Final Copy ARE YOU TALKING TO ME

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Contents
Foreword 5
In The Beginning 7
A Heartfelt Letter from Your Customers 8
Swimming the Multi-Channel 11
The One Percent Solution 19
Real Life Example: Aegon DMS 22
Drop the ‘e’ 25
The Population Explosion 33
Going One on One 39
Calculating a Return on Investment 43
Superhighway vs Superhighstreet 49
Real Life Example: Tesco 51
Checkpoints for Tomorrow:
The Immediate Future for Customer Relationship Technologies 53
The Medium-term Future of Business 55
Questionnaire 57

Foreword—A professional view
One of the old classic business slogans is ‘the customer is always right’. It was a sign you used to
find in a certain kind of small shop, a mantra by which a new and, hopefully, growing business
proved that they intended to get it right first time by taking care of the people who made them
successful – their customers.
You don’t tend to see those little signs around so much anymore; but that doesn’t mean that as a
business maxim it’s invalid or forgotten; merely that it has changed as our view of the customer has changed and
the channels of commerce and communication have changed as well.
The small shop keeper serving his or her community has largely gone, replaced by the internet, e-commerce and
the call centre. But what made the small shop special – the fact that it knew its customers and responded to their
needs and demands remains crucially important. The service and value which people expected from the shop on
the corner has not lessened but increased, and the rise of IT and sophisticated software has seen the time
poor-choice rich consumer becoming more, not less, demanding.
Meeting those needs requires knowledge and a depth of understanding, but it also means that businesses must
be able to demonstrate that they act upon what they know: they have to prove that the customer is right, is valued
and important, by acting upon what the customer is telling them. They have to be able to pick up the
signals which transactions provide, and quickly convert those into actions which bring benefits to the customer
– and communicate them in the most appropriate and timely manner.

Not easy. But it can be done – and this booklet contains a great many examples that prove it can be done, from
the story of the Tesco Clubcard, which dunnhumby is delighted to share with you, to the other case studies we
have here from such varied sectors as finance, travel and IT.
This is a valuable and important book and we’re delighted to be able to take part and join the other companies
represented to share our experience and what it has taught us and our clients. I hope you find it useful and
stimulating too – and that it helps you to find new ways to keep your customers satisfied by making sure that they
are always right.
Edwina Dunn
Chief Executive
dunnhumby
Established in 1989, dunnhumby is one of the UK’s leading marketing services consultancies and has provided
customer insight, analysis and communications support to Tesco for the last eight years. Based in West London,
it employs 160 personnel and has an annual turnover of £15 million.

IN THE BEGINNING
Where to begin?
Why is this book necessary?
We’ve already determined that you are a large organisation with lots of customers,
500,000?
1,000,000?
10,000,000?
It doesn’t matter, the same issues apply as we get into this scale.
How do we deal with our customers and what do they think of us?
Do we do enough for them to keep them as customers?
Is it just enough or lots?
Consider this:
Here is a letter from one of your customers.
It will start to detail some of the issues facing you and what they, your customers, expect from
you.

A heartfelt letter from the people you want to be
close to – your Customers!
Dear Chief Executive, Dated today.
We are your customers. And for your customers, the morning mail is a frustrating experience; one which makes us
feel as much like a doormat as the thing your marketing mail-outs land on with a bigger thump each day.
From your gas division, for example, which writes to us as ‘the occupier’, despite our ﬁve-year residence and account;
from your power arm, which targets us with a glossy pack of offers in an envelope marked ‘The information you
requested’. We have no memory of requesting it. Why has this data not found its way onto your computer system?
And then there’s your retail subsidiary, tempting us with cut-price deals on prime cuts – despite our regular purchase
of vegetarian goods via our loyalty cards.
Each of these is a failure not only of communication, but also of business model.
Why? Because the hidden message of each attempt to lure us into a deeper relationship with your company is,
paradoxically, that we are not valued as individual customers who have unique preferences.
When we phone your call centre to track the progress of a missing credit on our current account, we ﬁnd you have
no trace of our previous calls and your bored employee will not give us her name or let us speak to her manager –
although her manager is monitoring the call, and would like her to take another within thirty seconds.
None of these departments has any record of my business with your other departments, and no one is able to
cross-refer to my conversations with you by phone or email – or to my in-store custom.

The next choice we make, then, will be to take our business elsewhere, even if that means abandoning our years of
loyalty and wading through yet more marketing mail-outs attempting to buy us back. Why didn’t you see it coming?
If our mail is electronic, it’s more frustrating still, as our failure to click on the opt-out box of your customer portal
has led to reams of spam messages – from which we can’t unsubscribe. We can see that you want our custom, so
why do you fail to treat us like your customers?
And when your phone company rings our ex-directory number at nine o’ clock at night to inform us of the countless
unused phone services you have put at our disposal, most of us feel that we too have failed to communicate.
We know you have invested millions of pounds in building back-end and front-ofﬁce systems to manage our business
and save you money, but your failure to talk to us on even a basic level has made us distrust technology at a time
when you are encouraging us to use it more, and in ever more innovative ways.
Money is tight, and Company X has always impressed us with its tact and customer care. Does your rival have the
same computer system? We neither know nor care.
Can you help?
Faithfully, for now,
Your Customers.

Swimming the Multi-channel
Welcome to the reality of the multi-channel business for many consumers today.
Of course, businesses have always been ‘multi-channel’ to an extent; they have issued
marketing messages, focused on building and extending a strong, identiﬁable brand,
to potential customers through a variety of channels for years, such as shop windows,
mail, phone, advertising, special offers or promotions.
Today those channels seem to proliferate daily, taking in the Internet, mobile phones,
personal digital assistants, digital TV, interactive TV, enhanced CDs, DVDs, intelligent
video devices such as the TiVO, and in-store kiosks. There is even the promise of yet
more potential channels to come in the guise of so-called third-generation mobile
technologies.
All these would seem to offer greater opportunities for targeted marketing, so why do
so few businesses seem able to seize them?
The answer is too tight a focus on technology.

