Marketing Success Is (Almost) All About the Data: Optimizing Customer Loyalty Behavior Initiatives

Much of what I’ve learned over the years about sales, marketing and customer service has to do with the critical importance of customer data, and how those data are converted to actionable insights. It’s how companies generate the right customer data, manage and share data the right way, and use it at the right time. It’s also how they use data to the best effect, to optimize loyalty and profitability, that makes them successful, or not, on an individual customer basis. Culture, leadership, and systems will facilitate effective information gathering, storage and application; and, CRM, CEM, ERP, or other acronyms notwithstanding, it’s impossible to be successful without having as much relevant anecdotal and dimensional content about customers as possible.

Much of what I’ve learned over the years about sales, marketing and customer service has to do with the critical importance of customer data, and how those data are converted to actionable insights. It’s how companies generate the right customer data, manage and share data the right way, and use it at the right time. It’s also how they use data to the best effect, to optimize loyalty and profitability, that makes them successful, or not, on an individual customer basis. Culture, leadership, and systems will facilitate effective information gathering, storage and application; and, CRM, CEM, ERP, or other acronyms notwithstanding, it’s impossible to be successful without having as much relevant anecdotal and dimensional content about customers as possible.

Bill Gates, often a prophet, said in “Business @ The Speed of Thought” (1999):

The best way to put distance between you and the crowd is to do an outstanding job with information. How you gather, manage and use information will determine whether you win or lose.

He might have added, had he really understood how to create and optimize customer loyalty, that what information, particularly customer-specific information, a company collects, and how they manage, share and apply it to the customer will determine how successful they can become.

One of my key sources for the uses of information gathered by customer clubs and, particularly, loyalty programs, for example, is friend and colleague, Brian Woolf (www.brianwoolf.com). Brian is president of the Retail Strategy Center, Inc., and a fountain of knowledge about how companies apply, and don’t apply, data generated through these programs.

In a Peppers & Rogers newsletter, for example, Don Peppers quoted Brian in his article, “The Secrets of Successful Loyalty Programs”:

Loyalty program success has less to do with the value of points or discounts to a customer, and much more to do with a company’s use of data mining to improve the customer experience. Top management hasn’t figured out what to do with all the information gleaned. You have all this information sitting in a database somewhere and no one taking advantage of it.

You need to mine the information to create not only relationships but also an optimum (purchasing) experience. The best loyalty programs use the customer data to improve not only promotions, but also store layout, pricing, cleanliness, check-out speed, etc.

Firms that do this are able to double their profits. When these elements are not addressed, all you’re doing is teaching the customer to seek out the lowest price.”

Tesco, one of the world’s largest retail chains, is using its customer information for a number of marketing and process initiatives. In his book “Loyalty Marketing: The Second Act,” Brian described how Tesco leveraged customer data drawn from its loyalty program to move into offering banking and financial services:

With information derived from its loyalty card and enriched by appended external demographic data, they can readily develop profiles of customers who would most likely be interested in basic banking services, as well as an array of related options, ranging from car loans and pension savings programs, to insurance for all types of needs—car, home, travel and even pets. It costs Tesco significantly less than half of what it costs a bank to acquire a financial services customer. Without a doubt, having detailed customer information gives them a competitive edge.

A few years ago, Tesco parlayed its offline customer data to also become the world’s largest online grocery and sundries home delivery service. Additionally, Tesco uses its customer data to target and segment communications to the millions of its loyalty program members by almost infinite demographic, purchase and lifestyle profiles. In his book, Brian notes that Tesco can create up to 150,000 variations of its promotion and reward statement mailings each quarter. These variations, as he says, ” … are both apparent and subtle, ranging from the product offer (i.e., which customers receive which offers at what price) to the content of the letter and the way it is personalized.”

Tesco is absolutely a company that knows how to leverage customer information. Its customer database contains not just demographic and lifestyle data, food spending in stores and on home delivery, but also specifics about its customers’ interest in, and use of, a diverse range of non-food products and services. As Bill Gates’ statement suggests, incisive and leveraged customer data has enabled Tesco to put distance between itself and its competitors, in both traditional and non-traditional retail markets.

An understanding of the real value and impact of customer information, and a disciplined plan for sharing and using the data to make a company more customer-centric, is needed more than ever. A good analogy, or model, for CEM and loyalty program effectiveness or ineffectiveness in building desired customer behavior, may be what can be termed the “car-fuel relationship.” A car, no matter how attractive, powerful and technically sophisticated, can’t go anywhere without fuel.

Not only that, to reach a desired destination, the car must have the right fuel for its engine, and in the right quantity. For customers, the car is CRM and its key data-related systems components (data gathering, integration, warehousing, mining and application).

The destination is optimized customer lifetime value and profitability. The fuel is the proper octane and amount of customer data.

Leading-edge companies are focusing on customer lifetime value as a destination. They are collecting the right data and using the right skills, processes, tools and customer information management technologies to make sure that key customer insights are available wherever they are needed, in all parts of the enterprise. Jeremy Braune, formerly head of customer experience at a leading U.K. consulting organization, has been quoted as saying: ” … organizations need to adopt a more structured and rigorous approach to development, based on a real understanding of what their customers actually want from them. The bottom line must always be to start with the basics of what is most important to the customer and build from there.”

