Customer Relations - Maximising the relationship you have with your customers


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Presentation to the Croydon Chamber of Commerce - March 2007

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  • When a sales manager said - ‘People buy from their friends - so be a friend’, I thought - no-one is going befriend a cut-throat sales representative! In essence, what they are saying is that if you’re a seen as friendly and approachable, you will build trust. But you also need to target your customers carefully, and let them know who you are. What is it that makes your customers tick? Can you exploit that knowledge of your customers? Are you developing products and services that are of use to the customer profile? The famous advert, I think, sums it all up - “So, what was it you wanted to sell me?”
  • This is a version of the famous encoding/decoding communications model, and surrounding the message is NOISE! It shows the message emanating from the ‘Source’, being encoded by language or image, before being decoded by the ‘Receiver’ who will then provide some form of feedback. The noise, however, is the factor that can confuse or destroy the message. Online noise takes the form of spam, messages from competitors, too many messages, inappropriate targeting, etc. As marketers we try to eliminate noise, but in the online world we are now coming up against ear-shattering and very distractive noise – so the Minority Report example is certainly a marketing nirvana. It is time marketers fought back against this noise. Legislation can go someway to helping this – well targeted, meaningful dialogue with customers is were we can make most impact.
  • If I could show you how to increase your sales by 50% without increasing your marketing budget, would you be interested? Of course you would, what marketing professional or business owner wouldn't be interested? By the time you have finished this article you will have figured out how to do just that. Take a few moments and think of all the inactive customer files you have in your file cabinet. Business owners often make the costly mistake of servicing a customer once then assuming "they'll stay" as a customer or client without maintaining and growing that relationship.
  • A year later that business owner is wondering what happened to that customer and where they went. Why haven't they hear from them? Did they leave? If so, why? When you consider that the last two make up the majority of why a client or customer will no longer use your service or buy your products - it can be a hard pill to swallow. After all it means they are an inactive client because they felt you didn't care about them and your competitor did. This makes sense when you consider that customers often purchase your service or product because they have developed a relationship with you, they owned another product or yours, or they were referred to you by a friend or associate. When faced with the above facts why is it businesses spend 80% of their marketing dollars going after new customers and clients rather than nurturing, retaining, and maintaining the customer relationships they already have?
  • As you can see your marketing dollars will go further if you use it to build, nurture, and develop your customer relationships. This isn't as difficult as you think. Building these relationships just means treating your customers and clients as if they
truly are your strategic partners and showing them that you truly care about them. It's important to try to satisfy them with the right products and services, supported by the right promotion and making it available at the right time and location. Customers can easily detect indifference and insincerity and they simply will not tolerate it. Long-term client and customer loyalty is a long-term challenge that you must strive for every day and with every transaction no matter how big or small. While a growing business needs to constantly capture new customers, the focus and priority should be on pleasing your existing customer base. Companies that fail to nurture and retain their customer base ultimately fail. You will also spend twice as much to get new clients as you will in maintaining your existing customer base.You will also be limited in your ability to attract new clients if you can't hold onto and satisfy your existing customers and clients. The bottom line is that one of the key components in marketing and business growth is to spend the majority of your time and effort nurturing customer relationships, so that you get business from existing clients and customers. This is a strategy that will move you forward in increasing your sales by 50% without increasing your budget.
  • When I was a salesman, my boss told me that people bought products or services from their ‘friends’. I have yet to meet a salesman that I could call a friend – not whilst they were trying to get my money, anyway! Trust is the basis for building loyalty which in turn will increase interaction – it is up to you to turn this interaction into profit. As a personal example – I am an Apple McIntosh user at home, but have to suffer PC’s at work. Think about the customer loyalty Apple has – most Apple users can be identified by two main attributes – they are fiercely loyal to the brand, and they are poor, because the loyalty costs so much! I have used Michael Porter’s value chain model to demonstrate the trust-focused value chain, culminating in ‘trust’ in a brand, product or service. It is no fluke that trust occupies the same space that ‘profit’ does in Porter’s model, indeed I could have extended it with another field to the right called profit. Being trustworthy is profitable.
