Ask someone why they bought a certain brand of prestige car. What do you hear? “I’ve got to keep up my status”, “I thought I’d look good in it”, “Makes me look successful”. You wouldn’t get answers like “handles really well” or “It has a low rate of depreciation” or maybe “It’s got a really good sized boot”.
The fact is that most of us base our choices on emotional needs - things that make us feel good. Knowing our mates will be jealous and that neighbours, work colleagues and friends will think we’re doing really well makes us feel better about ourselves. Our behaviours might be modified at work but our basic motivational drivers remain unchanged. We still want to look good in front of superiors and peers. Some people want recognition, some want security, some want growth - most want all of these and more.
If we transfer this reasoning to business atmosphere, we’ll be much more successful if we match our product to customers rather than the other way around. Why? Because we often cannot change our product but we can change the perception of who we choose to sell to. And that’s critical because what’s right for one customer won’t be for another.
Knowing your customers
To get to know your customers is not that difficult if you have a good customer relationship management (CRM) system in place. The success of any CRM is measured by how well we have been able to use information to predict and influence future customer behaviour. We want to make our offer only to the customers who will provide the highest return (greatest response rates, highest profit margins or lowest cost to serve).
Let me list the steps needed to get to know your customers.
Get down with the data. The purpose is to prepare customer profile or enhance profile coverage. Participants would be product team, database marketing team.
Segment customers. Define segmentation strategy group customers by similar profile characteristics. Involve product team, database marketing team.
Let us go little deep into these two steps.
Getting down with data
The database marketing team members need to actually get their hands on customer data so they can eventually pick exactly the right customers to receive the offer.
Determining a customer profile
The database marketing team will start a project with a target customer profile in mind. The description of that target profile indicates what the company believes to be the important characteristics of customers who will respond to the offer.
In the good ‘old’ days, storeowners knew their best and most loyal customers by name and they often saved them the special cuts of beef or personally delivered the grocery order to their homes because they had been such valuable customers over the years. This is a wonderful picture that brings back visions of a much friendlier and more personal time and it is the vision for CRM as well.
In today’s marketplace, businesses may have thousands of customers and they may be located all over the world. It’s very likely that no one in the company has ever met most of them. But in this new marketplace, customers still expect personal treatment. CRM, the alternative that is practical for managing relationships in today’s marketplace, uses information to identify groups of similar customers and to support personalization.
Targeting customers is the transition step between getting to know our customers and delivering the offer. This is where we pick exactly the customers we plan to contact with our offer. Targeting decisions are based on predicting responses based on past behaviour and expected returns. We want to provide each customer with the most appropriate experience possible. ‘Appropriate’ does not necessarily mean the best experience. We cannot treat all customers the same. For each project, we need to target the segment(s) that are the best match to the offer because of the expected behaviour of that segment. If you’re planning to provide an expensive new capability, you might limit the offer to those who are highest value, highest potential value or highly visible and influential in the marketplace.
Often, we want to use calculations, statistics, and modelling tools to define and target the most actionable customer segments. These are some of the most commonly used calculation tools.
LTV (Lifetime Value) - Projects profit over the number of years’ customer remains loyal. The tool is used to justify larger investment because of payback over life time.
RFM (Recentness, Frequency and Monetary value of customers) - Customers who have bought recently, who buy more often and who spend more have been shown to be the most likely to buy again. This tool is used on basis that previous behaviour predicts future response.
Scoring - Rank customer’s likelihood of response based on specific characteristics. This tool is used to develop a ranking for customers based on some other attribute(s).
Value - Company income from orders less cost to acquire and serve customer. The tool is used to measure actual value of customers (net profit from customer), the best customers.
ROI (Return on Investment) - Cost of project divided by revenue from project. This tool measures fiscal results of each project.
The most important reason for implementing a CRM solution is to keep your customers happy, stay in touch and bring them back when needed. By utilizing a CRM database, you are ensuring that not only is the data up to date and accurate but also easily accessible for team collaboration.
CRM, if properly implemented, is a magic tool. It will serve a company in many ways.
Register leads and contacts
It isn’t simply the act of entering customer information into a CRM that makes it worthwhile; it’s the categorization of and analysis derived from that data. By sorting your customers into easily identifiable categories, you make it easier to recognize who might buy what and when or who needs extra support and where. You can move those customers to other categories depending on their stage in the buying process and also create groups based on their purchasing habits.
If you are entering leads and contacts into your CRM consistently, chances are you have some prospects that you haven’t made a sale with yet or customers that haven’t been very active lately. Use your CRM to keep the interaction alive and productive; marketing campaigns can be configured through the CRM to target specific customers and contacts, ensuring that you are still fresh in their minds even if they aren’t ready to buy yet.
Track all interactions
The key to a happy customer is communication. Many consumers or clients leave their current supplier/provider after being ignored or not feeling as though their voice matters.
By keeping track of every customer interaction in a CRM solution, you ensure that your team has access to all pertinent customer history.
This data allows even the newest members of your team to meet the customers’ needs without information gaps, letting the customer know that you care about what they think and say.
Customer data stays
This is an often overlooked benefit of a CRM solution. The data collected by your team stays in the system even after your team members have gone. No more sifting through reams of outdated paperwork on an old desk; once the customer is in the CRM, they are accessible and easily updated by anyone in your organisation.
You’ll know exactly where they are in the sales pipeline even if the person who brought them into the CRM moved on a long-time ago.
(Lionel Wijesiri, a corporate director with over 25 years’ senior managerial experience, can be contacted at email@example.com)