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How to Make the Shift to Customer-Centric Marketing
A road map for the evolution your company will experience.
Posted Dec 1, 2005
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There has been a lot of talk about multichannel marketers moving from product- and campaign-centric models to focus more on their customer relationships. And yes, the interest is definitely there as consumer resistance to intrusive marketing has risen while the long-term payoffs of a valued customer experience have become increasingly clear. But this is a dramatic change, and like all such moves, must start with clear, achievable first steps. First of all, shifting to customer-centric marketing will not work if your approach is too radically different from what is happening today. People find it difficult to adopt wholesale changes to anything--and marketing is no exception. So the process must be gradual as well as logical. There is a basic road map for how this should work. At the highest level, the evolution that your company must go through looks like this: First, you must understand what your customer base looks like and how it breaks down in terms of value and potential value. Then you can begin to align your marketing investments--starting with the direct marketing budget and then examining where you might shift budget from mass media to direct media. Having a customer-centric strategy requires that you focus more effort on direct, 1-to-1 messaging and less on untargeted, mass media messaging. Mass media marketing is impossible to differentiate from customer-to-customer and thus prevents you from varying your investment at a customer level. Once you have the information you need to determine which customers deserve more focus and which deserve less, you need to develop a messaging strategy that will keep customers loyal and shopping with you. Since we can't really develop a contact strategy for each and every customer, we need to develop contact strategies for the various customer segments we have in our marketing database. Initially, most companies developing a segmented marketing approach use a combination of value-based segmentation and customer lifecycle segmentation. We use a standard segmentation approach called MVP (marketing to value and potential), which contains the following segments:
  • High Value
  • Medium Value
  • Low Value
  • New
  • Lapsed
    As you can see, these segments are a combination of customer value (High, Medium, Low) and life cycle (New, Lapsed). The customers in each of these groups should receive different frequencies of contact, as well as different messages. Each segment needs to have its own contact strategy and plan. The segmented contact strategies should include the following things:
  • Basic marketing objective (e.g., retain, upsell, migrate, reactivate)
  • 12-month financial opportunity (e.g., for High Value customers, retaining an additional 10 percent of this segment will yield $XXX,XXX in revenue)
  • Segment "theme" (e.g., for New customers, "Welcome and here is a special offer for you.")
  • Direct mail plan
  • Email plan
  • Customer Service plan (hint: Customer Service should know which segment customers are in--especially High Value customers) Developing contact strategies by segment is a great first step in developing a customer-centric marketing approach, leading the way for more advanced techniques like real time, trigger-based personalization of offers. Many companies have a limited ability to do real time personalization on their Web site (modifying the Web pages people see based on what they are currently looking at online). But a new capability of combining historical customer behavior from all channels with real-time customer behavior at the Web site or call center is where things are heading. And when we get there, we will have achieved true 1-to-1 marketing. Developing a road map to become more customer centric, the process should look something like this: Throughout the process, it is important to educate and inform all relevant parts of the organization about what is happening. True customer-centric marketing involves all parts of the organization that touch the customer--not just outbound marketing. The insights you get from analyzing and segmenting the customer base should be shared with the e-commerce, customer service, and store management teams. They should also be aware of the outbound marketing programs, and which customers are getting which messages. Synchronizing these messages and offers will play a critical role in convincing customers that you are focused on them and concerned about them. One final thought: This will take time. One multichannel retail client has accomplished the development of a marketing database to segmented contact strategies in just about 14 months, which is quite fast. It is critical to recognize that this effort requires both patience and persistence--and it might require some outside assistance from an expert. About the Author Andy Cutler is chief strategy officer at BeNOW (an Equifax company), a strategic database marketing-services provider. Please visit BeNOW. Andy Cutler can be reached at 781-876-2090 or at Andy.Cutler@benow.com
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