  • The normal trust lifecycle curve shows that a customer will start in an untrusting state - they are unaware of the brand’s reputation. During the transaction, the customer will build a view of the company, trusting the relationship as they go. Over time, and [hopefully] with repeat transactions, this trust will be confirmed, and then maintained. Advocates, as we highlighted before, will reduce the time required to build trust, because if you trust the advocate who recommended the company to you, you will adopt some of that trust.
  • Genealogy is not the answer to your marketing problems - it will only help if you are interested in tracking your family tree, or who lived in your house previously. If you could get hold of the last census - in 2001 - you would only have access to anonymous information, based on parishes or villages. But, this anonymous data can be useful for starting your research, and for building a database - if you are marketing to older people, you will be looking for certain demographics and certain local services. For Business to Business marketing, the census is almost useless, unless it involves highly manual labour markets.
  • Customer Relations - Maximising the relationship you have with your customers

    1. 1. Customer Relations Maximising the relationship you have with your customers Thom Poole March 2007
    2. 2. Agenda <ul><li>Reminder of marketing principles </li></ul><ul><li>The relationship </li></ul><ul><li>What is ‘data’ </li></ul><ul><li>Next steps </li></ul>
    3. 3. Why Me? Quick biography of Thom Poole
    4. 4. Thom Poole <ul><li>Web & digital marketing trailblazer since 1992 </li></ul><ul><li>Taught digital marketing for 9 years </li></ul><ul><ul><li>e-Commerce </li></ul></ul><ul><ul><li>Web design for marketers (and the terrified!) </li></ul></ul><ul><ul><li>CRM </li></ul></ul><ul><li>Written papers on ‘Data Privacy’, ‘The Marketing Art of the Opt-in’ and ‘Trust in Business and Marketing’ </li></ul><ul><li>Written a book on ‘ethical e-marketing’ called ‘Play It By Trust’ </li></ul><ul><li>Held senior marketing positions at O2, Black & Decker and Hilti </li></ul><ul><li>Fellow of the Chartered Institute of Marketing & holder of an Individual Charter Standard in Marketing </li></ul><ul><li>Consultant & business mentor for digital marketing strategy and implementation </li></ul>
    5. 5. Marketing principles revisited A reminder of why the customer is so important
    6. 6. Definition of Marketing - CIM <ul><li>Marketing is the management process responsible for identifying, anticipating and satisfying customer requirements profitably </li></ul><ul><ul><li>Customers are at the heart of the process </li></ul></ul><ul><ul><li>It is the study of the market forces and factors, and the development of a company’s position to optimise its benefit from them </li></ul></ul>
    7. 7. Definition of Marketing - Alternative <ul><li>Marketing is all about EXPLOITATION ! </li></ul><ul><ul><li>You learn all about your customers </li></ul></ul><ul><ul><li>Your products and technologies </li></ul></ul><ul><ul><li>Your competitors </li></ul></ul><ul><ul><li>Your economic environment </li></ul></ul><ul><ul><li>Your customers aspirations, etc, etc </li></ul></ul><ul><li>And you exploit that KNOWLEDGE profitably </li></ul><ul><ul><li>You give your customers what they want </li></ul></ul><ul><ul><li>What they think they want </li></ul></ul><ul><ul><li>What you can convince them they want </li></ul></ul>Thom Poole - 2000
    8. 8. The Marketing Mix Products Pricing Place (Distribution) Promotion People Processes Physical Evidence
