Retention and Relationships : Marketing Thoughts by Michael Greenberg

Last month’s column for Chief Marketer.  I’d planned on covering the first three elements in more detail before publishing this article, but we’ve been very busy at the office for the last couple of months.

This column touches on the power of recognition, the value of real interaction, the retaining power of collaboration (and the low cost content it can provide), and includes a push to enable advocacy by your customers.

Knowing which individuals are your customers is a crucial task for every company.  It’s easy to do in business-to-business companies, but can be quite difficult for consumer-focused companies. 

There are two parts to this problem – who is the customer, and what did they buy?  While you can solve the first part of the problem without the second, that’s not recommended.  You will have no way to calculate customer value, making future optimization decisions much more difficult.

So the best approach is to tackle both parts simultaneously.  In retail, loyalty programs and credit cards were the traditional way to gather customer identities and connect them to individual transactions.  This approach still works.  The other major approach, data appends, now depends mostly on reverse appending phone numbers, which is much tougher due to rising cell phone penetration (which can rarely be appended).  In certain circumstances, email can be used as the tracking mechanism outside of a loyalty program.

Companies can reduce the barriers to identification with newer technology (such as new point of sale systems) which can be expensive, or with great relationship programs and a great brand.  The former increases the capture rate at the point of purchase, the latter increases a customer’s willingness to raise their hand and be tracked voluntarily.

The mix that makes the most sense for your business depends on your current capabilities, budget, and overall objectives.

If you have nothing today, I’d start with a relationship program with soft benefits, requiring an email address.  If you have a high-throughput point of sale/interaction, think about using phone number as another identifier.  Bar coded cards are the most accurate, but not all consumers are willing to carry them, so you will need a ubiquitous backup identifier, and phone number has the benefit of being reverse appendable (no, its not a word, but it should be).  So at minimum, you could connect multiple purchases over time to a specific phone number, even if you can’t identify the individual.

Down the road, you will end up with more records than customers.  At that point, bring in a professional data hygiene firm to help with merge purge.

My latest at Chief Marketer.

I see 7 key elements in best customer management.  This first column focuses on the 3 basic ones:

Identify - Understanding who an individual customer is and what they have done and bought.

Communicate - Messaging an individual customer with relevance to their needs and prior actions.

Reward - Providing and promising incentives and benefits based on their activities.

I’ll spend time over the next few weeks exploring each of these areas in depth before the second column is published with the other four elements.

Its now time to find out how effective everyone’s relationship efforts were throughout the year. Confronted with a blizzard of offers, catalogs, ads, and products, consumer choice will come down to who can cut through the clutter.

The first test is Thanksgiving weekend, where companies are pouring email and direct mail into the hands of key customers (well, lets be serious, everyone is getting something).  I count inbounds from 46 different companies on personal accounts on Monday-Tuesday alone, plus direct mail inbounds from another 33 on the same days.  While deals still influence visitation if someone offers just the right item, nowadays the choice is heavily influenced by our relationship with the destination.  Its nice that some companies are reaching out to me now, but trying to relate to me once a year just has little impact on my decision.

The second, and more interesting, test is the email and direct mail they deliver in the 3rd and 4th weeks of December.  Who will try and relate to the gifts I bought last year, and point me towards similar categories?  Who see that I respond to coupons?  This is the fun part of holiday…I’ll come back to it in January and analyze.

My latest article for Chief Marketer is one that influences everything we do at Loyalty Lab.  The idea of reserving substantal resources for hidden programs is key to long term success in relationship programs, especially for companies where a small number of customers account for a substantial portion of revenue and profits.

There’s a fascinating study going around from the CMO Council that looks at how marketers are interacting with their customers.  To summarize, they’re not.

49% named CRM or database systems as their main information source on customers.  75% don’t have advisory boards or online communities.  30% don’t develop their own customer segmentation.  Plus, there are plenty of other insights on the CMO Council website.

From my perspective, every marketer should talk or listen to customers every week.  Whether that means walking onto a sales floor as a retailer, reading customer satisfaction survey responses, listening in to a call center, or participating in weekly account manager conference calls, keeping up to date on customer needs, concerns, and input is crucial.  Qualitative input helps balance the tendency to rely solely on quantitative input, which many of us practitioners have tended to fall back on.

There is an outstanding discussion between Vinton Cerf and Esther Dyson at wsj.com that is definitely worth reading.

The fascinating part is their discussion of attention.  If there truly is an emerging shift in how individuals value themselves (Adults define themselves by what they own and wear, Kids by who pays attention to them), there are staggering changes to the concept of brands and brand relationships on the horizon.

It’s not difficult to envision a world 20 years from now where individual expression is everything, and conformity is nothing.  Functional and performance brands will still thrive, but attitudinal brands will become niche-oriented to survive.

The relationships that brands have with their customers will become even more important, since holding on to core customers will be an absolute requirement for survival.

This blog will focus on the intersection of marketing and technology around managing customer relationships in consumer and retail businesses.

Sounds droll, but if you are in this profession you know how difficult it can be to be successful, and how much change there is in the space.

I keep hearing how the typical CMO tenure continues to drop, and I’m convinced its because marketers with traditional training underestimate the effectiveness of relationship and technology-based marketing and advertising. 

There is, finally, a wave of new practitioners in the space (still mostly at the VP and Director level), for whom an holistic understanding of customer relationships, regardless of interaction channel, is their mantra.

If you are part of this new wave, this blog is for you.