Category Archives: DataBase Marketing

Marketing through Operations

Analytical Culture, Brand Management, DataBase Marketing, Marketing thru Operations

OK, so to review, here’s the premise.  Customer-centricity is something companies want to embrace more than ever.  Company can do this through a Chief Customer Officer, but why isn’t a Marketing exec taking the reins on this issue?  In direct marketing companies – where customer-centricity is not just a fad, but has a decades-long history – the Marketing folks know that Operations typically contains a goldmine of customer-centric Marketing opportunities they can take advantage of.  Many of these opportunities come from problems with empathy and context – or for the more technical folks out there, “Usability”.

Yes, you can optimize the service side of a business just like you can optimize a web site.  Here is how:

1.  Do you have a relationship with a peer in customer service?  If not, that’s really short-sighted for a marketing person who wants to be viewed as a strategic thinker – find someone, OK?

2.  Does customer service record the reason for each call?  If not, that’s nuts.  Most every call center system provides this capability, but you do have to turn the damn module on and populate it with the reasons people call.  So if the center is not using this functionality, get talking about how to get it turned on.

3.  You and your customer service peer need a list of the reasons people call.  Get this by talking, of course, with the agents.  If such a list does not exist, create it.  If such a list does exist, review it – it’s probably filled with crap or default reasons that don’t really have much to do with your business.  This is the most common mistake I see made in the “customer centric” area – using default call reasons not customized for the business.

4.  Once you have the module running and the call reasons right, make sure the agents know how important it is to status every call correctly.  Tell them by statusing calls, you plan to make their jobs easier by reducing routine problem calls, allowing them to spend more time on quality of call and resolving complex issues.

5.  Determine how to report on compliance with correct statusing.  If you don’t do this, all your effort will be subject to failure.  Hint: Do not provide agents with a giant “other reason” bucket; force accurate call accounting by providing a full and complete call reason set that only allows a very small percentage of “other reason” ticks.

6.  Find out from Customer Service or Finance what the internally acceptable “cost per call” calculation is; what does Finance think it costs to take a customer service call?

7.  In conjunction with customer service, study the reasons people call and think about how to reduce the need for those callers to call.  This project is about reducing or eliminating the triggers for a call.  Why do they call?  FYI, most really customer-centric companies have a meeting on this topic every week.  At HSN, we had this meeting every day.  Why?  Because we could react in real time.  If you are in an interactive business, perhaps you can too.

8.  In many cases, you will find they call because of things marketing does or could affect, for example:

  • Confusing language or other problems with marketing materials / advertising – this is a huge category which includes all kinds of bad Marketing execution – wrong or expired coupon codes, collateral distribution problems, etc.
  • Incomplete or confusing instructions or product packaging
  • Incomplete or confusing installation process or procedures
  • Pricing or bundling logic issues – the options don’t make sense to the customer
  • Problems with call center script language or logic
  • Illogical touch-tone trees or branching problems
  • All kinds of similar problems with the web site too numerous to mention here

Note to web analysts reading this:

Sound familar?  After you optimize the web site, find out if they will let you join the BI unit and optimize the business.  Idea: Optimizing a VRU / IVR is really no different than optimizing a web site using path analysis – think about it.  Traffic sources, the funnel, leaky bucket, pogo-sticking.  Same thing.

9.  Get off your GRP-lovin’ ass and fix the operational problems Marketing is causing or can affect.

If you are saying to yourself, “But I don’t have control over a lot of the items on this list” then ask yourself why that is.  All this stuff is about copy and presentation, and heck, you’re the expert in those areas, right?  So why don’t you have control over these issues?  Did you ever ask for this control?  If not, why?  That’s what a strategic thinker would do, because all these customer contact issues directly affect customer value and retention.

This stuff is marketing.  It directly affects the value of the customer and customer retention, not to mention word-of-mouth.  You want that new fangled social media thingie you bought to boost sales, right?  How about optimizing the customer experience with your company?

Oh, I forgot, less than 30% of you said increasing customer LifeTime Value is a top marketing objective.  So I guess less than 30% of you should move to the next step.

10.  Measure the reduction in phone calls for these problem areas you have fixed, calculate the cost savings, present to senior management.

Extra credit: measure the increase in customer satisfaction, if that’s all you can do.  Better than nothing.  Hopefully you have some kind of statistically correct, longitudinal study going and can measure satisfaction properly.

Super extra credit: measure the actual reduction in customer defection and monetary value of this reduction.  That’s the right thing to do and will boost the monetary value of your actions tremendously.

