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Customer Insight Findand Keepthe Customers You Want


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Customer Insight Findand Keepthe Customers You Want

  1. 1. Find and Keep the Customers You Want: The Customer Insight Mandate 3
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  3. 3. After a half-decade of inward focus, companies are awakening to the need to shift from customer retention to acquisition. In fact, executives we’ve spoken with roundly agree that their company’s success—in some cases, survival—is directly tied to their ability to more effectively acquire new customers and subsequently develop much more intimate relationships with those customers. Yet we’ve also heard and seen the frustration that companies experience in addressing this challenge. In many organizations, despite several years of Customer Relationship Management (CRM) investment, capabilities for developing insights on customers—and successfully acting on those insights—are still lacking. In this paper, we share our thoughts on how companies can transcend the obstacles to generating deeper insights into their customers. We explore how to use customer insight to dramatically improve both the quality of sales and marketing campaigns, as well as customer loyalty and lifetime value. And we provide examples of leading companies that are using customer insight as a key tool in their journey to achieve high performance. 5
  4. 4. Find and Keep the Customers You Want: The Customer Insight Mandate Customers are key, but executives in France and Japan. French with finance and insurance companies executives cited increasing customer fell by 1.7 percent (and 6.5 percent capabilities are lacking loyalty and retention (56 percent) and since 1994). Furthermore, for the first increasing customer service capability time ever, consumer satisfaction with As companies continue their quest for (50 percent) as their top issues, while e-commerce providers dropped—by 2.7 growth, the need to build stronger, more in Japan, acquiring new customers (45 percent from 2004. profitable relationships with customers percent) was tied for second on the assumes greater importance. Accenture top-issues list2 (See Figure 2). Another well respected barometer of research shows that growth is, indeed, consumer attitudes—this one involving on the minds of many executives as the However, many companies—despite the automobile industry—is J.D. Power economy improves. An Accenture survey making significant investments in CRM & Associates. In a recent study, they of 244 executives around the world over the past several years—still aren’t discovered what should be a troubling found that 42 percent will be focused well-positioned to connect with cus- trend for automakers: 17 automobile primarily on growth in 2005 and an tomers in ways that maximize loyalty companies retain fewer than half of additional 32 percent will attempt to and repeat business. This is reflected their customers when they buy a new strike a balance between growth and in a number of industry statistics that car, with many of these companies cost control. 1 speak to consumers’ ongoing frustration only holding on to one-third of their or dissatisfaction with various product customers. In a second survey of more than and service providers. One such statistic 800 global executives conducted by is the American Customer Satisfaction Churn is an accurate gauge of customer Accenture, 32 percent of respondents Index created by the University of displeasure, as the telecommunica- said acquiring new customers is one of Michigan. The most recent edition of tions sector knows all too well. Most, their top business issues—just behind the index found that consumers grew if not all, of the major telcos and cable changing organizational culture and less satisfied with product and service television providers have struggled employee attitudes (33 percent) and providers in the past decade. In the throughout the past decade to retain attracting and retaining skilled staff past year, satisfaction with retailers their customers as the industry has (35 percent) (See Figure 1). The focus on dropped 3.2 percent (and just over 4 undergone significant technological and customers is especially strong among percent from 1994), while satisfaction market upheaval. Cable companies, 6
  5. 5. for their part, continue to lose large to engage customers with offerings that Another study, conducted by Strativity numbers of subscribers to hard-charging more closely meet their needs. Group, reinforces Accenture’s findings. satellite providers, while traditional In this research, 54 percent of execu- and mobile telephony companies seem For example, it is well documented tives said their company’s relationship intent on fighting a price war that that to generate true insights into with the customer is not well defined. no one can win. The vast majority of customers’ behavior and preferences, a Even worse, fewer than 20 percent had customers switching telco and cable company must have a complete view of data on key aspects of their customer providers typically cite poor service as each customer’s interactions and history relationships, including the cost of new their top reason for making the move. with the company—whether those customers, customer complaints and interactions were via a store, website, even average annual customer value.3 catalog or call center. Yet, according to an Accenture survey of global Clearly, companies must do a much No insight equals marketing executives, only 29 percent better job of knowing who their no connection of companies surveyed have a single, customers are and what motivates consistent view of all customers across them if they are to stimulate the strong all business functions. customer loyalty that is the foundation Why are companies continuing to for business success. struggle building strong and lasting Furthermore, the same survey found relationships with their customers? that companies are not regularly Based on our research and work with capitalizing on customer interactions as leading companies around the world, selling opportunities (typically because we believe the root of the problem 1. “The High Performance Workforce Study,quot; they lack a complete view of their is that most companies still lack the Accenture, 2004. customers). Only 39 percent of partici- capabilities to develop and act on robust 2. quot;Accenture Global Awareness Tracking Survey,quot; pating marketing executives said their customer insights—and that shortcom- January 2005. companies offer additional products and ing is preventing them from using 3. quot;2004 Customer Experience Management Global Survey,quot; by Strativity Group. services each time a customer contacts customer interactions as opportunities the company. 7