12 “ARE YOU TALKING TO ME?”
Customer
relationships are
like any
relationships
Witness the slow uptake of broadband Internet access in the UK, and the poor reception
given to interim mobile technologies offering roaming Internet access. They have failed
so far because companies pay scant regard to the services people actually want.
In a world of such technological richness and opportunity, it is tempting to think the
customer is someone who will always evade your grasp, unless you buy in better
technology than your competitors, and use it with even more ruthless regard for your
short-term bottom line.
However, for many companies this multi-channel message has traditionally been a
monologue to a disloyal audience, with the sole exception of the dialogue – the human
conversation – available via the telephone or, better, through face-to-face interaction.
Too many companies are foregoing human interaction thanks to the temptations of the
‘point and click’ age. The result is an increasing remoteness from customers as local
branches of many High Street service companies are consolidated into call centres.
Hardly a closer, richer relationship with the people who hold the keys to those
companies’ success.
The reality is that customer relationships are like any relationships: they involve
dialogue and only end if one partner loses the other’s trust or loyalty. To treat
relationships cyclically, or as something ﬁnite rather than ongoing and mutable, is a
mistake more and more businesses make. The advent of point-and-click technology
often leads to point-and-click thinking and decision-making.

SWIMMING THE MULTI-CHANNEL 13
This can be described as a clash of ‘superhighway’ (a focus on technology for
technology’s sake) and ‘super High Street’. This is where companies create a virtual
model of the benefits of High Street service levels. Subsuming technology into a
customer-focused organisation benefits both customer and employee.
‘Business at the speed of thought’ is a snappy catchphrase, but fundamental business
principles do not move at the speed of technological change; and neither should they.
The fact that your company’s message can be taken to your customer directly via a
variety of technologies, be they Internet-, text, phone or point-of-sale-based (as well
as by more traditional methods), does not imply that the means justify replacing
dialogue with technology-driven monologue.
Technology is irrelevant unless companies build supportive internal processes first,
and resist the temptation to replace human interaction with ‘point and click’ solutions.
These might seem advantageous to one party – your company – in terms of efficiency,
but may alienate the other. Particularly as customers guard their privacy in proportion
to the proliferation of channels by which you can reach them.
In this book we will explore numerous organisational action points and more, such as
how to match technology choices with your long- and short-term business goals to
achieve truly intuitive marketing.
Let’s start with a section of goals for you to develop your best practices.

Be your own
customer – what is
the experience like?
Best Practice: Your Goals
A successful marketing strategy demands that the entire company, from the board-
room to the receptionist, shares a single vision. Strong leadership encouraging internal
innovation should build a culture of creativity and staff involvement.
This means everyone understanding what your company can uniquely offer your
unique customer, then designing a ‘customer experience’ that ﬁrst satisﬁes that vision
– and, vitally, allows the customer to surprise you.
What is a ‘customer experience?’ – If you are not sure of this, try contacting your
company and see what you think of your own service. That’s the ‘customer experi-
ence’.
See – ‘Be your own customer’ below.
Your second goal is ‘dialogue’ – whenever and however the customer chooses to
contact you.
To be successful, that dialogue must be equally informed across every channel, which
means having access to the same data at every point. A web-site may be a good shop
window for your company, but it will be useless if you are unable to have an informed
conversation with your customer in person or by telephone. Customer loyalty means
building a rewarding experience, which offers incentives to each customer’s goals,
needs, preferences – and aspirations.

Next, match your perception of yourselves with how the customer perceives you –
which is derived from his or her dealings with your company in the real world, not
from your mission statement.
You must be able to target, acquire and retain your customers, to use Gartner
Group’s terms, but that is only part of the story. True dialogue means identifying new,
proﬁtable and innovative services you can offer – and recognising new groups of
customers when they emerge.
Be your own customer. What is the experience really like?
Pick up the phone and ring in with a query or question?
Send a letter.
Email the same thing.
Etc.
Every way your company can be contacted.
How do you feel after you’ve made that contact?
Happy?
Disappointed?
Frustrated?
Did you even get an answer?
Could it be improved?

That’s the ‘experience’ – and if you didn’t come away with the feeling that this was
something you could easily repeat and enjoy, you need to take some action.
Consider how would you like to be treated as a consumer? Match that to your bottom
line and your (perhaps conflicting) financial objectives in the short term.
We all know of companies who have a poor reputation and low customer ratings.
More often than not, they have built a monopolistic position in the market, and
believe their hard-won customer relationships are finite and can be abandoned when
they hit a certain level of financial success.
No amount of marketing investment will succeed if customer satisfaction is absent.
Ensure the two go hand in hand, no matter what channels you select to speak to your
customers – and which channels they choose themselves.
Buying a large-scale customer relationship technology does not make you a listening,
customer-focused organisation. Long before you attempt this, you must focus every
part of the organisation on customer service.
Technology will fail if staff are bored or demotivated by using it, and while analysts
often talk about the need for organisational change, cultural change is preferable. The
pitfalls of re-building the organisation around the technology are many; integrate
technology with your visionary company.

This is a management issue.
Don’t ‘re-engineer’ your organisation around the need to slash costs. Management
consultancies may have grown successfully over the past ten years by urging this, but
most are now refocusing on customer satisfaction themselves.
Multi-channel marketing and customer care risks building a fragmented, unsatisfac-
tory customer experience – unless each channel feeds into a single data source and
internal interface. Realise this in advance, otherwise your investment in customer
relationship management and marketing technologies will alienate your customer
base. Systems must support your value proposition, and offer insights into what your
customers want, need or aspire to.
Fundamentally, and without exception, take every opportunity to
listen to your customers!
Take every
opportunity to
listen to your
customers

The One Per cent Solution?
Unless internal processes are robust, businesses risk having multiple views of their
customers, rather than a single view into their interactions with the company, or
individual, across each available channel, at every point of the marketing cycle.
But before your marketing activities can seize the opportunity of the multi-channel
age, chief executives and the board of directors need to understand the value of
innovative marketing.
For example, a ‘disposable message’ (junk mail) is something many customers
associate with direct mail campaigns, or campaigns which make half-hearted attempts
to personalise the message by adding the customer’s name to an otherwise mass-pro-
duced mail-out.
This is no longer sufﬁcient. Neither is the fabled one per cent response rate, which is
the benchmark of success in direct mail campaigns.
Remember: one per cent success means 99% failure.

