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Unica wp customer-centric marketing Document Transcript

  • 1. White PaPer Customer-Centric Marketing: You Can Get There From HereIt’s been nearly fifteen years since Peppers & Rogers published their eXaCtLY What iS CUStOMer-CeNtriC MarKetiNG?seminal book, The One to One Future. Nowadays, few marketers To implement customer-centric marketing, organizations need aseriously question the importance of focusing on the customer. working definition. What is it, exactly? How does it differ fromUnlike many buzzwords of similar vintage, customer-centricity has traditional marketing?never been discredited or gone out of fashion. In fact, it has become Here’s our definition: customer-centric marketing is marketingeven more urgent, as powerful market dynamics have relentlessly designed around each individual customer. It relies heavily on highlyreduced the efficacy of traditional marketing tactics. granular, personal targeting and customer segmentation.Nevertheless, the ranks of companies that are truly customer-centric Most traditional marketing organizations have been organized inremain thin. Those that have achieved this goal, like Best Buy and fundamentally different ways: around mass markets, in which allSouthwest Airlines, have become Wall Street and media darlings. customers are treated essentially alike; around specific productsBut too many companies and marketing organizations are still stuck and families, reflecting the internal structure of the business and itsin the no-man’s-land between knowing and doing. managers; or around channels, such as stores, catalogs, InternetEven in the banking industry, which has earned a reputation for sites, and direct marketing via sales forces.pioneering marketing innovation, customer-centricity has made It is now both possible and essential for customer-centric marketerssurprisingly little headway. “Despite ten years of effort,” says Tower to transcend these distinctions—which are, after all, largely artificialGroup’s Kathleen Khirallah, “just a few banks have made real from the customer’s viewpoint.progress in becoming customer-centric. Most banks still care more Using new technologies—and the immense amount of detailed dataabout process and IT efficiency than about individual customer they generate—marketers can now identify and leverage new syner-satisfaction.” Financial services firms are far from unique. Op- 1erationally focused metrics—such as load factors and occupancy gies in sophisticated multi-channel marketing. They can reach everyrates in travel and hospitality, or same-store sales per square foot in customer where and when that customer wants to be reached.retail—still drive most decisions. They can make offers that have been individually personalized to beUnica works with more than 800 of the world’s leading marketing ® as relevant and compelling as possible to each individual customerorganizations. Our clients include legendary innovators like Best Buy and prospect. More broadly, using the technology and data, theywho have successfully made the journey to customer-centricity and can drive strategies that align the entire enterprise around customerare reaping the benefits. Our clients also include companies at all needs and desires—including non-marketing functions such asstages of the journey: companies who have learned hard lessons product development.and are making slow progress, but nonetheless continue in theright direction. WhY iS CUStOMer-CeNtriC MarKetiNG SO iMPOrtaNt?In this white paper, we’d like to share what we’ve learned in working Over the past decade, every marketing “megatrend” has convergedwith all of these organizations, starting with our two most important to make conventional marketing less effective, and customer-centricinsights: Customer-centricity can be achieved. And when it is marketing more essential. These trends are familiar to theachieved, it can deliver the results it promises. professional marketer:We’ll begin by taking a closer look at the promise (and necessity) ofcustomer-centric marketing. Then, we’ll outline a nine-step blueprint • More competition and new alternatives are giving consumersfor becoming the customer-centric, one-to-one marketing organiza- more market power and reducing the power of supplierstion you need to be. • Both market channels and media have proliferated and frag- mented, making consumers harder to reach on a “mass” basis • Offerings are increasingly difficult to differentiate based on features; commoditization is relentless, and low-cost strategies1 Tower Group, Best Practices in Customer Management: Some New Methods are difficult to sustain profitably Breaking Out, October 2006Unica Corporation | www.unica.com 1
  • 2. • Customers increasingly value their individuality, demanding to be • Extended their core direct marketing processes to deliver treated as participants in a two-way conversation, not as passive programs across customer touch points to deliver a more recipients of marketing messages consistent customer experience • Leveraged predictive modeling to target programsJust as marketers have traditionally been structured to deliverconventional mass marketing solutions, so too have entire organi- Having done all this, they have reached the point where additionalzations. Many, if not most companies, have long been organized campaigns and models have begun to target the same customers,around product lines or sales channels. In recent years, executives and where multiple marketing programs compete for attention withhave become increasingly aware of the shortcomings of these each other. More of the same simply exacerbates the problem. Atraditional structures: new way forward must be found. (The good news? Organizations in • Duplication of effort across product groups this position may already possess many of the tools they’ll need