  6. 6. Business issues ranked by order of importance Attracting and retaining skilled staff 35% Changing organizational culture and 33% employee attitudes Acquiring new customers 32% Develop new processes and products 29% to stay ahead of the competition Increasing customer loyalty 29% and retention Managing risk 29% Improving workplace performance 28% Increasing shareholder value 27% Using IT to reduce costs and 27% create value Being flexible and adaptable to 26% rapidly changing market conditions Developing employees into 26% capable leaders 0 5% 10% 15% 20% 25% 30% 35% Figure 1. Survey of 800 executives conducted by Accenture. Customer insight Creating a single view A consumer may have a home mortgage, of the customer savings account, credit card, and unlocks the door to investment portfolio with the same bank. The capability that is at the core of Yet, because these products often are customer insight is the single view of profitable growth sold and managed separately, the bank the customer. Without such a view, has no way of knowing the true value it is impossible to paint a complete Where does such knowledge begin? It of that customer across its product picture of customers and their needs all starts with customer insight. The lines. Similarly, telcos have millions of and preferences. Gaining a single logic really is quite simple: unless a customers, each of whom purchases view of the customer begins with the company fully understands key aspects some combination of broadband, implementation of a data warehouse of a customer—including behaviors, wireless, local, long-distance and into which all relevant internal customer attitudes, and perceptions of the com- entertainment-content services. The big data—often widely dispersed throughout pany’s offerings relative to competitors’ challenge is to know what that specific the organization—is fed. This data includes products and services—it will be unable combination is for each customer and customer contact information, products to take the steps necessary to create a treat them accordingly. or services purchased, mode of purchases strong bond with that customer. (Web, store, call center, catalog) and To be sure, the challenge companies monetary value of purchases. Importantly, Of course, the simplicity of the concept face is quite significant. But it can this information must be augmented by often clashes with the reality of managing be solved. A number of organizations external demographic data on customers. thousands, hundreds of thousands or —including a country’s postal service, By teaming a customer’s transaction millions of customers and their multiple an energy company, a telco and a history with key data such as number interactions across numerous touch large retailer—have taken major strides and ages of people in the customer’s points. This is especially true with toward generating and acting on strong household, median income of the industries such as telecommunications customer insights. In the process, customer’s neighborhood, and customer’s and financial services, which often have these organizations are building better ethnic heritage, a company can transcend different types of relationships with relationships with their customers, the one-dimensional, internal picture customers depending on the particular becoming more competitive and achieving of a customer that purchase history service or product being purchased. higher performance overall. alone provides. 8
  7. 7. Just as important as getting the right type of data in the data warehouse is ensuring the data’s quality and accuracy. 9
  8. 8. Just as important as getting the right priate to the amount of business they At the call center level, lack of integra- type of data in the data warehouse is do with the postal service, and grow tion prevented call center agents from ensuring the data’s quality and accu- its overall customer base. However, detecting the difference among various racy. As the old saying goes, “Garbage they also recognized that their existing callers—for instance, a corporation that in, garbage out.” We have seen many customer-facing database systems were did $10 million worth of business with the companies spend considerable time and holding them back. These systems were postal service versus an individual who money implementing a data warehouse, spread throughout the postal service, did $10 in shipping. Because they had no but fail to take the necessary steps to had their own set of business rules and way of knowing how much business each ensure that what goes into the ware- view of the customer, and had no link- person calling the postal service was house is clean and consistent. Tools and ages to each other. responsible for, agents treated every governance processes must be put in caller the same way—whether it was place to maintain data integrity and, This lack of integration and pervasive the $10 million customer complaining hence, its value to the organization. data integrity issues resulted in serious about recurring service problems or the operational problems for the postal $10 customer claiming his package was One country’s postal service has