The more data is
gathered, the more
personal the pitch
can become
In the age where customer loyalty must be earned, where multi-channel marketing
campaigns are the norm and multi-channel brands are commonplace, such a failure
rate is intolerable when there are so many options to create a meaningful dialogue
with customers, which deepens with every transaction.
The more data is gathered about a customer, the more personal the pitch can become
and, therefore, the more efficient and the less wasteful of your company resources.
Businesses should aim at acquiring the ability to target marketing at the individual
rather than just a pre-defined demographic group.
Economic downturns traditionally lead to slashing ‘non-core’ systems and, apparently
inevitably, marketing budgets.
The business imperative is to understand that marketing departments and customer
relationship systems remain core to business efficiency, and profitability, by maximis-
ing the value of one-to-one relationships.
The underlying message must be avoid IT hype, and concentrate on business
advantage, the human element and a defined return on investment (see later section).
This means abandoning the “auto-babble” jargon of the three-letter acronyms and
talking the real language of business, not technology.

THE ONE PER CENT SOLUTION 21
You should recognise that the technology suppliers’ rush to associate themselves with
the latest buzzword or acronym is simply part of the same scramble for growth and
competitive edge that led to the bursting of the technology bubble in 2001.
It’s technology scrabble, but a triple-letter acronym no longer scores highly.
The key is to match IT solutions to business needs and aspirations, and to only partner
with vendors who deliver and can clearly demonstrate a deﬁned return on investment
— and those which are prepared to tailor their systems to ﬁt your needs.
So what are the systems and best practices to create a personalised service that
maximises customer loyalty? Without straining the relationship to breaking point or
being intrusive of the customer’s privacy?

Real Life Example:
AEGON – Using Campaign Management Tools in Insurance
Better targeting working in-house reduces costs and shortens lead times
AEGON is one of the world’s largest insurance groups. Its Direct Marketing Services Group – the direct marketing
arm of its US operations – has a huge, but highly sophisticated database of policyholders and prospects. It executes
over 350 campaigns each year, focusing primarily on outbound telemarketing and direct mail with an average direct
mail campaign involving around one million pieces.
Since 1998, AEGON DMS has been using sophisticated in-house campaign management software to manage and
implement its marketing programmes. Prior to this it outsourced its marketing process to several vendors and the
company was looking for ways to streamline this process.
“By bringing campaign management in-house, AEGON DMS has reduced the amount of time it takes to execute
campaigns, gained more flexibility and control of the marketing process and reduced campaign costs,” says Karen
Klein, Vice President of Marketing Services for AEGON DMS.
“With the old system, it took up to six weeks to execute a campaign, mainly due to having to work with several
vendors. Now, campaigns can be executed in three to five days, from start to finish, and the cost for a targeted
campaign is reduced by 30 to 50 percent.”

23 CASE STUDY
Integrating the software with its other systems in AEGON DMS, marketing architecture was key critical, allowing the
company to effectively cross-sell and up-sell to its best and most proﬁtable customers while searching for new
customers. This information can be communicated within the organisation to customer service groups. The customer
service reps are then aware of any number of campaigns a customer may have received and are able to individually
help that customer. This is the start of a one-to-one customer experience.
Explaining how this has a direct effect on marketing costs, Klein concludes, “We have seen increasing response rates
to our insurance promotions using campaign management. More effective campaigns means we are getting a better
return on our marketing dollars.”

Drop the e:
Business Choices First, Technology
Selection Second
Marketing managers, IT strategists, chief finance officers and chief executives should
be as sick of the ‘e-enabled’ enterprise, e-commerce, e-business and every other
flavour of the universal e- prefix as your customer is. As Internet functionality has
come into play across formerly standalone technology solutions, IT vendors have been
falling over themselves to position their wares as so-called ‘e-business facilitators’.
But this muddying of the waters by the suppliers’ conflicting marketing messages,
coupled with the downturn of the global technology market and the widespread
failure of speculative and overcapitalised Internet ventures, has conspired to discredit
the idea of bolting an ‘e’ onto the front of business.
Rightly so; it is time to put the ‘e’ at the heart of business where it belongs, and return
to sound business values, innovative marketing and to matching technology to
business need.

It is no longer acceptable to re-engineer the company to match a single vendor’s
technology suite, which may itself have been cobbled together from a boom-time
acquisition spree. Research from the Gartner Group of analysts suggests that no single
CRM application suite is sufficiently comprehensive to cover more than 25% of the
functionality required for a large organisation to support CRM ‘across the board’
(across every area the technology could be deployed). (Source: Gartner Group
research note, 16 April 2001)
No company should realign its business or embark on a long-winded change
management process simply to realise the profit potential promised by a technology
vendor. Many vendors talk up their own ‘customer satisfaction’ ratings, but few – if
any – will explain how they have arrived at those calculations. Remember: you are
their customers.
Informed, strategic technology buying decisions, therefore, must be driven solely by
the need to make any technology into a virtual model of your company’s interactions
with your customers – however, wherever and whenever that dialogue takes place.
Marketing systems are unique in that, to be successful, they need to fit your internal
processes and satisfy the needs of your customers.

DROP THE ‘E’ 27
Customer relationship management and marketing automation systems are on the
brink of maturity as the market consolidates, but many suppliers are still overcoming
the integration challenges of bringing together a complex portfolio of products, many
of which have been bought in through mergers or acquisitions. You, as a customer
with customers of your own, cannot afford to be a testing ground for poorly integrated
products.
So, what are the key points you must address to match your technology to business
needs, so that you can drive greater value from your relationships with your cus-
tomers?
Don’t be a testing
ground for a
vendor’s integration
challenges

Best Practice: Action Points
Do not employ a consultant ‘wholesale’; bring in third-party expertise to plug known
gaps in your and your employees’ skills or knowledge.
Remember technology is low on your list of priorities. Ask yourself: What is my goal?
What message are we trying to convey? How can we maximise our existing invest-
ment in people and processes? Marketing systems are not just networks of wires,
hardware and software; they are a complex set of business processes whose goal is to
create a ‘one-to-one’ relationship with each of your customers, where previously it
was ‘one-to-many’.
Many large technology suppliers that promise what they call ‘end-to-end solutions’
evolved from small beginnings as specialists in sales force automation or call centres.
These are very different disciplines; the former supports traditional marketing activi-
ties, such as lead-tracking or sales statistics; the latter advanced call-handling and
customer relationships. Your expertise in deploying these in either area may now be
greater.