11.  Pitch strategic seat at the table / Chief Customer Officer responsibilities using knowledge from “why they call” study and resulting operational modifications.  You will have no shortage of future issues to work on.  Somebody has to do it, might as well be you.

12.  Convene cross-functional team, you will need it.  Get best and brightest from every area of the company or unit.  At minimum:  Marketing / Sales, Customer Service, Finance, IT, Distribution

13.  Start fixing more stuff that pisses the customer off, generates calls, and truncates customer value.  Achieve customer centricity.  After all, they tell you every single day what pisses them off.

Why don’t you fix this stuff?

Any takers?  Anybody doing this?  Any Marketers think they will get resistance if they start poking their nose into customer service land?

 

CMO’s: Strategic Seat = Chief Customer Officer

Brand Management, DataBase Marketing

Pursuing Ron’s analysis of Forrester’s Evolved CMO study, and it being the Year of the Customer (again), a couple of things seem clear.  

The lack of, or loss of, a strategic role for the CMO – the Deconstruction of Marketing – comes at the same time the Chief Customer Officer (CCO) concept is ascending.  Given an environment accepting of the CCO idea, why would any CMO aspiring to a strategic seat simply let this CCO opportunity slip away?  Clearly the CCO is a strategic seat, and a combination of Marketing and Customer Service responsibility isn’t unrealistic in a customer-centric org.

So I’m left with this: Do most Marketers have the required empathy to run customer service?  Do they have the capability to get down with people interaction, as opposed to blasting the nameless, faceless masses with messages?

In the spirit of not being a Consultainer, I’d like to provide some concrete direction to any Marketing folks who might be looking to “Prove that you deserve” a seat at the Strategic table.  The logical entry point is through this CCO idea.

The first question I would ask myself is this: Do I have control over all the Marketing, everywhere in the company?  Or have I ceded control of some Marketing issues to different operational groups?

For example, did Marketing write or approve the call center scripts?  How about the pathing logic and language used in the IVR / VRU?  Do you control the look and feel of invoices and packing slips?  How about installation or assembly instructions, are they easy to follow and do they use customer-friendly language? 

What about service counters, what does the signage look like?  Is there a good flow, do customers understand where to go and what to do?  Is the collateral up to date?  How are customers greeted?

All of the above is Marketing in a customer-centric world where relevance and authenticity is critical.  As a Marketing person, you’re an expert on language, copy, and presentation (if not emotion and empathy as well).

Why is it not your duty to bring these skills to all the customer-facing activities your company engages in?  Is it possible the customer service manager or IT programmer is better than you are at creating a great-looking, customer friendly, value-added packing slip?  If so, that strategic seat is something you will have to give up.

If you want a seat at the strategic table, you have to prove you understand the operational side of the business, and how you can affect it positively with great marketing ideas outside of the marketing silo.  Special bonus and faster advancement for actually measuring and proving the positive effects Marketing can have on the operational side of the business.

In fact, I will tell you that in many cases, your Marketing is not working as well as it should because you have not been influencing the operational side; here’s a real world example.  More real world examples here and here and here and here.

I will give you a specific plan for taking action on this CCO idea that will work at most companies in the next post.

P.S.  And don’t get me started on packing slips – have you ever actually seen one from your company?  Would it help to know that 95% of the ones I see from e-commerce companies that are not catalogers are little more than a copy of the order confirmation e-mail?  With all the e-mail header crap and all included?  No logo, no brand gestalt, no helpful information, no upsell suggestions?  How’s that working for a “customer experience”?

What about you?  Do you stick to “Marketing”, or do you shove your nose into the Operations side and get Marketing things done in Customer Service, Fulfillment, and other operational areas? 

Marketing into a Downturn

Analytical Culture, DataBase Marketing, Driller Q & A, Newsletters

Jim answers questions from fellow Drillers
(More questions with answers here, Work Overview here, Index of concepts here)

Q: I have been asked to create a whitepaper on marketing strategy and tactics for a down or recessionary market. In your studies and travels have you come across any literature or have thoughts of your own that I may quote?

A: Well, I suppose someone has written something about it somewhere. The trades write about it for every downturn! But I don’t know of any primary work on the topic – case studies, research, etc.