to succeed with customer-centric strategies.) • Internal competition for customer attention, resulting in customer contact fatigue The decision to adopt a customer-centric approach is usually a • Lack of visibility into higher-level customer needs strategic one made by senior executives, often in the context of other core strategies. Wachovia, for example, needed to generate • Inconsistency in customer behavior that is increasingly organic growth while consolidating a string of acquisitions. Hyper- multi-channel competitive markets also spawn customer-centric strategies, often • Inconsistent customer experience by firms seeking differentiators that will help them leapfrog the • Inefficient marketing operations that cannot be accurately leaders they are competing against. measured or aligned with business strategy For Best Buy, the commitment to customer-centricity began when senior management fore-saw declining marginal returns from addingCustomer-centric, one-on-one approaches help enterprises respond more stores. Hence, senior executives shifted gears from geo-to both their marketing and structural challenges. At their best, they graphical growth to growing loyalty and wallet share. In the wirelesstransform marketing from an intrusive annoyance into a welcomed communications business, increasingly ubiquitous signal coveragecustomer service. Even when that ideal can’t be fully achieved, is reducing carriers’ ability to differentiate based on “the network.”customer-centric strategies offer the potential to significantly Hence, we see competitors adopting more customer-centric strate-enhance loyalty and retention, reduce customer acquisition costs, gies, such as Alltel Wireless’ emphasis on customer control over rateincrease revenue, support cross-selling, and drive sustained plans and other product features.improvements in profitability. More broadly, customer-centricity canpoint to new and better ways to handle everything from R&D to Forrester Research2 has identified three approaches senior man-financial measurement. agement can adopt once they have decided to pursue a customer- centric strategy. They are:For marketers themselves, customer-centricity offers one moreimportant benefit. Within the organization, marketing is, or ought • Most aggressive: reorganize around customer segments. Forto be, the “voice of the customer.” Where marketers are viewed as example, Best Buy created five key customer personas andcredible and effective, customer-centric strategies tend to signifi- focused everything from merchandising to channel initiativescantly increase their influence throughout the business. around these personas. • Moderately aggressive: create new customer-centric brands.What triGGerS the COMMitMeNt tO A major hospitality firm broke from the hospitality industry’sCUStOMer-CeNtriCitY? traditional price-point segmentation to create customer centricOften, organizations decide to undergo the upheavals required to brands segmented by lifestyle. Each brand is positioned aroundbecome customer-centric in part because they have already wrung the emotions and experience desired by its unique segment.all possible performance improvements out of their current market-ing models. They may already have: • Refined their direct marketing processes into highly automated, closed-loop, high-velocity machines that can rapidly execute 2 Peter Kim, Forrester Research, Reinventing the Marketing Organization, large, highly focused campaigns August 9, 2006Unica Corporation | www.unica.com 2
  • 3. • Less aggressive: layer customer initiatives over the current customers on a daily basis. Silos must be blown up and attitudes structure. Procter & Gamble is layering customer initiatives over changed. What’s needed is more akin to coercion and support. its current product-driven structure. For example, its innovative Fortunately, in many cases the ball starts rolling with an executive- Home Made Simple program markets multiple products across level decision to adopt a customer-centric business strategy, so P&G’s brands to customers with common needs. there’s buy-in at the top to begin with. As KeyBank CEO Henry L. Meyer III put it, “I want KeyBank to be at the forefront… of a move-iNtrODUCiNG a PrOCeSS FOr CUStOMer-CeNtriCtraNSFOrMatiON ment away from an obsession with selling products to one thatIn Unica’s experience, organizations that are successful with emphasizes meeting client needs.”customer-centric transformation typically follow a path that includes Harrah’s Entertainment, Inc. stands out in the world of travel andnine main steps. While several of these can proceed in tandem, this hospitality as an early adopter of customer-centricity. The com-list presents them in roughly chronological order: pany’s self-description perfectly captures its alignment around the customer—an alignment that is systematically being achieved, not1. An executive-level decision to adopt a customer-centric merely promised: business strategy, followed by sustained, long-term executive commitment Harrah’s Entertainment is focused on building loyalty and2. The implementation of a comprehensive data infrastructure and value with its customers through a unique combination of tools that provide a “360º view of the customer” great service, excellent products, unsurpassed distribution,3. Strategic segmentation, built from solid customer data by skilled operational excellence and technology leadership.3 analysts Once the journey towards customer-centricity has begun, it4. Organization of teams that “own” each strategic segment and requires highly visible and enduring executive support. Leaders serve as its voice—supported by a broader organizational must sustain the commitment over multiple years; five years into structure that facilitates their success the process, even respected leaders like Best Buy believe they5. Development and implementation of detailed, segment-by- still have many additional opportunities to drive greater value from segment business strategies and marketing tactics customer-centricity.6. Implementation of event-based and behavior-based marketing Throughout the journey, appropriate executive “coercion” involves programs driving all eight remaining steps, from implementing data infrastruc-7. The reengineering of processes, customer experiences, and ture through transforming metrics. Executives will be asked to lead: (ideally) compensation around customers and segments • Organizational change. Leaders must create ownership for8. Broad socialization of segment personas and extensive the “voice of the customer,” and reengineer business communication of the resulting business benefits across the processes around the managers and teams who have been organization given ownership.9. The development, delivery, and active usage of customer and • Culture change. Leaders must instill customer orientation into segment-oriented metrics organizational values, principally through hiring, measurement, and compensation practices.As you can see, these steps touch all three dimensions of the enter- • technology investment. Leaders must invest in technical in-prise: organization, resources, and infrastructure. In the remainder of frastructure, including data integration and enterprise marketingthis white paper, we consider each step more closely. management (EMM) solutions.1. aN eXeCUtiVe-LeVeL DeCiSiON aND SUStaiNeD • investment in people. Organizational, cultural, and technical eXeCUtiVe COMMitMeNt change must be complemented by investments in people: train-These days, advocates claim the need for “executive support” for ing and skill-building for existing employees and, often, head- count growth for customer segment managers and analysts.any corporate initiative beyond switching #2 pencil vendors. Butwhat’s needed for real, down-to-the-bone customer-centric transfor- One point is worth stressing, because it may not be obvious. Whilemation is of a different order entirely. Focus on the customer doesn’t many of these points relate to customer-centric transformation ofcome naturally to most frontline employees who interact with 3 Harrah’s Entertainment, Inc. investor relations site corporate profileUnica Corporation | www.unica.com 3
  • 4. entire companies, we also see many marketing executives success-fully pursuing customer-centricity within their organizations in a What is enterprise Marketing Managementbottom-up fashion. In so doing, they are building a record of (eMM) Software?success that we believe will ultimately motivate enterprise-wide EMM is enterprise software designed to make marketingaction at the CEO level. more effective, efficient, and accountable. It is analogousLands’ End is a retailer who has embraced customer-centricity to the enterprise systems that have already transformedcompany-wide, allowing it to permeate all aspects of their busi- other business functions, such as finance and supplyness including their organizational structure, the marketing dialogue chains. Using EMM, organizations can transform all of their marketing processes—from budgeting and planningthey create with their customers, and even the merchandise itself. to project management and workflow, real-time execu-Through the Lands’ End website customers can create custom- tion and closed-loop reporting. EMM helps organizationsmade products like jeans, chinos, blouses, swimsuits, shirts and systematically integrate all forms of online and offlinepants. Customers follow the site’s guidelines and type in their marketing they engage in, including brand, product, direct,measurements. The style, fabric, and fit choices are made from a set and event marketing.of options on the screen. Lands’ End keeps these measurementson the system’s files for the customer’s future orders. They alsoalign their marketing to these customer-centric products. They sendelectronic gift certificates to these customers to encourage them to oriented analysis. Retailers tend to have schema designs organizedpurchase through the Lands’ End Custom Program again; ultimately, around SKUs or transactions. In the travel and hospitality industry,not only increasing the rate of repeat purchases but also building it’s common for firms to house bookings and reservations datalong term loyalty. separately from frequent traveler databases.2. Data iNFraStrUCtUre tO SUPPOrt a (NearLY) 360° The “360° view of the customer” is emphatically a moving target. VieW OF the CUStOMer Our digital economy produces a growing flood of types, sources andThe customer data store is the foundation of customer-centric volumes of data. When Forrester last conducted its State of themarketing. Your goal is to create—and then provide easy access Customer Database survey4 even crucial data such as onlineto—a comprehensive collection of information about individual customer behavior was missing from more than 80% of customercustomers.Your customer data store should serve as your corporate databases. Openness and flexibility is critical to surviving thismemory for all your customer interactions. Without it, you’re doomed constant change: you can’t afford to be stuck waiting for IT toto continually re-acquaint yourselves with your customers, unable to integrate any new source of data you may need.differentiate between those you’ve known for years and prospects This raises one more point about the customer data store: theyou’ve never met. Without an effective customer data store, you marketing organization may end up taking a greater degree ofcan’t know your customers as individuals. You can’t respect their ownership in it. According to Forrester, “ownership of the integratedpreferences. You can’t develop new offerings they will value. data asset is the critical first step.”Many companies are surprised at just how much value an effective transforming Customer Data into Customer insightcustomer data store can deliver. In fact, at Best Buy and many other As we’ve stressed, a strong and consistent customer data store is thesuccessful customer-centric marketers, the customer segmentation foundation of successful customer-centric marketing. Having said this,that now drives the business has emerged organically from the capturing customer data—and even owning it—is just the beginning.database. Customer-centric marketing also requires enterpriseWhile most companies involved in direct marketing have some marketing management (EMM) applications to transform customer datasort of customer data store, customer-centric transformation often into customer insight and then drive actions and decisions. Simplyrequires further investment. Additional, unintegrated sources of put, customer-centric, one-to-one marketing cannot be done with-customer data must be incorporated to provide a true 360° (or nearly out the high degree of automation that is only realistic with EMM.360°) view of the customer. In organizations pursuing customer-centricity, EMM begins withSchemas may need to be restructured to facilitate customer-orientedanalysis. For example, financial services firms often have siloed 4 Forrester Research, http://www.forrester.com/Research/Document/account-centric design that complicates customer or household- Excerpt/0,7211,36982,00.htmlUnica Corporation | www.unica.com 4
  • 5. analytics: descriptive and predictive modeling, ad hoc reporting, and time for strategy and analysis. And they make it possible tovisualization intended to generate deep new insights about customers. deliver personalized messages consistently across touch points, even in complex multi-channel, multi-step marketing campaigns.Traditionally, analytics has been “locked in an ivory tower”: onlyspecialists in database marketing, analytics, and similar functions • Marketing resource management (MRM) gives marketers ahave worked directly with customer data. unified toolset for planning and budgeting marketing activities, managing and collaborating on day-to-day design and produc-Some leading companies use EMM software to serve customer tion work, securely storing all marketing assets, and trackinginsight to real-time touch points such as websites, call centers, and the status and performance of every marketing project. OnlyPOS. However, the complexity of customer data and the tools used with MRM can marketing organizations efficiently manage theto access it have prevented most marketers from making decisions additional organizational complexity that typically accompaniesbased on their own data analyses. Most marketers have been customer-centric marketing.limited to making requests, waiting for answers (often for a week • Tightly integrated contact optimization enables marketers toor more), and then viewing those answers in the form of canned, identify the best offers for each customer from all possiblenon-interactive reports. Often, marketers simply don’t bother to promotions. Historically, companies have selected the bestask many of their questions: it’s either not worth the trouble or the customers for each campaign. Optimization instead selects theanalysts don’t have time to answer them. best campaign for each customer, while at the same time ensur- ing that the goals of each channel and especially the overallThis can now change. New analytics and modeling tools are proving business are achieved. This helps marketers shift incrementallythat data analysis can be democratized. With these products, from their traditional channel or product roots towards a moremarketers are given the right data, specific to their domain and customer-centric approach.questions—and the right ways to look at it. For the first time, they • Lead and cross-line of business referral management unifies andget reports, visualizations, and analytics tools that have been streamlines every facet of the lead development process. Fordesigned explicitly for them. Marketers no longer need doctorate example, it can capture leads from all sources; “enrich” leadsdegrees in data mining in order to perform crucial tasks such as with customer data and potential selling points; qualify leads;generating segments, identifying likely cross-sell opportunities, or route qualified leads to the right representative with the capacityevaluating response propensities. to work them; ensure prompt follow-up and action as needed;With today’s new tools, marketers, analytics teams, and IT profes- and systematically track the results associated with each type ofsionals can finally work together to bridge the gap between insight lead, channel, or representative.and action: a gap that has often been the most important root causeof dysfunctional marketing. As they bridge this gap, companies can Unica’s EMM technology offers powerful synergies to marketers—begin deriving far more value from the 360° customer view they’ve and even makes it possible for companies to develop offerings thatworked so hard to create. might otherwise be difficult or impossible to support.Beyond analysis to the rest of the enterprise Marketing 3. DeVeLOPiNG a StrateGiC SeGMeNtatiON SCheMeManagement (eMM) Suite At the heart of customer-centered marketing is segmentation:Analysis provides the insights marketers need to craft customer- accurate, business-focused, and easy for everyone in the businesscentric strategies. The rest of the EMM suite provides the tools to understand. Gartner Research drives home the importance ofneeded to efficiently execute those strategies. For example: segmentation with this prediction: “Through 2010, only those who formally segment their customer base will become truly customer-• Campaign management and related capabilities enable centric—increasing customer value by over 30%.”5 marketing to handle the higher volume of campaigns required by granular segmentation strategies. The best campaign manage- While statisticians and analysts may wish to develop a rich, complex ment solutions enable you to create, test, optimize, deploy, and segmentation scheme, the successful customer-centric transforma- analyze multi-wave, multi-channel personalized communications tions Unica is familiar with utilize a small number of distinctly named, through a single system with a single, easy-to-use interface. easy-to-comprehend segments that have been enriched with lively, They can handle everything from scheduling and event-driven “human” profiles. These segments are often known as persona. programs to real-time personalization recommendations and sophisticated cross-campaign optimization. Using these tools, marketers can dramatically increase their productivity, freeing 5 Kimberly Collins Ph.D., presented at Unica’s Marketing Innovation Summit, May 8, 2007Unica Corporation | www.unica.com 5
  • 6. Many companies will find that they have much of the quantitative Using eMM to Support Differentiated New Products: business data they need to perform segmentation, but they need far a Case Study more qualitative data to flesh out their portraits of the human beings Unica’s EMM technology helped make it viable for the they want to do business with. This data can be acquired through a credit card division of a large international bank to create a wide variety of methods, from surveys and focus groups to psycho- flexible new credit card that allows cardholders to pick and graphic data. choose card features (e.g., rate, insurance, airline miles, Customer-centric segmentation typically relies heavily on under- etc.). This card’s individualized feature set has triggered standing customer needs: understanding why customers purchase an exponential growth in both the organization’s marketing certain products, and when they purchase them—i.e., what triggers challenges and its opportunities. The firm’s marketers rely the purchase. We agree with Gartner that “building needs-based on EMM contact optimization to identify offer bundles for segments is a more difficult task than building segments based on each customer, execute events and scheduled campaigns, more traditional dimensions. The fact that the customer is being and track performance for each customer segment. The segmented on the basis of an aspect to the relationship which the result: the bank has differentiated itself from its competi- tors without increasing either staff or marketing budgets.* enterprise may not have complete knowledge of makes the process more difficult, but the end result more valuable.”6 * Unica White Paper, Enterprise Marketing Management (EMM) —Enabling World-Class Marketing 4. teaMS that “OWN” eaCh StrateGiC SeGMeNt Segments cannot thrive when left to fend for themselves. Most of the successful customer-centric marketing organizations we’ve worked with have assigned teams to “own” each of their strategicBest Buy’s primary segments are well known examples. There’s segments. These teams serve as the “voice” of their segmentsBuzz (the young technology buff), Jill (the suburban soccer mom), throughout the organization.Barry (the wealthy professional guy) and Ray (the family man). We’ve seen segment managers and teams empowered with variousThe idea behind the naming convention is simple: if you give each degrees of decision-making responsibility and authority. In organiza-customer profile a distinct face, employees will be able to interact tions that are not yet ready to fundamentally reorganize around themore productively with people who walk into their stores. Once they customer, they may operate as “overlays,” promoting greater aware-recognize a customer as “Jill,” for example, they’ll recognize that ness of the company’s customer segments and spreading segment-this customer is likely to be more concerned with a digital camera’s based insights to product and marketing teams. They may alsoease-of-use than with the number of mega pixels it offers. help formulate business rules for addressing issues such as contactBy selecting straightforward segments that non-experts can under- fatigue and for implementing optimization software to help rational-stand, companies like Best Buy also ease organizational adoption— ize product-oriented processes.which, in the end, is indispensable to success. The challenge, of Customer-centric organizations structure themselves to amplifycourse, is to define segments that are intuitive while also being the customer’s voice from a pleading whisper to an authoritativestatistically valid and powerful for driving business. mandate. Best Buy, Washington Mutual, BMO Bank of Montreal andFinancial services institutions have traditionally divided their busi- other Unica customers have all centralized customer insight andnesses into separate lines—e.g., consumers, small businesses, and marketing into a single organization with the charter and criticallarge businesses. However, the opportunities for customer-centric mass to drive the transformation. These groups typically reporttransformation typically arise at a lower level, with segments that directly to the company’s top marketing executive. According to areflect far more qualitative information about life stages and 2005 Forrester survey, 64% of them report to a CMO.7customer behavior. Some organizations, such as Royal Bank of Canada, take segmentFor example, KeyBank couples “demand segments,” such as management even further by driving P&L responsibility to theYoung Transactors, Family Asset Builders, or Mature Thrivers, with customer segment level. Segment managers formulate customera “value” dimension (grow, retain, reduce costs, etc.). Segments likethese offer a framework that segment managers can use to create 6 Kimberly Collins Ph.D., presented at Unica’s Marketing Innovation Summit,effective marketing plans. May 8, 2007 7 Elana Anderson, Forrester Research, Organizing for Customer-Centric Mar- keting, July 7, 2005Unica Corporation | www.unica.com 6