DROP THE ‘E’ 29
Relationships foster the sense that both parties have ‘known each other for years’.
Many successful companies evolved from just such customer loyalty, but many
formerly successful companies have tampered with that trust, or not treated the
relationship as something that evolves as customers’ needs and preferences change.
Recreating that sense of comfort in a multi-channel age is a daunting task.
Personalisation is vital for successful and profitable marketing. Allowing your cus-
tomer to customise your web site works in two ways: your customer feels unique, and
you can gather vital data about their preferences, choices and buying habits.
More importantly, the human element – deploying your employees’ skills, knowledge
and creativity – is essential in developing targeted campaigns that meet your cus-
tomer’s needs. And it motivates staff. Creating an environment where your customers
can ‘opt in’ is better than a steamroller-style marketing campaign, from which your
customer may wish to opt out.
Consider ‘personalising’ your Internet presence yourself. For example, using ‘skins’.
This is a method of disguising your company’s main web site in the ‘skin’ of a specific
brand your customer might buy or use. This ‘skin’ could appear to the customer
whenever he or she visits your web site, so they only see the individual brand rather
than the company that makes it.
Personalisation is
vital for successful
and profitable
marketing

An unprofitable
customer is an
opportunity
This is a valuable data-gathering opportunity. You can easily establish through data
analysis who is visiting your web site via each individual brand. Analysing each
customer’s buying habits could give you a valuable insight into who buys or uses each
brand. What you do with this knowledge is down to you and your marketing experts’
skill and ingenuity.
Do not adopt a ‘point and click’ attitude to your customers. For example, relying on
technology, rather than human intuition, might tempt your banking division to weed
out ‘unprofitable’ customers, even if they manage their accounts well and have a good
credit rating.
An unprofitable customer is an opportunity: what products or services could be
targeted at him? What new levels of service could you offer? How can you encourage
him to interact better with your company, to his and your long-term financial
advantage? If his finances are complex, could he be offered an incentive to bank
online and manage his own account? This would save you administration costs, and
a higher rate of interest would make him feel valued as a person with unique needs.
Plan for a multi-channel technology implementation, which offers a single view of
the customer. In plain terms, this should include data storage, analytics (what use is
your data if you can’t analyse it?), internal and external relations and both cross- and
multi-channel communications.

DROP THE ‘E’ 31
Develop a single, integrated, seamless view of your customer, and an audit trail of his
or her dealings with your company. Each channel should be as intuitive and
responsive as the others, and should feed into (and from) the same data repository and
audit trail.
You may not be able to choose which channel your customer uses, but this shouldn’t
matter to either you or your customer when it comes to targeting products and
services.
Do not concentrate on one channel – online services, for example – to the detriment
of another, such as the telephone. The customer may be more demanding than you
can satisfy, so a good level of communication by one channel may lead your
customer to expect the same level of service from another.
Research is key. Data mining (investigating tacit information and turning it into
explicit knowledge), call centre technologies, wireless communications (such as via
mobile phone or portable computing device) and developing an Internet presence all
present a complex integration challenge – to you and, almost certainly, your suppliers.
Technology integration equals organisational complexity. Strategic co-ordination
between marketing, sales, customer relationship departments, order fulﬁlment and
your technology department is the only way to market successfully in this environ-
ment. Outsourcing may be necessary, if you lack expertise in house.

Do not ‘cannibalise’ your current business processes to build a new channel to
market. The Internet is just one of many ways of creating dialogue with, and selling
to, potential customers.
Adopting any other approach means repeating the mistakes of the dot com ‘land-
grab’, which led to the failure of so many speculative ventures. Most realised too late
that they had to build fulfilment infrastructures to match those of their ‘bricks and
mortar’ counterparts. Instead, they poured capital into advertising, rather than building
a rewarding customer experience to make good their promise of personal service.
Brand and customer loyalty are built on service and fulfilment, not on animated logos
and video streaming, which may perform poorly on many consumer’s PCs. In short,
do not burn through your capital and sacrifice customer satisfaction just because that’s
what your competitor is doing. He may fail too.
Design your customer experience first, then look for the technology to provide it.
Do not attempt any of the above without involving your staff, and your existing
partners.
Source: Meta Group, Gartner Group, The Concours Group, Impact

The Population Explosion
Data management is asset management.
Over the past ﬁve to ten years, there has been an explosion of data populations within
medium to large enterprises, yet no similar adoption of methods to carry out a
population census. Many ‘data warehouses’ and smaller ‘data marts’ are full of data
that cannot be extracted.
But how do you get data out of your systems and track meaningful relationships
between them to achieve a view of customer segmentation and buying habits,
together with inferences or predictions about individual customer behaviour? The
answer lies in analytic techniques and data analysis, not in gathering a mass of
undifferentiated data (see below).
Of course, this varies from business to business. In magazine publishing, for example,
companies pitch new publications at an ‘ideal reader’, whose age, socio-economic

group, lifestyle, income, gender and probable aspirations they research in advance.
Next they target a new publication at him or her, with the aim of establishing a unique
advertising proposition.
This is a useful exercise for all companies, but caution is advisable in many industries,
such as finance, travel and retail. Do not exclude potential customer groups that
cannot be satisfied by alternative products or services. This is particularly true if
specific customer groups are fickle, or subject to socio-economic change or shifts in
aspiration.
Adopting a simplistic model of pitching products at narrow market segments is a risky
undertaking, especially if you get it wrong. Internet site Boo.com, for example, fell
when its customer experience, targeted at high-income ‘clubbers’ and sportswear fans,
failed to work on many customers’ computers, especially Apple Macs (the computer
of choice for many of their potential customers). PCs with a slow dial-up connection
fared just as badly.
This was an aspiration too far, despite months of market research. Again, millions of
dollars worth of advertising could not compensate for a poor customer experience. In
the end, Boo found its technology was its only saleable asset; hardly a success for a
lifestyle retailer on the brink of a technology recession.

THE POPULATION EXPLOSION 35
Technology fails when it does not match business vision or internal processes.
Point and click solutions, misapplied, also encourage a culture of weeding out
apparently unprofitable or ‘undesirable’ customers by applying a cut-off point in
customer value — such as by annual income.
A better, more forward-looking and profitable strategy would be in targeting person-
alised services at different customer groups or, ideally, at individual customers who
could have a profitable relationship with your company.
A more
forward-looking
strategy would
target personalised
services and
different customer
groups, or ideally
individual
customers

Ask yourself: where is your business today? Where do you want your business to be?
How to you bridge the gap between reality and aspiration?
Your customer will surprise you, so don’t be too rigid in the type of data you gather.
Avoid building too narrow a set of questions or categories into which to fit your
customer’s data. You’ll lose business fast if your customer’s needs or aspirations fall
outside the areas your system is designed for.
Combine human intuition with analytic software. Deploy both to ‘slice and dice’ your
customer’s buying habits to create new marketing opportunities and identify where
new, or greater, profits lie.
Consider building a new set of products as the relationships between data identify not
just new customers, but also new customer segments whose needs your company
could satisfy first.
Successful marketing and customer relationship management strategies involve
ensuring the free and intuitive flow of customer information around the organisation,
and must integrate with your ‘bread and butter’ business systems.

THE POPULATION EXPLOSION 37
A customer’s interactions with your company across every channel mean rich
pickings, if your employees, processes and systems can identify new marketing
opportunities. Providing analytical functionality will be the major growth area among
customer relationship management technology companies within the next two years.
Ask whether your technology partner can satisfy your analytical needs now or in the
immediate future. Does it have a proven track record of successful implementations
in this area? And, just as important, can its technology integrate with bought-in
analytic software from another supplier, should it be unable to meet your needs at the
right time?
Consider migrating groups of customers towards low-cost channels, as previously
discussed. But to achieve this, you must instil an information-use culture within your
organisation, then match the technology to it.
Avoid giving the impression that every part of your marketing system is automated, as
you could lose loyal customers. Human interaction and intuition can’t be faked by
software, whatever the suppliers say. Your customer’s intuition will rapidly detect
such a forgery.
Human interaction
and intuition cannot
be faked

Only technology suppliers believe that customer relationship management is about
technology. Integration between disparate systems and platforms, many of which may
be a legacy within your company, will become an ever-increasing priority as the
project progresses. This risks the need for ‘middleware’ solutions to bridge the gaps
and allow systems to talk to each other. Plan for this in your budget.
Bring the technology into an integrated organisation, and do not attempt a technol-
ogy patchwork on top of a fragmented, poorly deﬁned organisation that lacks a shared
vision.

Going One-on-One
Too often companies market themselves rather than their familiar brands. Today,
understanding your brand is essential, before any meaningful relationship can de-
velop, particularly in an aggressive, diversiﬁed market.
People like to feel unique. They might be loyal to a brand or company because they
feel it meets their needs or immediate aspirations. Don’t tamper with this bond of
trust, particularly in a multi-channel environment, which, poorly managed and
integrated, works against the concept of brand loyalty by encouraging people to surf
around for the cheapest deal.
A canny company could infer a customer’s possible aspirations and lead them into
new and challenging experiences – adding genuine value to the relationship between
customer and supplier.
But there is a stumbling block. As we have already examined, customers guard their
privacy closely, for several reasons.
People like to feel
unique

First, they have probably been on the receiving end of clumsy marketing in the past,
whether by phone, direct mail or via spam messages on their email accounts. If your
company runs a portal where customers can pick up email, then they will associate
poor marketing with your company.
Second, technology hype, rather than a stress on business beneﬁts and improved
levels of service, has made them suspicious about receiving yet more junk mail
(unsuccessful marketing campaigns!), whether they are real or virtual.
Third, even when they have agreed to enter a deeper, more rewarding relationship
with a company, such as via their loyalty cards, the company has let them down.
Despite shopping regularly with their local supermarket – perhaps ordering online for
home delivery – the special offers and marketing campaigns they received may have
borne no relation to their preferences, buying habits or aspirations.
European data protection laws, with which the UK is harmonised, stipulate that
personal information cannot be used commercially for any purpose other than that for
which it was gathered. In other words, it cannot be sold on to another company or
department without the customer’s express consent or opt-in.

GOING ONE-ON-ONE 41
US data protection laws are different, which has led some US dot coms, for example,
to sell on privileged customer information. In fact, many have found this information
to be their only asset in an economic downturn. This situation will change over the
next few years, but if your company can demonstrate that it guards its hard-won
customers’ information closely, you will win widespread support and loyalty.
So how much is each individual customer worth to the company – and what criteria
are – or should be – applied to arrive at that calculation?
How much is each
individual customer
worth to your
company

Best Practice: Guidelines
Such calculations rely on your vision, internal business processes, employee motiv-
ation and empowerment working hand-in-hand with your technology choice’s ability
to measure goals against performance.
The building blocks of a successful marketing and customer relationship management
strategy rely on the measurement of goals against performance.
This is primarily a management objective.
Ask yourself, have you set measurable objectives for your marketing strategy and
calculated what each customer or set of customers is worth? If not, you will be unable
to establish whether or not your technology choice is meeting your business’s needs.
(See later section.)
Beyond this, are your marketing strategy, motivated employees and technology
ﬂexible and intuitive enough to identify new revenue streams, customer segments and
emerging buying habits?
In the case of technology, you need to establish what your technology supplier can
do for you.

Calculating a Return on Investment
Studies by the Meta Group, Gartner Group and other leading analysts suggest that
acquiring new customers can be as much as six times more expensive than holding
onto your existing ones.
At a time when businesses are diversifying or being bought by acquisitive giants keen
to storm into new markets, this is now more true than ever. In such an environment,
then, every company wants to know as much as possible about their customers’
preferences and then lock them into a deepening, mutually profitable relationship.
But the key is to establish your business ‘value proposition’ first. Technology vendors
will all claim to deliver an attractive return on investment, but the metrics they use are
often centred on their own customers’ satisfaction ratings (how impressed you are with
their level of service) rather than a defined profit potential from using the technology.
Consider these are your action points.

