ECRM and the Art of Customer Retention
Time was that marketers simply marketed. They told a story that engaged potential customers in their brands. They talked at people, hoping to attract, seduce and exploit. Retention was simply about delivering what was expected - not disappointing - and being consistent. In this article, Felix Velarde explains the relevance of data management and understanding segmentation to increase sales.
By Felix Velarde
When I became aware of interactive marketing in the early 1990s it was because of a CD-Rom called Xpand Expo, a virtual exhibition hall that you could click around, read text files placed on virtual stands, and that was about it. They'd spent a lot of time rendering an exhibition hall-like suspended ceiling, and done a good job of selling virtual stands to the likes of HP. What occurred to me at the time was that here was a golden opportunity to give some power to the consumer, by removing the sales person - but it needed structure and marketing thinking to make it engaging and work. I started my first digital agency to do just that.
Interactive multimedia truly gave the power of self-selection to the consumer. It meant if we gave consumers five choices, they'd (almost certainly) choose the option that appealed to their needs most. Slightly problematic in that getting CDs to enough potential customers was expensive and the media was fixed. No-one in marketing took it very seriously. Then the following year along came the world wide web, and the world changed in twelve months.
Marketers cottoned onto the opportunity - eventually - to engage customers in a dialogue driven by the customer herself. Websites became big business for forward-thinking clients and agencies like ours; getting people to the websites became the next challenge but again, tapping into elective channels made sense and worked in practice. In fact, the agency I run now started as a search engine optimisation (SEO) agency in 1996 as an offshoot to our web agency. And actually that leads me towards the problem marketers face at the moment, which in my view is crippling the advance of interactive, elective experiences that customers can enjoy and companies can make millions from. And they can, because some have seen how to solve the problem.
The issue is that in the years following the early pioneering experimentation, digital marketing has become siloed. When I last looked there were 3,500 companies claiming to build websites. SEO has become an industry in its own right - in fact, two industries: organic (natural) search optimisation and paid-for search (PPC – pay-per-click). Web has become websites plus tactical microsites, often by different agencies. The DM agency probably has a microsite supporting a print campaign. The PR agency is looking after "reputation management", though it might be subcontracting the Facebook page to a social media agency. Oh, and the online ad campaigns are being specified by the media buying company.
I'm sure it all made perfect sense at the time.
So here's the situation most clients (except the really canny ones staffed by strategic thinkers) find themselves in today. A dozen agencies, some nested or subcontracted. Each of them doing what they've been told. And if they're good, each one is trying extremely hard to improve on what they did last quarter, incrementally increasing click-throughs or eyeballs or impressions or recall by 3%.
Many of the really good ones will be coming to you with really great ideas for attracting new customers. Fantastic viral ideas coming from the ad agency. A really good creative hook with legs from the online agency that will reach new audiences and probably drive some extra traffic to the website too. And what with the e-commerce company annually improving the sales funnel, well, it's an ever-improving world out there. But while all these bits and pieces are individually doing better than whatever they were doing before, they are also gradually losing touch with each other. It used to be that marketing marched to a single coherent beat, where the TV ad established the awareness and each other medium elaborated on the brand message. Yet that's fragmented badly, and what we're left with is a mess of tactical, competing, agency-income-motivated digital campaigns that have no backbone or strategy, and which often do more to confuse the customer than empower them.
It's a situation we see all the time. And there is a simple way of getting out of it, though it takes will, vision and patience.
We need to go right back to the customer. The data is the key here. All of the various marketing activities I've described deliver data in fairly large quantities - data about who your customers are, how they behave, what they like, how many times they buy, how much they spend, how long they last, how quickly they churn and so on. Again, it's probably in a variety of different places, but that doesn't really matter. The first step is to find it all.
So, step one, find the data. Any eCRM agency worth its salt (shameless plug: mine's called Underwired - we changed to eCRM from SEO in 2003 because even we were getting confused) will be able to manage the aggregation of this data, manage its analysis, and come up with insights about your customers. These insights inform segmentation - behavioural, demographic, technographic; value (by whatever measures)-led, loyalty-led, influence. And segmentation tells you what you need to say to each of them at what time to increase their engagement and to increase sales... when McCain Foods did this, engagement rates with brand resistors went from 14% to 63% in just ten months.
So now we have a map of what needs to be said to whom and when. In its most basic form eCRM can easily be delivered by email. This might be augmented by microsites speaking and exchanging information with each segment. Supporting this you might want to extend forums or social media that allow customers to interact further with you, or each other. If you observe these closely enough you'll find out what's bothering customers - in fact they might show you how to segment them even further or what's going to interest them in the future.
And suddenly (well, to be fair it might be three to twelve months) you have the kernel of a digital strategy. Followed through, the segmentation which came from all that disparate data can start delivering genuinely useful information that essentially becomes the foundation of a marketing strategy. Simply observing the success or failure of each strand of communication with a segment by watching the behaviour of the recipient, gives you the power to change the options you make available to her over time. It's enormously powerful, and because all that is being done is observing response and making changes based on what is seen, the power really is back in the hands of the marketer, even if it appears that the whole machine is being driven by the customer.
And from this observation of what works and what doesn't, what motivates or engages and what demotivates or disengages, comes the magic: very quickly we start to see which segments we want more of. And that means we know what to tell our agencies to do. They are suddenly working to your plan, not theirs, and your plan is driven by an eCRM strategy not an agency account handler's desire to make themselves famous with an award-winning viral or a 0.002% increase in banner clicks. Time was that clients drove strategy, rather than herding agencies, and eCRM brings that time back, at long last.
Felix Velarde is Managing Director at Underwired Amaze, one of the UK’s leading eCRM agencies.
For more information, please visit www.underwired.com and www.ecrm.co.uk.