Customers for Life

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Customer acquisition and retention may be the basic goals of CRM, but imagine capturing the mythical creature known as The Lifelong Customer. For some players in a few lucky industries, this creature is not a myth, but a reality that they've recently begun to capitalize on. This month, CRM magazine examines three industries in which cultivating committed customers has become a core competency: sports, wealth management, and higher education. Executives in these industries are using CRM to maximize the value of these customers--lessons that apply to everyone looking to improve margins. SPORTS
Swinging for the Fences What it is: Maximizing revenue from a zealous fan base What it isn't: Brand extension who's doing it: Firstwave, E.piphany, Nuance, Onyx When it comes to sports, customer enthusiasm isn't the problem. Properly channeling it is. Fans grow up rooting for their favorite team, and passions run high. That's why, as far as Larry Witherspoon is concerned, the business case for CRM "is a no-brainer in sports." But Witherspoon, vice president of technology and services for the Seattle Mariners, says that CRM in sports is only special in its application. "A customer is a customer," he says. "Only the product differs. The basics of what you are trying to accomplish [are] the same." Still, he acknowledges at least one unique benefit: Sports clubs "are dealing with a large fan base, [but] the front-office side is relatively small," making it easier to deploy and train staff. Some industry insiders think differently. "It's a misnomer to think that CRM in sports is used in a similar manner as it's used in other industries," says David Simmons, president of CRM vendor Firstwave. "It's not." There's also contention about how successful the industry has been thus far in using CRM. The entry-level use of CRM in sports has been to handle season ticket sales, Simmons says. "And that's where it's failed miserably," he says. "It takes much more than just season tickets to be successful." Some sports organizations, however, are finding that success in other areas, such as single-ticket sales, luxury-suite bookings, merchandise sales, and concessions. With the advent of new stadiums and arenas, for example, sports clubs have a strong incentive to push their luxury boxes, and CRM has helped. The Houston Astros, for example, were frequently stalled by an antiquated paper-based system of booking sales. "We were doing it in an old-fashioned way," says Jaime Williams, the club's assistant premium sales and operations manager. Cancellations were haphazardly recorded by erasing penciled-in entries, making it difficult to tell if a suite was still taken or not. Now, armed with a unified CRM system, she says, "all of our sales reps can see [what's open]." CRM is also allowing sports organizations to think globally, but act locally: The technology can be used by individual teams, as well as by entire governing bodies. The National Football League, for example, is using CRM to streamline its fans' various points of contact across the national brand, while helping individual clubs to target fans of visiting teams with ticket and merchandise promotions when those teams come to town to play. Sales and marketing expert Andrew Kaplan says that CRM in sports "includes a Web site, online ticket purchasing, chat with players, e-commerce for fan items, and communication tools," in addition to a central contact database. The database itself, he says, requires strong data-mining capabilities, because "a good percentage of your database may turn over" as the local population changes. As Perry Cooper, director of database marketing for the NFL, says, "We have a big database and that's good, but it's all about bringing fans' experience closer to the game and bringing them closer to our business partners." Unlike most sales organizations sports clubs have to move their product even in the face of poor results. "Performance is critical in all sports, but being able to provide a great fan experience will hopefully keep fans coming even in a down year," the Mariners' Witherspoon says. "Season ticket renewals [depend] on a lot of factors, including the local economy, the success of other local sports teams for the same dollars, and the success of the team," Kaplan says. Still, "it's sometimes easier to do CRM, because these are fans and you have a brand monopoly in the market--[they aren't likely] to buy from someone else. You have a lifetime loyalty from childhood in many cases." In the long run, Witherspoon says, CRM can help turn that loyalty into profit. "Personalizing the experience is the next step," he says. If we know that you like to come on the 'Bobblehead Giveaway Day' and get a Pepsi and a hot dog, we should let you know on what day the giveaway is and promote your favorite products to you." And who can argue with a well-targeted bobblehead? WEALTH MANAGEMENT Following the Money What it is: Handling high-net-worth, private-equity clients What it isn't: Retail banking Who's doing it: Onyx, SalesLogix, x.eye, Finaplex, PeopleSoft, Siebel Systems Wealth management has long been a catchall term for a variety of personal financial services, but there's a significant difference in approach between handling your kid's first savings account and overseeing a charitable trust worth hundreds of millions of dollars. That's where high-net-worth private bankers come in, and where CRM makes a serious difference by providing advisors with a solid understanding of each client's unique needs. "We're more than just a broker," says Nick Voutsakis, CTO of Philadelphia-based Glenmede Trust Company, which deals exclusively with high-net-worth clients. "We provide an in-depth service." In other words, the higher the value of the client, the higher the level of service required. The challenge financial services organizations face, however, is to serve advisors and clients. "The bank or brokerage sees the advisor as its customer, [but] the advisor looks at the client as the advisor's customer," says Matt Schott, a senior analyst in TowerGroup's Retail Brokerage & Investing unit. That can lead to fundamental