    9. 9. <ul><li>What makes them tick? </li></ul><ul><li>Marketing = exploitation! </li></ul><ul><li>It is no good developing applications for the elderly if they are unlikely to use them </li></ul>Target your customers “ I don’t know who you are, I don’t know your company, I don’t know your company’s products, I don’t know what your company stands for, I don’t know your company’s customers, I don’t know your company’s record, I don’t know your company’s reputation, Now – what was it you wanted to sell me?” MORAL: Sales start before your salesman calls – with business publication advertising
    10. 10. Communications model A linear model of communication (based on Schramm (1995) and Shannon & Weaver (1962) – from Fill (1999))
    11. 11. Customer Relationship Marketing <ul><li>Be relevant to your customers </li></ul><ul><li>Give your customers a reason to trust you </li></ul><ul><li>Build a community of customers who you can test ideas on </li></ul><ul><li>Use/exploit the knowledge you have about your customers </li></ul><ul><li>Align your organisation behind your relationship </li></ul>
    12. 12. Customer Relationships <ul><li>This is a form of marketing that aims to create relationships with a company’s customers </li></ul><ul><li>It involves a database that records all the customer interactions and their outcome </li></ul><ul><li>Some complex systems can generate millions of lines of information each day </li></ul><ul><li>It is one thing to collect it, it is another to know what to do with it: </li></ul><ul><ul><li>HEADLINE: CRM is dead! </li></ul></ul>
    13. 13. Types of CRM <ul><li>Simple rotodex </li></ul><ul><li>Contact database </li></ul><ul><li>CRM System </li></ul><ul><li>Complex ERM System </li></ul><ul><li>Propensity Modelling System </li></ul><ul><li>E-CRM </li></ul>
    14. 14. Propensity modelling <ul><li>If you behave in the same/similar way to someone else, you are likely to complete the same transactions </li></ul><ul><li>If you behave as your segment always does - this will be your next move </li></ul><ul><li>Why is this important? </li></ul><ul><ul><li>We can predict whether to invest time in this relationship </li></ul></ul><ul><ul><li>We can possibly force the customer to make a larger purchase </li></ul></ul><ul><ul><li>We can reinforce our models with the outcome of this transaction </li></ul></ul>
    15. 15. Amazon
    16. 16. Know-your-’customer’ exercise <ul><li>Split into groups </li></ul><ul><li>Each of you will have an interesting hobby, fact or experience </li></ul><ul><li>Ask questions of each other and try to find out what it is </li></ul><ul><li>Also think about what you expect to get out of this course </li></ul><ul><li>You have 10 minutes & should then present what you have found out </li></ul>
    17. 17. ‘Relationship’ exercise 10
    18. 18. ‘Relationship’ exercise 9
    19. 19. ‘Relationship’ exercise 8
    20. 20. ‘Relationship’ exercise 7
    21. 21. ‘Relationship’ exercise 6
    22. 22. ‘Relationship’ exercise 5
    23. 23. ‘Relationship’ exercise 4
    24. 24. ‘Relationship’ exercise 3
    25. 25. ‘Relationship’ exercise 2
    26. 26. ‘Relationship’ exercise 1
    27. 27. ‘Relationship’ exercise <ul><li>Let’s find out about each other </li></ul><ul><li>What have you learned about each other? </li></ul>
    28. 28. The relationship <ul><li>Re -la-ti on -sh ip (r ĭ -l ā ' sh ə n-sh ĭ p') </li></ul><ul><li>n. </li></ul><ul><li>The condition or fact of being related; connection or association </li></ul><ul><li>Connection by blood or marriage; kinship </li></ul><ul><li>A particular type of connection existing between people related to or having dealings with each other: has a close relationship with his siblings </li></ul><ul><li>A romantic or sexual involvement </li></ul>From:
    29. 29. Increase your profits! <ul><li>Customer acquisition </li></ul><ul><ul><li>Buy in lists, and communicate relevantly </li></ul></ul><ul><ul><li>Follow up professionally on enquiries </li></ul></ul><ul><li>Customer retention </li></ul><ul><ul><li>Provide a relevant relationship </li></ul></ul><ul><ul><li>Be and remain competitive </li></ul></ul><ul><ul><li>Understand customer drivers/motivators </li></ul></ul>
    30. 30. Customer churn/defection <ul><li>There are many reasons a customer or client may leave you, but the ones you will hear most often are: </li></ul><ul><ul><li>Customers felt your pricing was too high or unfair </li></ul></ul><ul><ul><li>Customers had an unresolved complaint </li></ul></ul><ul><ul><li>Customers took a competitors offer </li></ul></ul><ul><ul><li>Customers left because they felt you didn't care </li></ul></ul>
    31. 31. Value for your money <ul><li>Before you spend your time and money going after new customers and clients you do not currently
 have a relationship with consider the following statistics: </li></ul><ul><ul><li>Repeat customers spend 33% more than new customers </li></ul></ul><ul><ul><li>Referrals among repeat customers are 107% greater than non-customers </li></ul></ul><ul><ul><li>It costs six times more to sell something to a prospect than to sell that same thing to a customer </li></ul></ul>
    32. 32. Friendship = Trust <ul><li>‘ People buy from their friends’ </li></ul><ul><li>Trust builds loyalty </li></ul><ul><li>Trust will drive profit </li></ul>Trust-focused value chain (adapted from Porter, 1998), Poole - 2002
    33. 33. Trust lifecycle Time Level of Trust Unaware Build Trust Confirm Trust Maintain Trust Register/Transact/Confirm Consider/Validation/Assess Browse/Search/Compare Trial Threshold Purchase Threshold Habit Threshold Untrust phase Extrinsic Intrinstic Recommendation  Poole (2005), adapted from Reynolds (2000)
    34. 34. What is ‘data’? How do we get it, how do we use it?
    35. 35. Where does all the data come from?
    36. 36. What is data? <ul><li>You tell people ‘information’ about yourself </li></ul><ul><li>Companies collect this information and aggregate it, producing data </li></ul><ul><li>data: “Representation of facts, concepts, or instructions in a formalised manner suitable for communication, interpretation, or processing by humans or by automatic means. Any representations such as characters or analogue quantities to which meaning is or might be assigned” </li></ul>
    37. 37. What can we do with data? <ul><li>STP </li></ul><ul><ul><li>Segment - divide our audience up into convenient groups of similar characteristics </li></ul></ul><ul><ul><li>Target - communications, products, pricing, etc can be carefully targeted to maximise its effects </li></ul></ul><ul><ul><li>Positioning - products, brands, etc can be positioned so that they are more appealing to customers </li></ul></ul><ul><li>EXPLOITATION! </li></ul><ul><ul><li>The more we understand of our customer’s behaviours, motivators and aspirations … </li></ul></ul><ul><ul><li>… the better we will be at our jobs </li></ul></ul>
    38. 38. Why ‘STP’? <ul><li>In a ‘global’ village of 100 people… </li></ul><ul><li>57 would be Asian </li></ul><ul><li>21 European </li></ul><ul><li>14 American (North & South) </li></ul><ul><li>8 African. </li></ul><ul><li>52 would be women </li></ul><ul><li>70 would not be ‘white’ </li></ul><ul><li>70 would not be Christian </li></ul><ul><li>89 heterosexuals </li></ul>• 6 people would own 59% of the wealth, and all 6 from the US • 80 would be below the poverty line • 70 would be illiterate • 50 under nourished • 1 would die • 2 would be born • 1 have a PC • 1 have an academic qualification Would you want to talk to everyone?
