Melinda and Carla would like to thank Ari Buchwald for contributing this month's column.
Do you remember the days of 16K scientific calculators and Atari? How about punch card programs? Slide rules? Those days of pre-millennial technology are long gone, only to be replaced by the next latest and greatest techno-toy.
Similarly, most business conversations are sprinkled with buzzwords for technologies and techniques that will be outdated before they are ever implemented. However, one basic concept that will remain constant throughout all of these micro-cycles and mini-trends is that all businesses have customers. To remain in business, all enterprises must have a detailed understanding of their customers' needs and direct all their internal processes toward satisfying those needs. Once a business loses sight of this ultimate goal, it will not take long to steer off a successful course.
Focusing on the customer is an easy mantra to tout, but how does an enterprise obtain mission-critical information about their customers? What costs are associated with gaining this valuable insight so essential requirements can be satisfied? While many costs such as hardware and software, marketing programs, consulting, training and analytics can be measured in some form, the cost of collecting and acting upon information from or about the customer can be more elusive.
The quote of the day for enterprises interested in thriving in this competitive brick-and-click economy should be, "Know thy customer or lose thy customer." Let's look at several ways to accumulate customer information.
One of the easiest ways to understand customer needs is to ask questions and make sure every interaction is relevant. Astute businesses will identify each sale to the customer, even to the product level. Study of sales history will show trends such as product preferences and purchase frequency. Monitoring and analyzing this data can give clues to trends that can be used to formulate communication strategies and sales targets. Some suggestions are to:
- Make sure that all customer transactions and interactions are tracked throughout all sales channels.
- Remember the customer employ techniques that recognize the customer and refer to past interactions.
- Resist the temptation to let return or complaint information go into a data landfill never to be seen again. Track customer satisfaction and talk to customers to ensure that any bad experience is properly resolved.
Incremental information can be collected in small pieces as the customer visits the store, calls an 800 number or logs onto a Web site. Some suggestions are to:
- Ask the customers what they want or like poll the customers as to variety, convenience, service, price, frequency of contact and permission to use various communication channels such as e-mail.
- Offer incentives to both customers and employees to increase participation in data collection.
- Reward customers for completion of additional information surveys.
- Establish an interval of relevant communications such as e-mail, newsletters or special offers. Use bounce backs to collect additional information.
- Remember and use data about key dates such as anniversaries, birthdays, holidays, etc.
- Use surveys and comment cards in direct mail or as point-of-sale handouts. Look for advertising partners such as lifestyle magazines or vendor partners for increased visibility.
A good rule of thumb is to save precious time with the customer for obtaining information that cannot be inferred or appended from some other source. In most cases, data can be appended to enhance an existing profile. In addition, clickstream data can be captured and analyzed to provide valuable insight to any customer's online habits.
Service bureaus offer rather complex matching and tracking methods that can provide valuable demographic information as well as psychographic data. Modeling transactional data and the updated customer database enhanced with this new information can provide valuable insight as to where to spend marketing and advertising dollars. Some techniques are:
- Append additional data to existing data stores in order to better identify and understand the customer. Look to processes such as reverse append to link demographic and psychographic data to the customer base.
- Model customers to identify high lifetime values and high propensity purchasers.
- Identify most profitable segments and communicate relevant offers.
- Calculate the cost of acquiring a customer, cost of keeping a customer and the cost of losing a customer.
- Apply analysis to list rentals and marketing campaigns. Test for the most effective methods to keep good customers and reach look-alikes to your best customers.
- Monitor Internet clickstream data for additional information on behaviors.
There is a cost associated with collecting relevant customer information. However, the higher cost is in not listening to the customer and failing to fulfill their needs. In this customer- centric business climate, the fiercest competitor is not the one that is most technology savvy, but the one best able to acquire and interpret relevant customer information.
Ari Buchwald is an associate consultant with Nykamp Consulting Group, a Chicago-area professional services firm with offices in Denver and Boston.
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