Recessions Make for Strange Bedfellows
As historical trends suggest, events like the current recession have a way of recalibrating priorities — individual priorities for you and me living on Main Street, as well as the priorities of organizations that have been forced to examine aspects of their businesses that they may have taken for granted during better economic times.
The "light bulb" moment for many businesses came during the recession when they realized that customer loyalty efforts — including the important work of reducing customer churn — were being severely hampered by unnecessary, and often unknown and siloed, departmental behaviors and business practices.
According to a June 2009 study entitled Losing Loyalty: The Customer Defection Dilemma , the defection of highly loyal customers hit a staggering level. Per the research, highly loyal customers are defined as the 20 percent of consumers who provide roughly 80 percent of a company's revenue. The research revealed that only 48 percent of these consumers in 2007 remained loyal in 2008. Even more disturbing was the finding that for the average brand, 33 percent of highly loyal consumers completely defected in 2008. Marketers are concerned, and rightfully so.
A key problem is that for many organizations, customer data and the behaviors that go along with this information remain often untapped, or in many cases severely underutilized, in departments such as marketing, technology/web analytics and customer service. Yet there is no shortage of available data. The marketing department has an abundance of information on customer purchasing behaviors. The Web analytics team can reveal trends related to how customers navigate a company's web site.
And the contact center, in particular, is rich with customer data, as it handles direct customer interactions and houses first-hand customer feedback. Yet it's the follow through on what to do with this information that can present challenges. Data is meant to be explored, and departments across the enterprise need to work together to share customer preferences, intelligence and ultimately up-level the customer experience.
Brand erosion at the levels surfaced by the study referenced earlier has direct implications on the bottom line. According to the study, one soft drink company experienced a loyalty decline of eight percent, with a six percent drop in overall revenue. A large detergent manufacturer experienced a loyalty drop of 38 percent, with a resulting 25 percent decline on observable revenue. The reality is that your loyal customers can — and do — defect on occasion, even in the best of times.
Typically, they leave based on dissatisfaction with products and services, repeated order or payment processing issues, or because they've received competitive offers that are just too hard to resist. In times of economic hardship, however, these pressures intensify. Quite literally, your brand can move from "unquestioned" to "unknown" overnight.
Eliminating Silos and Becoming More Customer-Centric
While customers aren't shy about making their preferences known, many organizations struggle with using the voice of the customer to fuel their decision-making. Too often, they take the easy way out by relying on their own internally developed metrics, and even on consumer buying decisions to reveal preferences. Unfortunately, by the time customers start making purchases in discernible numbers, it may be too late for marketing programs to be persuasive, particularly if a nimble competitor was paying attention and now fills that need. Entire industries have been redefined through this process.
Capturing the voice of the customer is central to this strategy. From an organizational perspective, much of this happens in the contact center, a primary front line for customer interactions. As such, it stands to reason that a tight alliance and open, regular communication between marketing and the contact center are vital first steps toward halting brand erosion and fostering customer centricity. These groups need to work together to capture, share and learn from customer feedback. This requires business process integration, technology integration, and personnel integration and collaboration.
Customer data collected through quality monitoring, speech analytics, customer feedback surveys and broader workforce optimization (WFO) software in the contact center needs to be made available to CRM applications. Ultimately, for organizations that run CRM, integrating with a WFO solution can help them better transfer and analyze siloed customer data from the contact center within the enterprise, and vice versa.
All difficult economies come to an end. However, those that invest in and master these principles today can put themselves in an even stronger, more competitive position when the economy rebounds. A legacy of our current recession: greater focus on customer loyalty and the "voice of the customer," and heightened emphasis on eliminating silos — creating strong linkage and better integration between today's marketing and customer service operations.
About the author
Oscar Alban (email@example.com) serves as principal global market consultant for Verint Witness Actionable Solutions. Prior to joining the company in 1997, he spent 12 years as a regional sales and training manager for a Fortune 500 company in its 1,200-person, inbound/outbound, state-of-the-art contact center division.
 CMO Council and Pointer Media Network, Losing Loyalty: The Customer Defection Dilemma, 2009
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