  • 7. segment treatment strategies, and are responsible for customer Global, U.S. advertising spending will grow only 3.1%, while Internetexperience, cross-channel contact, product mix, delivery, pricing, advertising expenditures will rise 15%, and emerging platforms suchand other key issues. According to RBC’s Vice Chairman, James as mobile marketing, video games, advanced television, and digitalRager, this approach has enabled the company to raise profitability out-of-home networks will grow at 31.7%.across all of its customer segments. Given the appropriate authority, segment managers and teamsRecently, Unica has observed more customer-centric organizational should also be involved in articulating how their segments will bestructures spreading to new industries, such as wireless service treated in terms of product offerings, promotions, pricing, service,providers, where many marketing departments have already taken and many other aspects of the customer experience.the initial step of separating prospect and customer marketing, and 6. iMPLeMeNtatiON OF eVeNt-BaSeD aND BehaViOr-are beginning to further segment customers beyond simple plan/ BaSeD MarKetiNG PrOGraMSproduct holding and usage levels. Marketers increasingly appreciate the importance of customer lifeCustomer-centricity isn’t free: building customer insight and cycles and timing in the success of their campaigns and programs.segment management teams requires additional resources. These In the financial services industry, for example, it’s crucial thatnew groups tend to operate in conjunction with existing analytical customers transitioning to a new provider have their accounts setand product teams, though there may be some consolidation up accurately and find that their new account relationships are aand overlap. good fit for their needs. Using banking as an example, organizationsAdditional IT and DBA support may also be required. Forrester consistently report new retail customer attrition rates two to threeResearch’s database marketing benchmark survey research8 bears times higher in the early stages of new account ownership than inthis out. Adjusting for size of business and other factors, customer- seasoned accounts. On the positive side, Bank Administrationcentric marketing organizations (“consultative” or “strategic” Institute (BAI) reports that nearly 75% of all cross-sales fromaccording to their maturity model) had larger and faster-growing new retail checking accounts occur within three months of thedatabase marketing teams than other firms. “Customer and/or account opening.9segmentation analysts” are the most common new hires (55%). Optimizing the first months of new customer relationships hasUnsurprisingly, customer-centric marketing often requires emerged as a crucial issue in many industries, not just financialcompanies to exercise its analytical muscles more extensively. Less services. To avoid attrition and leverage the unique opportunitiesobvious, though, is the parallel need for direct marketing teams to associated with new relationships, many companies are implement-adopt a broader and more strategic, business-oriented perspective ing structured on-boarding programs.that reflects their expanded charter. Beyond core marketing teams, Such programs are only possible with robust EMM technology—fortransitioning to customer-centricity also requires segment-oriented example, on-boarding solutions from marketing software vendorstraining for large numbers of customer-facing staff. such as Unica. These solutions continuously sift customer data, seeking triggers that indicate an incorrect product or service fit, a5. DetaiLeD, SeGMeNt-BY-SeGMeNt StrateGieS aND taCtiCS new product or service need, a defection threat, or even fraud. OnceSegmentation is only useful if it drives changes to strategy. Segment it uncovers an opportunity, it can automatically execute against thatmanagers and teams should define detailed, segment-by-segment opportunity—and then track and measure your success in convert-business strategies and marketing tactics. ing that opportunity to business.From the standpoint of marketing and media expenditures, For example, travel and hospitality providers are using Unica’s EMMcustomer-centric segment strategies accelerate the ongoing trend to software to create rich, robust, automated dialogue with customersshift spend away from traditional mass marketing and advertising throughout the entire “lifecycle” of each trip. These usually beginchannels and toward direct channels, such as email, direct mail, and with confirmation emails sent upon reservation. Such transactionalsearch marketing—which can deliver targeted, segment-specific emails are nearly always opened, since customers are highlymessages, and closely track their effectiveness. In 2007, according motivated to make sure their reservations are correct. Marketingto recent estimates by Universal McCann and Universal Magna 9 Window of Opportunity, by Paul McAdam, Ajay Nagarkatte and Steve Klinker-8 Elana Anderson, Forrester Research, Organizing for Customer-Centric Mar- man, BAI Banking Strategies, November/December 2003, www.bai.org/ keting, July 7, 2005 bankingstrategies/2003-nov-dec/window/index.aspUnica Corporation | www.unica.com 7
  • 8. offers embedded within these emails can be related to the specific who have just purchased high-definition TVs with a promotion fortrip: they are highly relevant by definition. adjacent product categories like home stereo systems.As departure dates approach, reminders are sent—often with 7. reeNGiNeer PrOCeSSeS aND the CUStOMerrelevant travel information such as weather forecasts or online eXPerieNCecheck-in options, as well as targeted offers cross-selling other travel By this stage, companies have effectively captured detailedservices from ski rentals to in-room movies. After the trip, “thank customer information; used analytics tools to glean insights fromyou” emails gather feedback, reinforcing the message that the that information; implemented comprehensive EMM solutions thatcompany truly cares about the customer’s experience. Such can be used for automated one-to-one marketing; defined needs-programs not only provide useful services to customers: they have based customer segments; and assigned teams that have definedbeen shown to deliver outstanding results—including 5%-8.5% strategies and tactics for each segment. The next step is to beginincreases in per-stay revenue. systematically reengineering marketing, sales, and services processesThroughout the customer relationship lifecycle, customers often to reflect their new segment strategies, tactics, and insights.signal when the time is right for a cross-sell offer by changes in their Wachovia has defined cross-campaign business rules and modifiedtransaction behavior, and similarly signal opportune moments for its campaign design process to incorporate automated leadinterventions that could prevent an impending defection. To discover optimization. Using Unica Optimize, it can now communicate athese signals, companies must first determine typical behavior single customized marketing message to each of its customerspatterns for each customer: the upper and lower bounds of each across multiple channels, including direct mail, email, telemarketing,customer’s “normal” activity. ATM displays, and authenticated space web messaging. The resultWhen a customer’s transaction activity exceeds these bounds, your has been a 34% improvement in expected return on monthlymarketing and sales teams should immediately be made aware of campaigns and a 12% improvement in five year customer valuation.this event, so they can proactively engage in meaningful, timely, By using Unica’s EMM offerings to accelerate its campaign develop-customer-centric dialogue. Advanced solutions such as Unica’s ment and lead follow-up processes, Starwood Vacation OwnershipEnterprise Marketing Management suite make this possible— has made outbound callers more efficient and effective, reducedenabling companies to act immediately based on real-time trans- the turnaround time of hot leads from 17 days to eight, and—withinactional data or subtle customer behavior patterns that can extend just six months—has driven 15% increases in response and 24%over widely variable periods of time. increases in bookings.Consider BMO Bank of Montreal’s powerful success in this area. One example of customer and segment-based reengineering isEach day, the bank runs sophisticated models built using Unica the introduction of event-based marketing and customer com-EMM software in order to identify individuals who have made munications utilizing advanced tools such as Unica Detect, whichdeposits that are uncharacteristically large for them. Next, using empowers companies to take immediate action based on real-timeautomated business rules created by marketers, Unica software transactional data or subtle customer behavior patterns that canidentifies the most attractive product offering for each customer. extend over widely variable periods of time.The software then automatically assigns a representative to call eachcustomer within 24 hours of their deposit, with a message custom- 8. BrOaD SOCiaLiZatiON OF SeGMeNt PerSONaS aNDized around the offer that which has been identified. Since launching BUSiNeSS BeNeFitSits Priority Lead initiative, BMO Bank of Montreal has generated an Customer segmentation and one-on-one marketing does not comeaverage of $2,000 in additional income per identified lead, while at naturally to most organizations, and few companies truly understandthe same time strengthening customer relationships and reducing the real value of their customer data.attrition. Therefore, the participants in a customer-centric marketing initiativeRegardless of industry, customer-centric marketers can increas- need to plan for and engage in extensive, continuing evangelism.ingly uncover opportunities to replace traditional “batch” marketing That education should extend across the organization, not just tocampaigns with event-driven marketing that responds to “triggers” familiar partners and business functions.in the lives of individual customers. For instance, an apparel retailer Marketing teams need to broadly socialize the segment personasmay send special offers to regular customers who haven’t visited they have created. In addition to providing baseline training to allrecently; or an electronics specialty retailer might target customers customer-facing personnel, successful companies closely align theUnica Corporation | www.unica.com 8
  • 9. marketing team’s success with that of the business, demonstrate Wachovia now focuses on measuring “five year customer value,” notthe revenue benefits of the new approach, and promote their just shorter-term, product-focused metrics such as the number ofsuccesses widely. new checking accounts opened per quarter.Marketers at one leading national florist systematically worked to Like Wachovia, many organizations now find it indispensable togain support for using data more strategically, reports Forrester. measure long-term or lifetime customer value. In the words ofOne successful technique: sending out regular company-wide leading CRM expert Dr. V. Kumar, author of Managing Customers foremails with “tidbits” of data designed to show executives surprising Profit, Customer Lifetime Value (CLV) “is the only metric that incor-ways that data could be used to drive strategy and promote cus- porates into one, all the elements of revenue, expense and customertomer value. By evangelizing throughout the enterprise, the firm’s