Do not adopt customer relationship management technologies because doing so is an
end in itself, or because your competitor is doing it. This leads to the abandonment
of traditional business processes, such as considering your return on investment.
State where you want to be against your business plan, then ask your supplier to give
you the hard facts. If these cannot meet your objectives, look elsewhere.
Remember previous enterprise technologies, such as resource planning systems, were
designed to minimise costs and measure success in terms of wider profit margins and
demonstrable business efficiency. By contrast, technologies that facilitate marketing or
customer care are about driving increased or additional revenue streams, not slashing
costs or your employee base. If your supplier talks about minimising costs, it is
speaking the wrong language.
Consider costs may actually increase, so they should be set against increased revenue
over time and against budget targets. Is slashing your customer care department a real
benefit, if you neglect new revenue opportunities? Shareholder value can be a
short-term motivator in a technology-buying decision, so your leadership and vision
needs to win investors over in advance.

CALCULATING A RETURN ON INVESTMENT 45
Technology suppliers may arrive at their return on investment or customer satisfaction
metrics by different means. Do not attempt to compare these calculations without
knowing the base data.
Example: your system might identify a student whose custom could grow over time,
once she repays her student loan. But there are no valid metrics for measuring this
against your technology outlay, or your supplier’s claims of success. This is why your
vision and business plan must come first.
Implementing a customer care or marketing system might take two to three years of
technology investment, implementation time, change management, leadership and
consultation — and that doesn’t include future-proofing it for new opportunities (see
sections below). But the marketing processes it facilitates will be ongoing, and cannot
be measured in terms of a finite, three- or five-year plan.
Shifting marketing to the Internet involves complex calculations about internal
processes and change. These must be factored into your budget.
Your vision and
business plan must
come first

You may be able to measure a return on investment on a ‘micro’ level, such as at each
stage of a technology rollout. But for any strategy to be successful on a larger scale,
all your data must reside in one place, and be accessible for analysis across every
channel, from the call centre’s pop-up screen to your marketing campaign manage-
ment systems.
Customer and technology lifecycles are incompatible. Focus on your customers first,
as you will recognise them in ten or twenty years’ time, but it’s doubtful whether
you’ll recognise the technology.
Customers are unpredictable. You could attempt to analyse profitability by, for
example, calculating the cost of selling to an individual customer, or set of customers.
But a better, less ambitious route would be deploying analytical processes and
technologies — the real growth area in customer relationship management systems.
These analyse customer behaviour, rather than apply profit metrics which might hide
the truth or stifle innovative marketing opportunities.
In other words, don’t concentrate on analysing the cost of selling to Customer X,
when analysing Customer X’s behaviour might reveal that he or she is about to take
their business elsewhere. Build in analytic capabilities up front, as these will be a
good fit with your employees’ motivation, and with your vision and business pro-
cesses.

CALCULATING A RETURN ON INVESTMENT 47
You should not try to attribute the success of a marketing campaign to the technology.
Customers may simply be enjoying doing business with you, or enjoying the human
creativity, intuition, innovation and improved levels of service that went into a
well-researched campaign.
Attributing your success to the technology risks slashing the employee base that
made it work. As long as the technology enabled your campaign to work at its best,
then the investment was worthwhile.
In short, don’t leave repaying your investment up to your technology alone, and
certainly not to its manufacturer or supplier. Only you can deﬁne it, and make the
business support it.
Customers may
simply enjoy doing
business with you

Superhighway versus Super High
Street
It’s time to look at where your business is: on the superhighway (focused on
technology) or on the super High Street/super Shopping Mall (focused on your
customer)? For too long business has focused on bolting an ‘e-’ onto the front of
business and commerce, in the belief that electronic business is a separate discipline
and a separate channel to market.
In spite of the business and technology issues we’ve highlighted already, a strategic
investment in technology systems is still mistakenly regarded as an IT issue, and not
something that belongs at the heart of every business. The mantra of ‘think global’
often ignores the need to ‘act local’.
This has created a new breed of companies: the ‘Me2Bs’, who have implemented data
warehouse, business intelligence and customer relationship management systems
simply because that is what their competitors are doing, upping the ante in a
misguided technology arms race.

You must
communicate
amongst yourselves
first, before you can
communicate with
your customers
Too often marketing departments are excluded from IT decisions, or are put in charge
of web projects with no understanding of how to create a dialogue with the
employees and the suppliers who have to build the systems.
The inevitable consequence? Failed projects, which discredit both technology and
investment, leading to an ever-greater dislocation at boardroom level. Business
leaders want to know why there has been no demonstrable return on a six- or
seven-figure outlay.
The secret is first to bring IT under the boardroom’s direct control, and educate both
IT strategists and chief executives, finance officers and marketing directors in the
business benefits of strategic IT implementations.
The result: business with ‘e’ at the centre, where it should stand for ‘effective’,
‘enabled’, ‘enterprise’ and ‘evolution’. Businesses cannot communicate with their
customers if they don’t communicate first amongst themselves.
The knock-on effect is a top-down strategy with every level of the organisation sharing
that vision.

Real Life Example;
Tesco—How the Clubcard builds value
The Tesco Clubcard, which was developed by Tesco and dunnhumby and launched in 1995, has been one of the most
successful loyalty schemes of its kind. It has helped propel the retailer to the number one slot in the UK and keep it there,
despite massive competition. So what have Tesco done that is so right?
Firstly, they have taken to heart the idea that you can’t buy loyalty – instead you have to earn it by giving it. Tesco’s
mission is “to earn and grow the lifetime loyalty of our customers”. By translating that into actions which prove they
are working in the interests of the customer at all times – in short building the business around the customer not the other
way around – the customer keeps coming back and Tesco keeps growing.
This is achieved by careful and detailed analysis of the data which the Clubcard provides. Carried by 12 million customers,
80 per cent of Tesco’s sales go through using the Clubcard. This gives Tesco and dunnhumby a very rich source of
information from which to develop not only targeted communications to key customer segments, but also the power to
develop pricing strategies, store formats and product ranges, plan new store launches and develop customer acquisition
programmes for new products, such as credit cards and insurance through Tesco Personal Finance.
Every quarter 11 million statements are sent out to customers with four million variations, so no more than four or ﬁve
people ever receive the same offers. Cardholders get tailored promotions in exchange for their data – and more than
£1 billion has been passed back to customers through these special offers since the card was launched. But money
alone doesn’t buy loyalty. The key is relevance. For example, Tesco was able to use the data to develop and launch