    39. 39. Statistics <ul><li>There are lies, damn lies - and statistics Attributed to Mark Twain </li></ul><ul><li>Good for understanding macro-market dynamics </li></ul><ul><li>Can be combined with Geographic Intelligence System (GIS) data </li></ul><ul><li>Will not provide an insight into YOUR customers, but ALL customers </li></ul><ul><li>Census held every 10 years holds geodemographic information useful to marketing planning </li></ul>
    40. 40. Genealogy <ul><li>The study of one’s past and ancestry </li></ul><ul><li>Census data on individuals is available after 100 years </li></ul><ul><li>Births, Marriages & Deaths can be viewed, but for recent additions, you need special permission </li></ul><ul><li>This is now big business, worth millions every year </li></ul>
    41. 41. Genealogy example - 1891
    42. 42. Solution? <ul><li>Genealogy won’t help you market a product or service </li></ul><ul><li>Anonymous, aggregated information won’t help you identify your customers </li></ul><ul><li>Research </li></ul><ul><li>Build a database </li></ul><ul><ul><li>Coupons </li></ul></ul><ul><ul><li>Competitions </li></ul></ul><ul><ul><li>Sales transactions/EPOS </li></ul></ul><ul><ul><li>Feedback/questionnaires </li></ul></ul><ul><ul><li>Warranty cards </li></ul></ul><ul><ul><li>Trade show enquiries & business cards </li></ul></ul>
    43. 43. Data Abuse From: Alexander Bucklin <> Reply-To: Alexander Bucklin <> To: Date: 28-Aug-2006 06:58 Subject: Re: RXjevu Hi, Good news for you. PHARMACY directly from the manufacturer, Economize up to 60 % with us , , , me and the darkness became even more intense. Jim-are you all right? Can you hear me? Floyds face was just above mine, looking worried. Was I all right? o wohqtyd wcpgy r l j
    44. 44. Spam <ul><li>Spam now accounts for 38 percent of all North American e-mail </li></ul><ul><li>That adds up to 11 billion pieces of spam a day, and that number is growing daily </li></ul><ul><li>Estimates of annual productive time lost to spam ranges from $2,000 to $4,000 per employee in the USA alone </li></ul><ul><li>Spam eats bandwidth and gobbles storage space </li></ul>
    45. 45. Origins of Spam <ul><li>The United States continues to lead as the main origin of spam, with nearly 55.7% of all spam being sent from the U.S </li></ul><ul><li>South Korea (10.2%) </li></ul><ul><li>China (6.6%) </li></ul><ul><li>Brazil (3.4%) </li></ul><ul><li>Canada (3.1%) </li></ul>
    46. 46. Who is spamming? Top relaying countries 20.3% Others 1.8% Germany 12 2.0% Japan 10= 2.0% Poland 10= 2.1% Taiwan 9 2.4% Austria 8 2.5% Spain 7 2.6% Brazil 6 3.0% Canada 5 5.0% France 4 9.7% South Korea 3 22.3% China (in. Hong Kong) 2 24.5% . United States 1 Percentage Country Position
    47. 47. Other abuse <ul><li>Sharing personal data without the customer’s consent </li></ul><ul><li>Making assumptions or recording untruths about customers </li></ul><ul><li>Keeping your data in an insecure database </li></ul><ul><li>Ignoring your customer’s requests to be unsubscribed </li></ul><ul><li>Buying data that you suspect of being illegally gathered </li></ul>
    48. 48. Getting too familiar <ul><li>If you use a database, you could start talking to your customer about things that are relevant to them </li></ul><ul><li>You could also get too personal! </li></ul><ul><li>The law does not allow you to talk to anyone else about an account - example: </li></ul><ul><ul><li>Man, having an affair, booked into a large hotel. It is the 3rd time he had been there, each time with a female companion </li></ul></ul><ul><ul><li>After the visit, the hotel telephoned his home number and spoke to his wife </li></ul></ul><ul><ul><li>They asked her if she enjoyed the stays, and offered her, and her husband a free night </li></ul></ul><ul><ul><li>She had never been to the hotel </li></ul></ul><ul><ul><li>Divorce proceedings followed and the husband successfully sued the hotel for breach of the Data Protection Act </li></ul></ul>
    49. 49. Your next steps What do you need to do next?
    50. 50. Next steps <ul><li>Understand who your most profitable customers are </li></ul><ul><li>Learn everything you can about them (profile them, segment them, etc) </li></ul><ul><li>Learn what motivates them (and what turns them off) </li></ul><ul><li>EXPLOIT your knowledge and build a relationship </li></ul><ul><li>Be trustworthy and trusting in that relationship </li></ul><ul><li>Be proactive in the relationship </li></ul><ul><li>… go to the bank </li></ul>
    51. 51. Thank you Any questions? Thom Poole Managing Consultant [email_address]