service. Because the organization didn’t not picked up on his doorstep. Besides experienced firsthand the value of a have the tools in place to handle the obvious implication—that the more single view of the customer. Facing variations in the name or address of valuable customer was not receiving formidable competition in the express the same customer, a misspelling of a more attentive and urgent service— mail segment, the organization was in customer’s name could lead to the same this situation also resulted in missed trouble. It not only was losing money company being counted as two different opportunities for cross-selling and agent on various customer segments, it was entities. This was especially problematic follow-up to ensure that the problem losing customers to competitors better when it involved a major customer, has been resolved satisfactorily. equipped to understand and meet their because reports based on such data needs. Agency executives knew that the would not provide an accurate picture The postal service eventually decided organization needed to develop deeper of just how much business that customer it had to act. The organization first insights into its customers to create conducted with the postal service (and, designed, developed, tested and deployed more relevant service offerings, ensure consequently, the importance of that a technology solution that automatically a level of service for customers appro- customer to the postal service). cleanses and standardizes the data in One telecommunications company knew that the only way to grow was to convince customers to switch from its competitors. 10
  9. 9. all the postal service’s systems, and uses As a result of this initiative, the postal the behavior and value of customers; advanced matching capabilities to link service team now has the capability to and tactical customer and prospect corresponding customer entries across target marketing, sales and service ef- segmentation to continually improve the disparate organizational systems forts to specific customer needs, as marketing campaigns based on to one unique identifier (a customer well as identify new revenue and cost- initial response. identification number). Next, the agency cutting opportunities. Whereas in the created a central repository of the 16 past, the organization was centered Building on effective segmentation, the million uniquely identified postal service on products and services, its new company then can take advantage of customers, as well as a cross-reference customer-centric model enables postal best-of-breed marketing practices and capability that allows the postal service service employees to cluster products a more rigorous, scientific approach to know which systems are storing by particular customer segments, to customer interaction to plan and transaction information for each of thus resulting in better service for coordinate multi-channel campaigns these customers. The various source these customers. that reach customers with the systems can access these capabilities, appropriate offers via their preferred Executing more precise targeting in batch or in real-time, depending on channel. And by using advanced and superior campaigns their business needs. Finally, to improve technology to automate the campaign the quality of customer data stored in With a single view of the customer, development and execution process, the the source system databases, the project an organization can take the next step company can capture information on team worked with each source system toward building stronger customer campaign performance to continually business owner to assess data quality relationships: executing more precise improve campaign effectiveness. and address issues such as duplicate targeting and superior campaigns. customers, bad address data and missing Using a variety of analytical tools and The experience of one global telecom- customer information. The resulting processes to deeply analyze customer munications company illustrates the data consistency across all systems and prospect data, the company can impact more precise targeting and gives the postal service a clear and conduct strategic market segmentation better campaign execution can have on accurate picture of every way in which to understand its relative position in the a company’s marketing efforts. Facing the organization serves a customer—and marketplace; strategic customer and a saturated mobile phone market and opportunities to enhance that service. prospect segmentation to understand stiff competition, this company knew 11
  10. 10. Organizations are becoming experts at learning what their customers want and need, and then giving it to them. that the only way to grow is to convince customer data would be consolidated. the company has improved the speed customers to switch from its competitors. This repository enables the company of campaign creation and execution Doing so hinged on the ability to under- to quickly pull relevant data for and has strengthened its analytical stand customers’ lifestyles—and then to specific campaigns. It also allows the capabilities and on-demand evaluation more effectively communicate how its company to conduct complex analyses of campaign performance. Company offerings fit into those lifestyles. that often require cross-referencing executives believe the new campaign with different data sets. Next, the management capabilities give the telco To address the challenge, the company company implemented a new campaign a strong competitive advantage not only streamlined and automated a large management system that would access by solidifying the company’s current number of activities associated with the the data in the repository for analysis, market leadership position, but also by planning, execution and evaluation of segmentation and list generation by laying the groundwork for future efforts marketing campaigns. The company’s marketing personnel. This system is that are expected to include