52 CASE STUDY
a special Baby Club – so successful that 80 per cent of live births are now registered with Tesco before the baby is
even born. That’s loyalty.
The card has also helped Tesco develop its market leading on-line product, Tesco.com. Rather than an A-Z listing of
products, first-time visitors to the site can enter their local store, their own name and the Clubcard database then lists
all of the products they most regularly buy. By making the customer’s job easy and quick, click through rates soared
and customer kept coming back.
Clubcard data is now being shared with Tesco suppliers. Using the card information FMCG manufacturers can find out
more about who is buying their products and develop new lines and special offers – and then see exactly how these are
taken up by Tesco shoppers. This brings further benefits to the customer as they get more of what they want, and helps
suppliers to gain greater customer knowledge and insight in a way which is highly cost effective.
“The Clubcard has been a success because of the power of the information it delivers, “ says Edwina Dunn, Chief Executive
of dunnhumby. “But that power is only useful if it can be turned into actions which make a real difference to the customer.
Yes, money is a great motivator, but you can’t buy loyalty, you have to earn it. Clubcard is a clear demonstration that
Tesco cares about its customers and values their business – but the clearest demonstration of all is the way it takes the
information it gathers and turns it into practical benefits which the customer can touch and feel. That’s what makes
Clubcard work, and that’s what keeps Tesco ahead in the UK’s supremely competitive retail environment.”

The Immediate Future of Customer
Relationship Technologies
Over the next two years, mergers and acquisitions among operational, analytical and
collaborative technology vendors may obstruct technology integration plans that are
vital for your company. Stay informed about the future of your supplier if it is a ‘niche’
player.
Software will move increasingly towards being able to track customer lifecycles.
Analytical technology suites will be the main drivers of this from the dominant
vendors, who will seek to acquire specialist suppliers as their share prices remain
depressed. Suppliers who cannot offer this functionality will fail.
Remember: when larger technology players acquire ‘niche’ technologies, these are
often rewritten to match the larger companies’ portfolio of other technologies. Could
this harm your business?

Call centres will
become
multifunctional
centres dealing
across a number of
channels. Should
you be there now?
Customer relationship management and ‘e-commerce’ technologies such as content
management and portal-building tools will begin to converge. Bear this in mind for
future integration challenges between your supplier’s current offerings and your
legacy systems. Will your technology remain as flexible as your business over the next
two to five years?
Investment will shift away from one channel, the Internet (what Meta Group defines
as the ‘e-channel’) towards satisfying the needs of other, emerging opportunities, such
as digital or interactive TV.
Call centres, which are currently regarded as being low-value, low expertise jobs
which attract little employee loyalty, will gradually shift towards being multifunctional
centres dealing with customers across a variety of channels. Should you be there now,
and build the appropriate level of employee loyalty and reward?

The Medium-term Future of Business
Despite the need to make technology the servant of business, we can infer some idea
of the future of marketing from the direction in which technologies are moving.
The watchwords over the next few years will be ‘superdistribution’ and subscription,
where paid-for digital content is distributed seamlessly across a multichannel network
of mobile devices, with its licensing terms embedded into the distribution process.
Micropayment and security technologies will also be invisible within the process,
ensuring payment for the content’s use is fed back to every part of the authoring,
manufacturing and distribution chains, which your company will be part of.
This will open up entirely new ways of marketing services to customers via mobile
devices, creating the potential for users to subscribe to your company’s products or
services and, as with all subscription services, become a community of users about
which you have an ever-greater level of knowledge.

Your customers will
start saying ‘You
ARE talking to me.’
With the advent of location-based mobile services, you will know not just what your
customer buys regularly, not to mention how he or she pays for it, but also where the
customer is located. Why not target services at the customer, which are relevant to
where she is travelling? Or where he is on the High Street?
If your company works towards this goal, you will be well positioned, in every sense,
to move ahead of the competition.
The terms ‘junk mail’ and ‘spam’ ought now to be things of the past; there is no longer
any excuse for them. If you can tackle this and position yourselves for the emerging
marketing opportunities, your customers will no longer say, ‘Are you talking to me?’,
but ‘You ARE talking to me.’
And they will want to know more.

Are You Talking To Your Customers?
ARE YOU CUSTOMER FOCUSED?
ARE YOU PRODUCT FOCUSED?
ARE YOU COMPANY FOCUSED?
Take a snapshot of where your company is today.
Ask six of your senior management and six of your junior managers or staff to give their views on this
questionnaire.
Just photocopy this form or download a copy from www.protagona.com/questionnaire.
Their answers may surprise you all!
Answer a, b or c
1 Is your marketing or branding strategy known to:
a Every part of the organisation, from the boardroom to the receptionist
b Senior management and the marketing department, but not lower level staff
c A privileged few in the boardroom

2 If you took a straw poll of your staff, would everyone know what your company can uniquely offer your
customers?
a Yes
b No
c Not sure
3 Does your customer experience — such as your web site, your points of sale and your call centre — match
your business vision and your marketing strategy.
a Yes
b No, it was built before the new customer strategy was designed
c I have no idea, I’ve never used it
4 Does your customer experience vary, depending on which channel your customers use to contact you —
such as the Internet, phone or in store?
a No
b Yes
c I have no idea

QUESTIONNAIRE 59
5 Which of these statements is closest to your current position?
a However our customers contact us, we have access to a data trail of all his or her individual dealings with
us, whatever channel they choose to contact us by
b We can call up data on some of our customers’ transactions or queries, but are unable to link up data
concerning phone calls, complaints, in-store business or web site transactions
c We have no idea who our customers are when they contact us, and have no audit trail of their business
with us
6 Does your customers’ perception of you as a company match your business goals or mission statement?
a Yes, they know who we are, what we do and what we stand for
b We are investigating this through market research
c Our brand is everything; our customers either recognise it or go elsewhere
7 Can you target, acquire and retain new customers?
a Yes, and we can identify new groups of customers when they emerge and target new products at them
b Yes; we talk and our customers listen
c No, we don’t need to. We are happy with our existing customer base