differences in approach to CRM, for example, how each tracks and shares customer data. Feeling underserved by their firms' technology efforts, "many advisors have bought their own software for client interaction information," Schott says. And those advisors may be loathe to share what they've built up for themselves. This situation can add to the already complex data management problems inherent in wealth management. For example, high-net-worth clients are often swayed by influencers like family, financial advisors, and tax attorneys. One of the challenges, Schott says, "is that it's not only about the nonfinancial stuff and understanding whom the clients' influencers are...but also the financial aspects of that relationship." Successful CRM systems have to be able to incorporate that level of detailed interconnectedness. "Ideally, [CRM provides] the total financial picture of that client," Schott says, "something that [asset-management] firms are still struggling with. No one has the answer yet how to pull together that full financial picture. Add in the challenge of bringing in information not held within the [financial] institution and it becomes even more complex." To meet this challenge, some wealth management firms are using CRM systems that have the ability to handle analyses like householding, which aggregates information from an entire family. Customer service is where the real separation between mere financial planning and true wealth management takes place. As Helen Clement, product manager for database-search vendor iPhrase Technologies, puts it, "In the high-net-worth segment it's less a question of simply trying to curb customer service costs, and more about providing differentiated levels of service." Sophisticated CRM systems rely on customized business rules and well-thought-out business processes to help wealth-management advisors--and the relevant customer service reps--decide which calls require the highest level of attention, using more than just the complexity of the call as a yardstick. Often when dealing with high-net-worth clients even a simple call that could have been handled by an IVR is sent to the advisor herself. At Glenmede, for example, a Web self-service option exists, Voutsakis says, "but it's not the primary vehicle for providing strategic information." It doesn't matter that that channel is more cost-effective for the company than live assistance, he says. "It's really just there for those [clients] that want to take advantage of it." The rest are welcome to reach out directly to their personal advisor. While the rest of the financial services world "tries to use CRM technology to keep the organization marching to [a] centralized strategy, in the wealth-management space it's much more entrepreneurial, more about the advisor," TowerGroup's Schott says. As a result, "CRM has to be built around supporting that advisor. [The focus has to be] less about the corporate marketing strategy and more about bringing the resources of the organization to bear to support the advisor's approach." Successful CRM deployments facilitate whatever individualized relationship approach the advisors were already taking, rather than imposing a single method upon them. HIGHER EDUCATION Making the Grade What it is: Driving alumni development and donations What it isn't: Marketing to college applicants who's doing it: Talisma, PeopleSoft, SPSS, SAP, Oracle, BearingPoint Student Information Systems have long been in vogue in higher education as a means to track interactions with current students, from registration to housing to billing to grading. But some universities have begun to take a longer view, recognizing a life cycle that spans the progression from prospective applicant to applicant to student to alumnus...and even to parent of future prospective applicants. CRM readily molds itself to treating would-be students as the equivalent of sales leads, and active students as clients. But what really stands out today is how universities are now using CRM systems to tackle alumni development. "Universities increasingly do not want a four-year customer, they want a customer for life...and they want that customer's children and grandchildren," says Malcolm Woodfield, the director of global business development for SAP's higher education and research unit. Fortunately, "alumni are not 'customers' in the sense that they can switch and become alumni of another institution." As a result, "universities have to find creative ways to maintain a preexisting relationship," he says. The business case for CRM is driven by what Woodfield calls a pipeline of prospective donors (read: alumni). That donor pipeline "is crucial to institutional development funded by the university endowment," he says. "This is funding not used for operations, but for growth and innovation." And what CRM can address, Woodfield says, is the "need to build and maintain close relations with alumni.... The analytical function of CRM [can] segment alumni and identify the top donors." According to Woodfield, universities pay 80 percent of their attention to the top 10 percent of their alumni donors, which can help to maximize contributions while minimizing resource allocation. At Cabrillo College, in Santa Cruz, CA, for example, the plan is to extend data mining technology and CRM to track "alumni who have [already] donated to the college, to map that back to their educational experience," says Jing Luan, Cabrillo's director of planning research and knowledge systems. Being able to identify patterns in the data will help guide the school's future development drives. Another aspect of alumni revenue generation, Woodfield says, is "supporting the development of other lines of business, such as conferences, sports events, cultural events, summer school, and other educational 'products'" that alumni can participate in. Former students are a much more target-rich environment when it comes to direct marketing campaigns. "CRM will also be used to develop relations with industry partners, spin-off ventures, investors, etc.," he says. Contact Articles Editor Joshua Weinberger at joshw@destinationCRM.com
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