real-time existing marketing campaign design and critical to the marketing team’s ability to personalization capabilities that can help implementation process was actually more efficiently and effectively launch the company boost revenue through quite mature and effective. But the campaigns to the right audience, and increased cross-selling and up-selling. process of identifying campaign targets to evaluate the effects in time to make Boosting customer loyalty and evaluating campaign effectiveness necessary adjustments. and lifetime value required considerable time and effort to gather and cleanse data from disparate As a result of its efforts, the company History and conventional wisdom systems, as well as to collect customer has reduced by 25 percent the cycle tell us it is much cheaper to keep a feedback. Also, necessary adjustments to time of marketing campaigns from customer than get a new one. So while the campaign could not be implemented initial data sourcing to final evaluation organizations make a pronounced quickly because of the lack of an of campaign performance. In fact, the move toward more aggressive customer appropriate online analytical tool. telco’s campaign process has become 32 acquisition, they must not do so at the percent more efficient, as measured by expense of existing customers who To improve its campaign management the amount of time that the activities are a prime target for competitors. process, the company first built a associated with the campaign are actu- As customers become more informed campaign data repository in which the ally adding value. Through automation, and competition intensifies, leading 12
  11. 11. companies have recognized the clear that the company no longer could customer service agents, marketing necessity of instilling discipline and pursue business as usual. and sales specialists, and other parts rigor in their customer loyalty activities of the business with complete views of and boosting the lifetime value of their One of the company’s biggest problems customers’ product/service holdings and most profitable customer segments. The was that its product orientation, their contacts within the company. key to managing and growing loyalty coupled with a number of process is developing specific experiences and technology shortcomings, made On the heels of the successful rollout for each customer segment that are it extremely difficult for employees of the new CRM system, the project unique to those customers and their to understand—and, thus, effectively team moved to phase two: adding specific needs. By analyzing patterns market to and service—customers. an enhancement to the system that of churn on a segment-by-segment Company executives recognized that would help call center agents become basis, an organization can develop a incremental fixes and process tweaks more successful salespeople. These deep understanding of the reasons why would not be sufficient; nothing short enhancements included “campaign customers defect. Once a company has of a complete transformation in the way prompts” that are marked against each identified its most important sources the company dealt with customers— customer’s record in the CRM system, of value, it then can develop specific including marketing, sales, service and which is linked to a data warehouse that loyalty programs that have the highest billing—was needed. contains more detailed information on chance of being enthusiastically customers such as complete transaction received by the most profitable The company ultimately embarked history and demographic data. Another customers. on a multiphase project, the first improvement is a product configuration phase of which involved creating a tool that enables employees to select A major provider of gas, electricity and common CRM technology layer on the different types of options on a a variety of home heating and plumb- top of the company’s legacy systems product (payment methods, rates, ing services faced a loyalty crossroads for gas, electricity and home services etc.) along with a common three-step of sorts. The confluence of three key customers. By aggregating the separate process to configure, price and submit challenges—intensifying competition, sets of product-based information a sale. And a number of automatic increasing customer churn and heightened into accurate comprehensive customer and integrated validation steps have investor pressure for growth—made it files, the company could provide its been added as part of the sales process 13
  12. 12. Targeted campaign prompts in the CRM system have delivered uplift in sales conversion rates. 14
  13. 13. Current business issues: France Current business issues: Japan Figure 2. Survey of 800 executives conducted by Accenture. improvements, including address and dramatically. Following the completion business. This approach had the retailer payment validation and credit vetting. of the second phase of work, average carrying a wide assortment that was handling time for energy customers difficult for its sales force to support As a result of the project, the company increased from 4 percent to 11 percent, and that greatly hindered profitability. is enjoying numerous operational and but sales conversion rates rose by as The company thought that shifting to financial benefits. All sales agents in much as 30 percent. Similarly average a customer-centric business model—a the company now have a single view handling time for home services new store layout, selling strategy and of its customers—and all the products customers jumped by 3 percent but was operating model geared to the retailer’s they hold—over its three major business accompanied by an increase in sales most profitable customer group—would areas (gas, electricity and home servicing). conversion rates of 7 percent. restore the organization’s growth This single customer view has improved and profitability. sales people’s efficiency because they Targeted campaign prompts in the are