarkets or Amazon.com (we’ve all encountered their ‘people who have read this book have also bought this other book’).

If you can identify a customer as having purchased a product then market basket analysis such as was applied here can deliver cross-sale opportunities by making the right proposition in communications, positioning complementary products together on the shop floor or on the website or catalogue page or driving the pitch made by a telephone sales agent.

Such models can be created without investment in analytical software and can be applied in rules-based workflow and business process, with the dynamics regularly reviewed and the model(s) enhanced.

The extended 3-letter acronym to drive retail direct sales

Analytics software is useful, but some concept of what should be analysed is also of value. Retailers will often create a RFV model, combining Recency (of last purchase), Frequency (regularity of purchase) and Value (either total spend or average order value, for example) to create a score for each customer.

We have found that adding additional elements expands the score from the 3-letter acronym to a multi-letter acronym such as RFVRCA where you add on the instances of Returns, Complaints and Abandoned on-line baskets committed by the customer.

This score then becomes a comparitor between customers, a selection criterion for campaign or proposition and changes in the individual’s score over time become a valid measure of success of the relationship.

Applying demographic, lifestyle and psychographic profiling provides an even more granular segmentation and the ability to apply the concept to prospects, with the benefit of making relevant offers to convert them to customers.

Such models can be created without investment in analytical software and can be applied in rules-based workflow and business process, with the dynamics regularly reviewed and the model(s) enhanced.

The Power Of an MBA (Market Basket Analysis)

Businesses can find tremendous benefits from analysing the vast amounts of data they collect finding hidden nuggets of information among their data, once they know how to go through it systematically and leverage the effect on profitability.

In practice, all too often marketers are concerned with using data to drive promotion, but true insight into customers has impact on all the elements of the marketing mix.

The knowledge to be derived out of customer data can be used outside the selling or marketing communications environment. Knowing what products different types of customers prefer is fundamental in planning range, in stock control and in driving cross-selling or up-selling opportunities. Being able to compose and analyse the combination of products that customers buy, either at one visit or over time, will enable the marketer not only to determine how best to develop the business with those customers, but, by extrapolating this information, estimate the buying potential amongst the remainder of the customer base.

The often-cited (and some say apocryphal) “beer and nappies” story is an illustration of what can be achieved. Those that don’t know the story can read it at www.dmcounsel.co.uk. A notable example of this concept took place in a Spanish airport duty free shop. Analysis of the EPOS data showed a significant trend of purchases that comprised solely either brandy and cigars or whisky and cigarettes. When the airport data was matched by flight number (remember, each duty free sale has the passenger’s flight number on the transaction record) it became apparent that the first transaction type related to passengers en route to Germany and the second type related to passengers with the UK as their destination. What was also noted was that these purchases were all made within 10-15 minutes of the scheduled departure time for the respective flights. This meant that people were passing through the shop quickly at the last moment, just picking up the two most important items on their shopping list.

The management therefore put sales points for the respective combinations of products actually in the gate area for the German and UK flights, thus generating incremental sales amongst the passengers who really felt they had no time to make a purchase at the shop.

This type of analysis is certainly not the exclusive domain of duty-free shops, supermarkets or Amazon.com (we’ve all encountered their ‘people who have read this book have also bought this other book’).

If a company can identify a customer as having purchased a product then market basket analysis such as was applied here can deliver cross-sale opportunities by making the right proposition in communications, positioning complementary products together on the shop floor or on the website or catalogue page or driving the pitch made by a telephone sales agent.

You can use such techniques to determine the real cost of being out of stock of key items and the implications on supply chain. But, by combining market basket analysis with customer profiling, you unleash powerful techniques that can generate significant increases in sales.

Turbocharge automotive marketing

The key to building insight about automotive customers and prospects lies in bringing together everything you know about them. This can reveal the ‘who’, ‘what’, ‘when’ and ‘how’ but what if you were able to add the ‘why’ factor?

 To achieve this you must also include attitudes and aspirations that drive their purchase decisions.

 Consider the scenario where information acquired through tracking response and behaviour is matched to the researched view of attitudes and aspirations to create profiles. The outcome can then be used to create communication strategies to ensure no opportunity is lost and the customer or prospect is always directed towards the best next action, driving relevant, targeted communications.

 A good example of this occurred when consulting for an automotive manufacturer. A list of potential customers for a new mid-range car was tested and ostensibly, the profiles absolutely matched the positioning of the model to be sold. However, research revealed their preference for a pre-owned luxury car with personalised plates to disguise the age of the car, as they could not afford their ideal car new. So a new mid-range car proposition would have been totally irrelevant and failed.

 Such insight can also be used to determine how best to move customer relationships forward or flag danger signs. Does recent action (or inaction) indicate possible churn? Has an enquiry been exceptionally different to all those before? Are they approaching a milestone in their relationship with the company?

 Similarly with prospects – insight can help in directing their passage through the ‘prospect funnel’ and reduce the number that are normally haemorrhaged on the way through.

When is a prospect not a prospect? When they are purely a suspect (or at least have a pulse)!

Just think how leads come into your business.

Unlike traditional marketing where specific, targeted campaigns generate a qualified response, today a company’s broad presence on the web can mean that response is uncontrolled and is not necessarily representative of a valid lead for your sales operation. Potential customers today go online to research products and services, review recommendations and compare prices. This means an initial enquiry may not generate a sale for a considerable time and the enquirer can only be viewed as a ‘suspect’ – not even a prospect. 

So, once a ‘suspect’ is acquired, a relationship must be created to establish qualification and evaluate and build on the potential until such time as the lead is ready to be passed to sales. But what constitutes a ‘sales-ready’ lead? This is a strategic decision to be agreed upon between sales and marketing. Remember, it may vary by type of prospect, by product or market.

This ‘pre-sales’ process is known as Lead Nurturing and involves scheduled time or event driven communications aimed at establishing the prospect’s needs and delivering soft sell support, with appropriate messaging, landing pages, tracking and measurement.

These communications can take the form of blogs, newsletters, thought-leading statements and tailored, personalised messages, normally delivered via e-mail marketing techniques or social media.

Insight into the behaviour demonstrated by different profiles of suspects, prospects and customers will enable a company to build a lead nurturing strategy that ensures as many as enquire turn into customers or repeat purchasers as possible. The strategy also controls the level of resource used to convert the sale, meaning improved ROI.