I completely agree. It’s (almost) all about the data.

I Am the Judge of You

Pointing the finger has never been so easy … and so anonymous. I suppose it’s human nature to feel (and act on) the need to take pot shots at others—whether it’s their point of view, their creations or their behavior. But to be able to do so without the fear of repercussion seems to be a growing trend. And as the owner of a product or service, it’s never been more infuriating

Pointing the finger has never been so easy … and so anonymous.

I suppose it’s human nature to feel (and act on) the need to take pot shots at others—whether it’s their point of view, their creations or their behavior. But to be able to do so without the fear of repercussion seems to be a growing trend. And as the owner of a product or service, it’s never been more infuriating.

Many small business owners complain about the power of Yelp, and understandably so. But the concept is actually brilliant. Interact with a business and, whether your experience was good or bad, you have a very large forum where you can share the love (or not). The fatal flaw is that you can do so without the business owner having the ability to correct the situation because, inevitably, pot shots are done from behind the shield of anonymity.

My Dad always used to say, “If you don’t have anything nice to say, don’t say anything at all.” I believe in the concept of healthy debate, so I don’t necessarily agree with my Dad, but to have a healthy debate, you need to know the enemy.

Many sites (like this one) require you to log in before you can post a comment. However you can log in with your gmail or yahoo account … and if your user name is not your actual name, it’s easy to start the attack without your boss, co-workers, spouse or clients judging you for your aggressive behavior and unsportsmanlike conduct.

The behavior is not limited to consumer sites like Yelp. On business-to-business sites like this one, there are lots of negative posts from unknown readers, and I wonder, what do they hope to accomplish??

I was recently planning a trip to Mexico and visited several travel sites trying to get the inside scoop on hotels and restaurants. While I was delighted with the many insights like “try to stay on the 4th floor or higher because the thumping beat from the dance floor will keep you awake until midnight,” I was also stunned by the spewing rants from individuals who have logged in with names like “CrabbyinNJ.”

How do we, as brand ambassadors, overcome these customer feedback challenges?

First, and foremost, train AND empower those who are on the front lines of customer engagement to act like the customer—is—always—right. Granted, you can never please all the people all of the time, but sometimes a lot of customer sympathy and a few “my apologies!” can go a long way to diffuse a situation. There is nothing more infuriating than having an issue and the person serving you is either indifferent or plainly unequipped to help solve your problem.

Second, don’t just send blanket “How did we do?” emails to every customer after an interaction. If the customer has had an issue, there should be a place to flag that issue in your customer database, so it can be quickly followed up on by someone who is in authority. Many situations can be rectified before the individual decides to go into a public forum to publicly skewer you and your business.

Third, listen to complaints and actually try to think about ways you may be able to change your policies or procedures in order to ensure the issue doesn’t repeat itself.

Finally, circle back to those customers who had an issue, got it resolved satisfactorily, and ask them if they’d be willing to write about the incident. I hear many business owners say they’re worried that if the customer “advertises” they got something for free or at a deeper discount as a way to try and resolve the issue, it will set the stage for a future customers demanding the same thing. My response is that if, as a rule of business, you treat people the way they want to be treated in the first place—with respect, concern and understanding—you shouldn’t have a problem.

As for those who slap others from behind the shield of anonymity (and you know who you are), man up.

How Much Is Your Email List Worth?

Every good direct marketer knows the top company asset is the customer database. Almost anyone with marketing experience can turn that data into revenue. I say “almost” because there is still a social media movement trying to prove that direct mail and email marketing is dying. It’s doubtful that anyone in that group could create and execute an effective plan that delivers sales and profitability. But, for the rest of us, the people who understand that customer relationships are about the quality of service, a solid list is money in the bank

Every good direct marketer knows the top company asset is the customer database. Almost anyone with marketing experience can turn that data into revenue. I say “almost” because there is still a social media movement trying to prove that direct mail and email marketing is dying. It’s doubtful that anyone in that group could create and execute an effective plan that delivers sales and profitability. But, for the rest of us, the people who understand that customer relationships are about the quality of service, a solid list is money in the bank.

Direct mailers are very good at creating detailed plans that project sales and profitability down to the penny. When shifts in external factors like weather and politics affect sales, adjustments are made to keep the company operating in the black. Executing a direct marketing campaign requires a significant investment, making careful management necessary to corporate success. Customers and prospects are segmented, monitored and measured every possible way in an effort to increase lifespan and lifetime value.

Email Marketing Is Different
The investment required for email marketing is minimal when compared to direct mail. Returning a profit is so easy that marketers are lulled into complacency. When the revenue to cost ratio is that good, why invest additional resources in making it better? After all, there are always other areas that need more attention.

Email marketing can do so much more than generate revenue and profits. In the right hands, it increases customer loyalty and reduces operating costs. Emails offer the opportunity to create a personal connection that is unavailable in any other marketing channel. They can be used to economically provide high quality service on an individual level. Capitalizing on this requires in-depth analysis that begins with the value of email subscribers.