I do know that when we get into a down / recessionary market my phone rings more and I work a lot harder. The “new client” customer retention business is counter-cyclical; people always wake up during the soft times and say, “Hey, if we can’t drive new customer volume, maybe we can sell more to existing customers!”. You know, the CEO or somebody read that somewhere…

The problem with this kind of thinking is, in most cases, it’s already too late to do anything about customer retention.  That’s not something people generally want to hear. I then say, “The economy is cyclical.  Do you want to be prepared for the next downturn?”

The people who answer yes to that question will often become clients; those looking for the “quick fix” generally won’t become clients – but they call again into the next downturn…

It’s a strategy thing, you know? Long term thinking? But I digress…

The insidious thing about customer defection is that it’s always there, eroding the asset base, wasting away the hard work. But people don’t see it until the flow of new customers shrinks, and then all of a sudden, the defection issue is laid bare.

This is why the retention business is so counter-cyclical; why “discovery” comes in the downturns.

What you normally find is whatever business change / policy / product is causing customer defection, it takes as long to build up the customer asset again as it did to destroy it. Here is a real-world example.

A retailer makes a significant change in the types of products it sells, because it wants to “attract more new customers”. For existing customers, revenue per customer starts to fall. This fact is masked on the revenue side by the attraction of new customers to the new products – for a while. But it ends up these new customers, in terms of revenue per customer, have a value about 30% less than the old customers? So even though new customer adds remain consistent, sales start to drop, and over time drop by 30% as old customers defect and are replaced by the new customers worth 30% less.

Two years into this process, a downturn in the economy causes more attention and analysis of the customer base, and this issue is exposed. Surprise! The newer kind of customers defect at a higher rate and in a shorter time than the old type of customers.

New management is brought in, and they decide to go back to selling more of the “older” product to attract the higher value customer. Once they make the switch, it takes just as long for sales to get back to where they were as it did to create this problem in the first place – 2 (very long) years.

And that’s why it is so tough to deliver a “quick fix” to these kinds of problems. They are systemic in nature and because you are talking about the value of a customer over time, take time to fix.

So, it may well be that your advice should ultimately be “use this downturn to prepare for the next one”, if you know what I mean. Investigate, learn, and understand what happens this time, so you know what to do next time. In terms of action items, a few:

1. Analyze the customer base, to understand the source of customer value. Who are the best customers, where do they come from Which media, sales persons, product lines, services, geographies, etc. create the “best customers” for the business?

2. Analyze these best customers, and understand their behavior. What would be a warning sign that these best customers – who are probably responsible for the lion’s share of your profits – are cracking into the downturn? Slowdown in orders per month, average order size, number of contracts, whatever the relevant metrics are.

3. Track a handful of these customer metrics and see how they change as the economy slows. These metrics will be a map for predicting actual trouble the next time – predicting trouble even before everyone is already talking about “a downturn”. This gives you the extraordinary advantage of lead time over your competition in reacting to the downturn in business.

4. Complete the same 3 steps above for medium value customers and low value customers, if you have the resources.

5. Now, fully understanding what you have to work with (perhaps for the 1st time?), what is the strategy for a downturn?  Generally, it would consist of a reallocation of resources away from lower productivity to higher productivity activity, in order of importance:

a. For best customers, how do we keep them?
b. For mid value customers, how do we grow them?
c. For low value customers, how do we reduce costs to acquire or service them? Note I do not advocate “firing” customers, but you certainly can cut back on acquiring as many low value ones.

For each group, you should have a specific (and probably different) strategy and set of tactics. What a lot of folks don’t understand is there is almost always a truly remarkable difference between these customer groups, and any “one size fits all” edict or direction is bound to screw up the business, just like the example of the “new customer” effort from the retailer above.

For example, we know that marketing spend generally softens in a downturn. Companies cut back on marketing because they feel like they are “pushing on a string”. They cancel or don’t buy advertising, they fire salespeople. This is the wrong move. The old saw about buying more marketing into a downturn to “grab share” can also be the wrong move, though has some “accidental” positive effects.

The company should invest in more marketing, but not across the board. They should buy the right marketing, the marketing that generates the best quality customers.

They should reallocate marketing resources away from generating “c” customers towards generating “a” customers. If you know trade shows generate leads which turn into “a ” customers and online ads generate leads that turn into “c” customers, you take the money you spend online and book more trade shows. You let go of salespeople that generate “c” customers and use that salary to bonus salespeople generating “a” customers.

Of course, this analysis and planning is an exercise that should be done all the time, not just into a downturn. A business should always be trying to understand where customer value comes from and how it is created. But unfortunately, this issue most often comes up going into a downturn.

You’ll have to excuse me now, the phone is ringing again…

Jim

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