One bank decided to take Elizabeth Barrett Brownings famous words, How do I love thee? Let me count the ways, to heart and count the number of communications they had with their best customers over the course of a year. They counted and counted and counted, ending up with close to 200 communications for a single high-value customer alone - and, in some cases, more than one communication per day. Thats a lot of love. This couldnt happen in your organization, could it? The truth is that this overwhelming number is quite possible in large organizations where marketing, sales and service are decentralized and each group has individual revenue goals to meet. In the instance of this bank, many different product groups conducted marketing campaigns to fulfill product volume and profitability goals. Customer segment managers generated promotional offers to improve segment value and surveys to measure satisfaction. Branch and call center personnel actively solicited customers to meet pay-for-performance goals. Campaigns from the asset and liability committee were printed on monthly statements, featured on the Web and voice response systems, and attached to the bottom of email responses. The same 20 percent of customers (those generating most of the organizations profit) were targeted over and over again.
How do we avoid giving our customers too much love? The American Marketing Association has coined the term integrated marketing communications (IMC). IMC is defined as a planning process designed to assure that all brand contacts received by a customer or prospect for a product, service or organization are relevant to that person and consistent over time. Focus on the all brand contacts component of the IMC concept, and things get interesting. Imagine being able to coordinate and prioritize your entire program of promotions and communications across all customer touchpoints. You could eliminate conflicting offers across channels. You could stop inundating your best customers with multiple marketing campaigns. You could deliver a seamless dialog with customers where every interaction is relevant to the customer, delivered at exactly the right time and satisfies a significant customer need. In this universe, the very act of communicating with your customer fosters a positive experience, facilitates trust and expands the relationship.
This is not science fiction. It is the emerging discipline of contact optimization, and it is yielding tremendous benefits for the organizations that are doing it. Timely, significant, relevant communications go a long way toward increasing satisfaction, and there is no question that satisfied customers add to the bottom line. A CRMGuru study found that there is a direct correlation between a well-managed customer experience and business performance.1 After making a conscious decision to manage the customer experience and optimize contacts, a large retail bank has experienced several decades of double-digit growth in revenue, profits and stockholder return. Their values and vision statement acknowledges that every day our customers say - know me, know who I am, know what I need, and the banks needs-based selling and communication program has paid off handsomely. They have an average of five products per household in the retail bank (six when the customers have been with the organization for three years or more), which is double the industry average.
While we have been talking banking thus far, industries outside financial services have experienced benefits from contact optimization as well:
- A leading retailer gained high double-digit responses from personalized offers to millions of consumers.
- A large bank converted 70 percent of customers who were approached to join the VIP program where significant cross sales are common.
- A prominent travel company achieved a 25 percent booking rate on campaigns after implementing event-based marketing with contact optimization.
Optimizing your contacts is not quite as easy as it might seem. There are significant technical and organizational challenges to overcome when implementing a contact optimization strategy. Understanding customer behavior and preference through sophisticated predictive analytics, wading through myriad potential contacts to determine the highest-priority opportunities and tuning your data warehouse to work in conjunction with specific contact optimization applications are some of the technical challenges. On the organizational side, simply obtaining agreement from all interested parties (anyone with a need to communicate with the customer) to adopt an optimization strategy can be tough enough. Prioritizing one type of contact over another can be even tougher, particularly when the organization has been practicing uncoordinated, unregulated customer communication across business units and functional areas.
In next months column, I will take a look at ways to overcome some of these challenges and examine some of the aspects of robust contact optimization applications.
- Bob Thompson. Customer Experience Management - A Winning Business Strategy for a Flat World. CRMGuru.com, July 2006.
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