behavior that drive profitability.”11marketers have gained powerful new influence in shaping business Customer value measurements can be complemented with a varietystrategy. of additional customer metrics. These include customer engage-Companies successful in their customer-centric transformations ment, new/lost relationships, share of wallet, and loyalty. Manyhave been assertive in demonstrating the financial benefit of their organizations, including GE, American Express, and HSBC, nowinvestments. To highlight the ROI boost achieved by customer- also rely on Bain & Company’s NetPromoter metric, which trackscentric marketing, one bank added a “business as usual” group to customers’ willingness to recommend your company to a friend.12its direct marketing standard control and holdout groups. In some cases, the data you need is already being captured, andAt Wachovia, where product managers were especially worried needs only to be massaged in new ways. For example, drawingabout losing control and product priority, proving value and educat- largely on existing data, Best Buy can now track its customering business partners was especially crucial. Wachovia’s marketers measures down to the store level. Of course, building on theidentified several specific ways their new approach would help the segmentation work they’ve already done, customer-centricproduct managers—ranging from shorter test-and-learn cycle time companies know they must also measure by segment—trackingto additional campaign support. Then, they worked closely with segment profitability, whether or not P&L responsibility rests withmanagers on parallel testing, demonstrating that individual product segment managers.returns could in fact be improved through more sophisticated Whether delivered through scorecards, dashboards, or reports,customer contact strategies. these customer and segment metrics should be linked to action.Of course, alignment requires more than internal promotion. Drawing This is another area where senior executive commitment makes aon extensive conversations with highly customer-centric companies, difference. It is the senior executive who is best positioned to ensureForrester recommends rotating marketers through business groups, that the organization actually uses its customer metrics to optimizeadopting joint metrics, and overlaying customer metrics with existing the allocation of marketing resources, to build customer-specificprocesses. communications strategies—and, ultimately, to assess performance and compensation.9. CUStOMer aND SeGMeNt-OrieNteD MetriCSAs every manager knows, you can’t manage what you don’t We CaN heLP YOU taKe the NeXt StePmeasure. Nowhere is this truer than in marketing, where—according True customer-centric marketing requires a fundamental change in howto recent research by the CMO Council—over 80% of surveyed most organizations do business—but, with the right tools, practices,executives are dissatisfied with their measurement of marketing and commitment, the goal of customer-centric marketing is now entirelyperformance.10 achievable. After years of hard work and experimentation, companiesMany organizations continue to rely on metrics that are focused in industries ranging from financial services to retail and hospitality haveprimarily on products, product lines, and campaigns. For customer- learned how to make customer-centric marketing work.centric marketing to succeed, these traditional metrics should be Using Unica’s enterprise marketing management platform, organiza-quickly complemented with customer metrics. Over time, customer tions like Best Buy, Wachovia, and Starwood Vacation Ownershipmetrics should gain increasing importance in tracking and rewardingperformance. 11 Managing Customers for Profit, V. Kumar, Wharton School Publishing, Janu- ary 200810 CMO Council, Measures and Metrics: The Marketing Performance Measure- ment Audit June 9, 2004 12 http://www.netpromoter.com/success-stories/index.phpUnica Corporation | www.unica.com 9
  • 10. are successfully redefining their marketing around the needs of eachindividual customer. They are differentiating themselves in an age ofcommoditization by consistently delivering the right offer to the rightcustomer at the right time. They are using what they’ve learned toreshape corporate strategy—and, ultimately, the entire organization.And, based on every relevant metric, they are delivering trulyremarkable results. You can learn from their experience—and Unicacan assist you every step of the way.aBOUt UNiCaUnica Corporation (NASDAQ: UNCA) is the recognized leader inmarketing software solutions. Unica’s advanced set of enterprisemarketing management and on-demand marketing solutionsempowers organizations and individuals to turn their passion formarketing into valuable customer relationships and more profit-able, timely, and measurable business outcomes. These solutionsintegrate and streamline all aspects of online and offline marketing.Unica’s unique interactive marketing approach incorporates cus-tomer analytics and web analytics, centralized decisioning, cross-channel execution, and integrated marketing operations. More than1,000 organizations worldwide depend on Unica for their marketingmanagement solutions.Unica is headquartered in Waltham, Massachusetts with officesaround the globe. For more information, visit www.unica.com. Unica Corporation Worldwide Headquarters Unica is a registered trademark of Unica Corporation with the U.S. Patent and Trade- Reservoir Place North mark Office. The Unica logo and MARKETING 170 Tracer Lane SUCCESS STARTS WITH U are trademarks of Waltham, MA 02451 Unica Corporation. All other trademarks are the USA property of their respective owners. t +1.781.839.8000 WP-CCM-1009-PDF F +1.781.890.0012 e unica@unica.com © 2008-2009 Unica Corporation. All rights reserved www.unica.comUnica Corporation | www.unica.com 10