How Valuable Are Your Email Subscribers?
There is a direct relationship between the quality of your email marketing program and the value of your subscribers. Programs that build relationships using personalized promotions, education and service create substantially higher value subscribers than pure-play promotional campaigns. This really shouldn’t come as a surprise to anyone because better investments always yield stronger returns.

The first step in creating high value subscribers is analysis. How do the customers and prospects that participate in your email program differ from the ones who don’t?

Compare purchase history, time from first entry to purchase, times between purchases, average order, lifetime value, lifespan, number of orders in specific time frames and any other valuation information available. Segment customers and prospects as needed so you will be able to consistently evaluate the results. Seasonal, discount, and hit-and-run shoppers significantly skew the results. The information accumulated here is the benchmark that will be used to gauge the effectiveness of new campaigns.

Next, catalog all of the emails sent to each segment over the last two years. Include all available results so new emails can be compared to historical data. If you haven’t been segmenting subscribers, or segmented them a different way, capture the information that is available and move on. Don’t waste resources trying to analyze something that doesn’t have enough data to provide clear results. When finished, you’ll have a good idea of the current value of your email subscribers.

Creating a New Email Marketing Program
The analysis you’ve done tells you what has happened in the past. If you are happy with the results, keep on doing the same things. But, if you want more:

  • Look for gaps in your email marketing campaigns. Do they include personalized emails? Are the transactional emails optimized? Are you sending educational emails that teach subscribers how to use products and services?
  • Are you emailing often enough? Test sending emails more often to a sample of your subscriber list. If response increases without a significant jump in opt outs and spam reports, roll it out. Well targeted emails that provide value to recipients are rarely rejected.
  • Use your email marketing to improve customer relationships. Invest time in understanding your customers’ problems and creating solutions. The more problems you solve, the less likely they will leave. Email is an excellent tool for creating unbreakable bonds because it is effective, efficient and economical.
  • Measure everything on a regular basis. The better your data, the easier it is to improve results. Consistently digging through the data provides insight into how your subscribers behave. The more you know about their tendencies, the easier it becomes to create campaigns that motivate them.

The 4 Pillars of Mobile Strategy

Your brand must have a well-thought-out plan that captures data from all interactions it has with each and every customer so that every customer interaction is contextually relevant. If this element is missing from a brand’s marketing plan, it will be severely limited — customer engagement and profitability will be hampered.

I recently spoke with the team over at Merkle in order to better understand what it takes to successfully embrace mobile marketing. According to Bruce J. Hershey II, mobile marketing strategist at Merkle, brand marketers must identify where their brand stands within the mobile ecosystem before moving on to specific mobile tactics and campaigns. Bruce emphasized that in order to achieve results with mobile marketing, it’s imperative that brand marketers develop and execute against a comprehensive marketing strategy that includes mobile rather than simply focusing on mobile capabilities in isolation. Doing so will allow your brand to stay focused on its overarching marketing strategy as you weave mobile or any other digital channel into the mix.

I asked Bruce what it takes to build a mobile-enabled marketing strategy. “Without a reliable and proven framework to use as a guide, developing and successfully executing a marketing strategy that includes mobile and achieves its desired and expected results can be a difficult thing to achieve,” he replied. According to Bruce, an effective mobile-enabled marketing strategy must account for everything, literally. You must understand the following:

  • your customers, the environment they live in and what they need;
  • your brand, including its objectives, resources, technical capabilities (both with traditional and mobile marketing), experience, and commitment to marketing and mobile at every level within the organization;
  • your existing strategy to meet your brand’s goals and objectives;
  • the technology that will enable your brand to implement that strategy; and
  • the media channels (e.g., print, email, television, radio, social networks, etc.) at your disposal that can be leveraged to reach and engage consumers.

I also spoke with Chris Wayman, vice president and general manager of mobile practice at Merkle. Chris emphasized that in today’s digital age another element to a successful mobile strategy is needed, namely connecting mobile data to your customer database. A CRM strategy helps businesses derive valuable customer insights by looking at all offline and online touchpoints throughout the customer journey.

In other words, your brand must have a well-thought-out plan that captures data from all interactions it has with each and every customer so that every customer interaction is contextually relevant. Chris noted that if this element is missing from a brand’s marketing plan, it will be severely limited — customer engagement and profitability will be hampered.

Merkle has developed a framework to help organizations build out their mobile plan. The framework steps through a process that helps organizations build out their plan along four key pillars:

  1. mobile audit and strategic road map;
  2. media integration of mobile tactics;
  3. mobile marketing tactics; and
  4. customer database integration.

By leveraging these four pillars and a proven approach to developing mobile-enabled marketing strategies, Merkle has found that its clients are able to properly integrate mobile marketing into their digital marketing plan, produce impressive list growth results, reduce uncertainty in the development and execution phases of their marketing plans, and generate predictable results for long-term, sustainable company success.

To learn more about what it takes to develop a mobile-enabled marketing strategy, join us for the following webinar on May 25: How Mobile Coupons Drive Revenue and Build a Mobile Database for Men’s Wearhouse’s K&G Superstore.