8 Have you ever been your own customer, via your web site or in store?
a Yes, we always monitor what our customer experience is like
b Yes, we investigated it at launch and were happy with the results
c No, I already know my business inside out
9 How would you tackle a rough ride in the press for your brand or falling customer ﬁgures?
a I would get to the root of the problem, ask serious questions and consider a change of tack
b With a marketing or PR offensive to stress the real values of our brand
c I have every conﬁdence that our strategy is right and will win through in the end
10 You’ve bought a large-scale customer relationship technology suite. Which of these statements is the
truest for your business?
a The implementation was entirely driven by the strategic and operational needs of our business, not the
technology supplier’s reputation and customer list
b We were impressed by the vendor’s customer satisfaction ratings, and rebuilt our business around the
technology
c We bought the technology, and now we’re a listening, customer-focused organisation

QUESTIONNAIRE 61
11 Why did you buy the technology?
a We wanted to enter a deeper dialogue with our customers, so we can better meet their needs. I am satisfied
that the technology will enable us to do just that.
b The purchase was driven by the need to be more efficient, cut costs and automate our customer processes
c Our nearest rival made or will make a similar decision, and we need to stay competitive to stay in the
game
12 Which of the statements below best describes the staff who use the technology every day?
a Our staff understand what they’re doing and why they’re doing it. As a result, they’re motivated and full
of ideas
b They know what they’re doing, but getting them to understand the new culture is an uphill struggle, so
we’re bound to lose people who don’t like change
c It’s a low skill job, so we have a high staff turnover. But it doesn’t matter as the technology does the hard
work for them
13 Since installing the technology, customers have …
a Entered into a mutually rewarding dialogue with the business. They like the new options that are now
available to them
b Been alienated to an extent, but we’re working on fixing the problem with a sustained marketing and PR
campaign to win them around
c Started complaining, but our processes are much more efficient so we can afford to lose a few. It’s a
technology problem

14 How high is technology on your list of priorities?
a It’s a means to an end. Our business comes first
b It has equal importance to our other business processes. We’ve got to stay ahead of the game, and that
means spending technology dollars
c It’s top of the list, if we don’t get there first, someone else will
15 Did your technology vendor promise …
a To listen to and work with us, as we know more about our customers than they do
b To re-engineer our business processes to realise their promises of customer satisfaction
c An end-to-end solution that would solve all our problems
16 When your customers do business with you online, can they …
a Personalise the experience, so they can self-select the type of information they see and/or receive?
b Choose from a set of predefined options, so you can better sell your complete range of products?
c Contact you as efficiently as possible

QUESTIONNAIRE 63
17 Once they’ve done business with you online, can you …
a Slice, dice and analyse the data so you can see who is buying what, down to the customer’s name or
demographic group?
b Get a general idea of trends, buying habits and customer numbers?
c See how many people have visited your web site, and sell that information on to advertisers or business
partners
18 Since buying the technology, have you …
a Targeted the most suitable products at the right individual or group of individuals?
b Migrated users towards low-cost channels to increase proﬁts?
c Weeded out unproﬁtable customers?
19 Since buying the technology, have you also …
a Used the opportunity to design a better customer experience that works just as well across every channel?
b Concentrated on the Internet and call centres, while minimising the number of customer-facing staff?
c Tried to move as many customers as possible onto the Internet?

20 Did you design your customer experience …
a Before sourcing the right technology to match your vision?
b Once you’d bought the technology and seen what it could do
c Our technology vendor designed it
21 Do you believe that the automation of customer systems is …
a Something that you try to hide from your customers wherever possible?
b Is a necessary evil, given your business goals?
c Something that customers are used to these days?
22 What do you measure the performance of your system against …
a Goals?
b Cost savings?
c We ﬁnd it’s impossible to measure its success: there are too many variables
23 Do your believe your customers are …
a Easy to understand, but are able to surprise you?
b Unpredictable?
c Predictable — that’s why we built the company?

QUESTIONNAIRE 65
24 Have you answered the above questions …
a Truthfully?
b The way I think you wanted me to answer them?
c Quickly, as I don’t believe in questionnaires?
Answers
Mostly a: Your business is using technology well to meet the strategic goals of a well-managed operation where
staff feel motivated and involved, and to get closer to your customers
Mostly b: Your business has recognised some of the advantages of technology, but is driven by external forces,
such as technology suppliers and hype. Focus more on your customers, and less on technology for technology’s
sake
Mostly c: Your business is adrift and is using technology to ﬁll the gaps in your vision and leadership. Your
customers will soon vote with their feet.

About Protagona Worldwide
Protagona Worldwide provides technology that empowers marketers to recruit profitable new customers, retain
and grow the customers that they have and deliver financial results to the business.
Protagona’s end-to-end marketing solution, Protagona Ensemble, is a comprehensive system of integrated
software modules that optimises a company’s marketing efforts, and enables them to forecast, plan, execute,
measure, and analyse their multi-channel marketing strategy from a single platform, achieving optimum return
on investment. Central to Protagona Ensemble is a workflow management tool, which provides campaign
managers, executive management and suppliers with Internet based, real-time collaboration and the flexibility
to manage and last minute revisions of real-world campaigns across the enterprise.
Protagona Worldwide has major operations in North America and Europe, with its headquarters in Birmingham,
UK. Key customer names include American Express, Aegon Insurance, Bertlesmann, Royal Caribbean Cruises
Ltd, Clerical Medical, Norwich Union, Standard Chartered Bank, Centrica, Cahoot (Abbey National), and Lion
Nathan.

Protagona Worldwide is a subsiduary of Protagona plc, listed on the London Stock Exchange under the symbol
“PTG.L”.
For more information on Protagona Wordwide, visit our Web site at www.protagona.com.

Final Copy ARE YOU TALKING TO ME

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