Driving Customer Relationships

by Richard Goat

There are no shortcuts on the road to truly profitable customer management. However, more success awaits those who plan their journeys before setting out.

Customer management is certainly not a new concept. In the past 20 years, countless companies have made significant investments in customer data analysis and marketing automation systems. However, most industry surveys show that there have been many more failures than successes. How, then, can you ensure that you actually achieve the benefits you seek?

A roadmap, of sorts, may be the answer. If followed diligently, a map will improve customer marketing activities dramatically, and significantly reduce the risks involved in implementing new systems.

Before embarking upon the customer marketing journey, however, it is wise to understand the factors that have caused countless projects to fall short of expectations or even fail completely:

• Technology, rather than business, was seen as the primary success factor.
• Realistic and measurable business cases did not exist.
• Overly ambitious deliverables were promised in unrealistic time frames.
• Flawed marketing processes were automated without first being corrected.
• Customer management skills necessary to uncover opportunities were often missing.
• Organizational changes integral to success were seriously underestimated.

Before the journey can begin, there needs to be a catalyst. As with any fundamental change to the way a company operates, there has to be an awakening within the executive and middle management levels – a realization of the need for a new approach to dealing with customers. That wake-up call might come in the form of increased customer attrition, the arrival of unexpected competition, deteriorating staff morale, declining new business sales or emerging industry trends.

For one large European insurer, the catalysts for improved customer marketing were the arrival of new competitors from the retail sector and a promotion of the senior marketing executive to CEO. In his new position of power, the former marketing executive gained the authority to implement what he had previously only been able to recommend.

That authority makes all the difference. Anyone who believes that a board of directors will fund a significant investment in a customer marketing project without a robust business case is simply naïve. But a few steps will maximize the likelihood of success: identifying executive sponsorship, defining business requirements, quantifying benefits and costs, developing a board presentation, and securing commitment and funding.

Selecting a marketing automation software package is part of the process – but it's just that, part of the process. Establishing a sound foundation upon which enhanced customer marketing can flourish requires much more than that. Don't overlook the fundamentals:

• Refine and prioritize business needs.
• Establish a technical and data architecture.
• Select partners that have appropriate software and services.
• Introduce a user, IT and partner steering committee with a mandate for change.
• Implement a rigorous project planning process.
• Strive for quick wins to maintain project momentum.

While looking at the fundamentals, don't overlook the mistakes of others who have attempted this journey and failed to get where they wanted to be – closer to customers. Industry observers share the opinion that the lack of customer understanding is at the heart of the problem of failed projects. A better route to customer satisfaction includes assessing the quality and completeness of customer data; establishing a mixed team of users and IT to improve information; analyzing the true meaning of customer information; and targeting marketing campaigns to minimize costs and maximize returns.

One European bank invested heavily in a customer marketing data warehouse, but never understood the need to analyze its customer base and run focused campaigns. By any assessment, the company had the cleanest, yet most expensive, name and address file in the industry, but without any tangible benefits.

With the introduction of call centers and the Internet, companies are struggling to deal with the complexity of channel and customer strategies. Combine this with the fact that most back-office processes are still product-focused rather than customer-oriented – and the true extent of the challenge becomes clear. Luckily, the route is pretty clear too:

• Align business propositions to customer segments.
• Determine customer channel preferences.
• Enhance sales fulfillment to meet customer expectations.
• Establish lifetime models to secure customer loyalty.

Another key is a willingness to adapt. Too many organizations spend millions on new software, hardware and databases that could improve customer marketing – but fail to reorganize or retrain. Unless your organization is willing to adapt, there is little likelihood of significant sales success. Adapting means you must create a customer management mindset; ensure that customer data analysis skills exist; reward customer and product marketing successes; and manage and mentor organizational changes.

Management, too, needs to change its behavior, as well as the criteria by which it measures the staff. Bonuses and sales incentives for increased customer loyalty and share of wallet are key incentives for changing employee behavior patterns.

No question, the reason behind such a significant financial and human resources commitment is to deliver business benefits. Isn't it strange, then, that most companies have no mechanism for measuring the outcomes? Some will say that it is too difficult to assess accurately, but in most cases it is fear of failure that causes management to neglect the measurement. We should all have more confidence. As long as a pragmatic business benefit case is made at the outset, the results are very likely to exceed the forecast. However, there needs to be a rigorous focus on measuring all outcomes – bad as well as good; eliminating inappropriate costs; optimizing customer potential; and increasing training and mentoring opportunities.

Sometimes, success can be found in unexpected areas as well. Communication lines need to remain open and experiences need to be shared so that effectiveness of the players can be assessed; lessons learned are disseminated; successes are publicized; business cases and expectations for rollout are modified; and customer propositions are broadened.

The true potential of a new customer marketing system cannot be achieved on day one. Success requires a serious focus on developing the people and skills needed to exploit the new information and software capabilities. When properly deployed and continuously monitored, customer marketing projects have an enormous impact on every aspect of a business. To ensure that positive outcome, executive management must:

• Appoint a true customer champion to drive the project.
• Ensure that all key participants support the business case.
• Select partners who share your vision, ethic and commitment.
• Create a holistic customer view with data you trust.
• Train and involve all staff enthusiastically.
• Amend sales compensation plans to support customer focus.
• Sustain an open and optimistic project style.
• Publicize and reward success.
• Consider the customer viewpoint at all times.

As your journey progresses, it is important to keep your fundamental business rationale in mind and not let the technical details obscure your vision of closer relationships with customers. While the journey itself can be a difficult one, it is one worth taking. And it is one driven by a direct and proven correlation between customer satisfaction and corporate success.