entering fewer duplicate sales, no CRM system have delivered uplift in The retailer’s first step was to mine longer wasting time trying to acquire sales conversion rates. A pilot of the its customer database to determine customers that already are won, and campaign prompts functionality across the shopping and lifestyle traits of the spending much less time recontacting four different sites demonstrated an company’s most profitable customer customers for more information. average uplift in conversion rates of group. After conducting a fact-based 7.3 percent. Rejection rates on sales analysis of historical purchases Because the CRM system supports a made by field agents have been reduced and primary research, the company common process and front-end interface from 60 percent to 25 percent due realized that it didn’t need such a to energy and servicing sales, all call to improvements in the automatic broad assortment. On the contrary, center agents can easily generate quotes validation, credit vetting and address its most profitable customer group and create customer orders—which verification processes implemented. And, wanted select, fewer items with has greatly increased agents’ ability to within just a few months of operation, better sales support and higher-value carry out cross-sales, and has spurred the CRM system significantly stemmed offerings. As a result of its findings, agents to actively look for cross- the company’s loss of gas customers. the company began reformatting its selling opportunities. Furthermore, the stores to expressly appeal to its most customer-centric nature of the CRM A large retailer is another company profitable customer segments in various system gives the company a unique that has boosted its top and bottom geographic areas. The new-format ability to generate deeper customer lines on the back of stronger loyalty. rollout is still in its early stages, but insights and marketing programs To differentiate itself in a crowded thus far, the company reports that based on the actions and life events market and reverse a serious decline its new formats are generating sales happening to its customers. These in revenue and profits, this organiza- at twice the rate of the company’s operational benefits have led to some tion decided to make a major shift in traditional formats. dramatic, measurable improvements in focus. Historically, the company had the company’s business. For example, a very product-centric approach that sales conversion rates have increased dominated almost every aspect of its 15
  14. 14. Conclusion To be sure, building and Leading organizations such as and need, and then giving it maintaining strong, profitable those profiled are examples of to them. In doing so, they are customer relationships is far how customer insight can be positioning themselves to make from easy. It requires significant a powerful tool in the drive and strengthen the connection shifts in organization and culture, toward more valuable and with customers that is so vital to sophisticated technologies and lasting customer relationships. keeping revenue and profits high analytical capabilities, and the Armed with a single view of and leaving competitors far, discipline to continuously monitor its customers—and leveraging far behind. and measure the results of all that capability to segment marketing activities. And, because customers more precisely, of constantly changing market execute more effective and conditions, “customer nirvana” efficient campaigns, and drive is a journey, not a destination. stronger customer loyalty and However, although difficult, it’s a higher lifetime value—these journey that every company must high-performance organizations take to grow and prosper in the are becoming experts at learning next five, 10 and 20 years. what their customers want 16
  15. 15. About the Author Alton L. Adams is the Global Managing Partner for Accenture’s Customer Insight practice in the CRM Global Service Line. Mr. Adams has more than 20 years of experience in marketing, sales and general management. He has particular expertise in the use of information for sales, marketing and risk management decisions. Prior to joining Accenture, Mr. Adams was president of the Database Solutions business at Experian, specializing in customer information, decision support and target marketing services. Before joining Experian, Mr. Adams held several positions in the information services industry, including executive positions with TRW, Equifax and Standard and Poors. Mr. Adams holds an MBA in Marketing & Finance from the Wharton School and a BA in Economics from Georgetown University. He can be reached at: 17
  16. 16. About Accenture Accenture is widely regarded as Accenture is a global management the leading provider of consulting consulting, technology services and solutions and managed services outsourcing company. Committed to designed to deliver high performance delivering innovation, Accenture to your business. The company infuses collaborates with its clients to help marketing, sales and customer service them become high-performance operations with strategic insight, businesses and governments. With sophisticated data analysis, advanced deep industry and business process technology and operational excellence. expertise, broad global resources and Combining experience, innovation a proven track record, Accenture can and a global delivery network, our mobilize the right people, skills and Customer Relationship Management technologies to help clients improve professionals team with clients across their performance. With more than virtually all industries to design and 115,000 people in 48 countries, the implement strategies for creating company generated net revenues of customer experiences that enable US$13.67 billion for the fiscal year growth, increased profitability and ended Aug. 31, 2004. Its home page is high performance. Copyright © 2005 Accenture All rights reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture.