Business Week has a great article on the approach of Del Taco to customer loyalty programmes. Sometimes building customer loyalty schemes is a simple affair of getting some basics right :
Del Taco has become the second largest Mexican fast-food chain in the U.S., behind Taco Bell (YUM). How did it manage this? Walk into almost any Del Taco restaurant and you'll find a counter card promoting the chain's new shakes (it also offers burgers and fries, in addition to tacos, burritos, and quesadillas). On the back of the card, visible to employees, is a reminder to smile and make eye contact with customers. The card is one example of the simple tools Del Taco President Shirlene Lopez uses to build customer loyalty.
Don't miss the little things. Effective communication skills played a prominent role in Lopez's career advancement and she sees such skills as crucial in the way Del Taco builds customer loyalty. "I learned at an early age that customers respond differently based on how you communicate with them. How you greet them and thank them makes all the difference in the world,"
Respect your employees and customers. Respect is a theme for Lopez. It extends to how she believes employees should treat customers as well as how employees should be treated by management. And she thinks eye contact and body language are necessary to convey respect.
Turn transactions into interactions. Lopez believes there is a difference between a satisfied customer and a loyal customer who returns to the same restaurant more than once a week-and tells people about it. According to Lopez, moving beyond merely "satisfied" customers to creating loyal ones is crucial in tough economic times when customers have fewer dollars to spend.
Very often we find organizations spending a lot of time planning and less time executing. So is the case with long gestation projects like Data warehouse. Most often, requirements keep changing, business challenges are also dynamic.
Here's an interesting article on how enterprises must start with data marts and get some quick-wins before they move to large scale DW projects:
An Enterprise Data Warehouse is a long term commitment: There are many imperatives (or foundations), which are key for a Data Warehouse. The examples of these imperatives are foundation or conformed dimensions, fine-grained granular data, comprehensive star-schemas etc...These elements need high level of readiness and investments to build these foundations. These foundations (though great for data marts as well) can be compromised for initial set of Data-marts.
Business Learning- Initial set of data-marts will provide great learning, less on the IT side and more on the business side. Here are the set of learnings from business side:
- Creating business themes
- Building Data-Mart Business Requirements
- Building Dimensional Model
- Testing of Data-Mart
- Taking business decisions around the extraction and transformation
- Generating the information out of the Data-Mart through end-user tools (like reporting and analytics application)
Examples of IT Learnings:
- Extraction, Transformation and Loading design
- Processing Load Management
- Handling Data Explosion (data goes up exponentially as you add sparse fields- where most of the records are blank)
- Change Management (end-to-end impact analysis if you make a change in the Data Mart Model)
Show-case for sponsors: A successful Data-Mart makes sponsorship of a Data Warehouse much easier.
Quick-hit: A Data-mart is a quick hit and gives earlier gratification.
Non-Disruptive: It does not take away the attention of an organization from other big things
Ron Shevlin has a very good post on the challenges banks face on differentiating their services. At Cequity, we do believe that "customization of services" is really the future of bank branding. Banks & Financial services business need to understand customer transactional behavior a lot more and tailor-make their services to customers according to their needs at that time. Differentiation by understanding "the pattern behind transactions" is going to become a huge competitive advantage for banks & financial services businesses in the future - which is starting now!
Take a look at what Ron has to say:
Financial services branding is a hot topic these days, from releases of (methodologically suspect) brand rankings, to a number of blog posts. Stealing Share published a study recently, and had this to say about bank brands:
"The major banks remain undifferentiated and deliver little to no brand meaning. What banks need is a new brand promise, one that is a reflection of who the target audience is."
In the future, banks will go down one of the following three branding paths:
1) Specialist. The brand message for firms going down this path will be "We do [fill-in-the-blank] - and only [fill-in-the-blank]." Fill-in-the-bank might be a specific product or service, or perhaps "serve" a specific segment of the market.
Rationale: The financial supermarket concept has never worked, and never will. Consumers have never wanted a one-stop shop, and many never will. Self-directed consumers who know what they want, are willing to put in the effort to manage their finances - and multiple financial providers - will place a value on firms that specialize in narrow product areas, services, or their particular segment.
2) Trusted, objective advisor. The brand message for banks on this path is: "We do right's for you - not us." Think Miracle On 34th Street with Santa sending customers to other stores because it's right for them. Sound crazy? Sure it does. But this is true differentiation - and will plenty of traffic in the door and on the site. It's working for Progressive Insurance.
Rationale: There's a segment of consumers - they tend to be younger, less affluent, less highly educated - that need advice and guidance on how to manage their financial lives and how to make smart decisions. Trusted advice is easy to get when you have $10 million in the bank (which is funny to say, because the people who have $10 million usually don't keep it with a bank). Trusted, objective advice - regarding both sides of the balance sheet (assets and liabilities) - is an unmet need among many consumers.
3) Operational excellence. The brand tagline for firms on this track is "We don't screw up - ever. And if we do, we'll fix it so fast you won't even know it happened." (I'm sure the copywriters will come up with more appropriate language).
Rationale: Relatively affluent, highly educated consumers value this more than anything else. When my bank screws up a $50 charge, it can only make me wonder: "If you can't keep track of $50, how can you expect me to invest $500k with you?
In India, yesterday the Government has announced the deadline & a roadmap for Mobile Number Portability (MNP). Cequity believes this is going to be an important challenge for telecom service providers in India and there is a need for customer retention marketing efforts in gearing-up to this environment, as this is just a few months away.
Here's is how South African Mobile operators have approached this challenge:
The introduction of Mobile Number Portability (MNP) enabled South African mobile phone service customers to retain their phone number when changing telecom service provider, this was expected to test customer loyalty and trigger far higher levels of churn, as it did in other countries that have already introduced number portability. Analysts believed that more than one-quarter of consumers (a predicted 27%) will change networks within one year of the service becoming available, and such predictions have ensured that strategies to retain customers are now firmly at the top of the agenda for the country's telecom service provider.
What drives churn?
Although particularly rife in fiercely competitive industries such as telecoms, customer attrition is a significant problem that spares very few companies. The mobile communications industry in particular is largely product driven and price conscious - two traditionally strong reasons for runaway customer churn. But Moodley suggests that the main driver of churn may actually be service delivery, both in terms of customer service and network performance.
"Although it might appear otherwise, with price conscious customers clamoring for the latest and greatest handsets, these reasons tend to cancel themselves out in the age of hyper-consumerism," said Moodley. "And products and service packages are quickly replicated by the competition anyway, so there is no real, enduring advantage from either."
"The higher rates of churn will predominantly be from customers with existing complaints or reasons for wanting to move, simply taking advantage of MNP."
Predictive modeling techniques based on empirical evidence and analytics can help find churn patterns. By combining a variety of mathematical techniques, including artificial neural networks, statistical regression, and decision trees, many SA mobile operators determine the propensity of any individual customer to cease doing business with a company within a given time period.
The results are often surprising: "You might be under the impression that customers want the latest phones or trendier outlets, but - for example - a large number of those leaving the network may have experienced a considerable number of dropped calls in the past six months."
Analytical customer management strategies can certainly be helpful for mobile phone network operators because they have unusually rich transactional data, which allows very specific patterns and results to be identified.
Cequity View Point: Collaborative & iterative approach is the need of the hour
Continuous, easy & quick analysis will be very useful and to maximize the efforts of customer centric marketing, customer service, and other departments, data analysis has to work in a synergistic manner. Analytical insights must be effectively used by marketers to have an interactive "dialog" with their transactional data--and also allow a cross-functional team to review the latest data and create meaningful interactions with customers that are most at risk at any given time.
Better access to and understanding of customer data will help circle heads take informed decisions and help build better customer relationships. Faster cycle times can accelerate deeper understanding and improve time-to-market--both will be key to success in an increasingly competitive marketplace like India.
The key to effectively combating number portability related churn is a flexible and iterative approach.
According to a Nielsen report on consumer insights, stronger and longer-lasting customer relationship can be achieved by a sound analysis of shopping behavior, leading to targeted marketing programmes.
At Cequity, our belief is that loyalty marketers don't really use their customer loyalty marketing data effectively for creating tangible business impact. Our belief is that loyalty schemes data has to be effectively used real-time(week after week in grocery retail or month after month in lifestyle, CD/IT retail) in target marketing campaign services to build " value perception" & " personalized service/rewards privileges" amongst loyal customers.
Take a look at what the Nielsen Report has to say:
Foundations of loyalty
In an increasingly competitive marketplace, companies that use their loyalty programmes to establish a deeper relationship with their customers are better positioned to prosper. Two foundational factors are especially important within any loyalty scheme:
- Maintaining good customer data with insights, which can be easily distributed throughout the organization for decision-making;
- Developing a business culture that constantly looks for ways to improve programmes that benefit customers by applying shopper insights.
Creating a process for gathering insights, testing programmes and learning about customer response is important. While a few interesting facts about a cardholder's household composition might come from the initial card application, such information and even deeper insights may also be derived by capturing sales history and assessing information about customers from transactional-level purchase data.
Sales data not only tells an analyst about additional family members in a cardholder's household, but it also identifies opportunities to target the household more uniquely through a better understanding of preferences for specific categories, products and brands to satisfy the special needs of a child or any other household member.
Increasingly-sophisticated models also enable analysts to understand why customers shop, how they shop, what they buy and how sensitive they are to various price structures. If properly collected and assessed, sales data can point out everything from pets in the home to family health and nutrition needs. Analysis of the data becomes one way to answer those burning business questions:
· What do customers want?
· How can I keep them shopping in my stores?
· What opportunities exist to increase sales?
Understanding data, analysis, and decision-making are only as good as the commitment by business leaders to continuously apply the insights to developing programmes that positively impact customer behavior. This kind of transformational change and the impact it has on the enterprise takes time. If leadership embraces the use and application of customer data, the business will follow. Even then, the business must adapt in other ways.
Structural changes needed
Organizational and structural changes are required to re-align goals and incentives or develop planning processes that place a focus on the customer. The end result, however, works. Nielsen Loyalty has witnessed established retailer programmes achieve:
- Sales effect increases of 1% to 5% in same store sales;
- Loyal customer basket sales increases of 5% and 9%;
- New customer retention rate increases from 20% to 40%;
- Supplier funding for insight and communications rises from 0.05% to 0.1% of sales;
- Promotional budget savings from 20% to 40%;
- At least 75% of sales tracked at customer-item level.
Every aspect of a retail business and the interaction with supplier partners must embrace the needed changes for these levels of success to occur. It does not happen quickly, but the sooner the shift in focus occurs, the sooner all parties can begin trialing new solutions.
A good example
One North American retailer, well known for rewarding it best "Platinum Fans" customers, wanted to use its Loyalty programmes to further build customer affinity and grow sales. By all accounts, this grocery chain has earned some measure of success-achieving over 85% of sales on card by reinforcing a message of customer value, targeted offers, and special services. These loyal customers received periodic special in-store gift cards and coupons presented to them directly by the store manager for maintaining high loyalty thresholds.
DM Direct has interesting article on how now it is important to take data, information & analytics from back-office to front-office if it has make business impact & drive ROI. At Cequity, we have been constantly talking to business leaders in different forums and also advising our clients that it is imperative to find methods to convert data into action in real-time. Else, given the huge data decay that happen over a period of time, one always tends to use data to analyze the past rather than influence the future or proactively manage the present. This is really where we believe enterprises must build competitive advantage with data analytics and data-driven marketing.
Take a look at what the DM Direct article has to say about this:
We've all been through it. After a frustrating attempt to figure out a discrepancy in your phone bill online, you finally give up and call the company. After being transferred twice and speaking to three people who each had to validate your information and ask what the problem was the problem of customer-facing analytics takes on real meaning.
Improving Phone Interactions
Most people who call into customer service are already irritated. The best way to transform an unhappy customer into a happy one is to address his or her problems quickly, interact with the customer on a personal level, listen to (and document) their issues and provide information about what will happen next. A customer service representative armed with information can transform a bad situation into a memorable, positive experience.
For those instances when a customer calls into an organization for reasons other than a problem - for example to start a new service - customer-facing analytics provide the customer service representative the ability to capture information about a prospective client and tailor offerings to the individual's needs. For example, a phone company can sign up a family for the most cost-effective plan. Analytics provide the ability to cross-sell and upsell based on consumer patterns, versus promoting a cookie-cutter offering for all customers and making them feel that they're just another checkbook.
In-person encounters with customers provide the opportunity to make a lasting impression. Any employee can be a company advocate in your campaign planning to create customer satisfaction, but one behind a computer screen can be a particularly valuable asset. In addition to providing good service, a customer service representative can ask better questions to serve a customer, provide insights into products that may interest the consumer and appear more knowledgeable.
As analytics improve, it's astonishing how good computers have become at "guessing" what you'd like. Netflix predicts what movies a viewer will enjoy based how the viewer has rated other movies in the past. Through the simple application of customer analytics, the Netflix Web site provides a valuable recommendation service. Customers expect this level of service, and it's becoming commonplace on successful businesses' Web sites.
The CMO council recently released the findings of the Sales & Marketing Silo, emphasizing on how important it is for organization to have unified data sources for better customer management. Since data between sales & marketing need to be fused for increasing marketing ROI. At Cequity, we too see this gap existing in companies as a part of our client assignments. Enterprises need to effectively harness this data for increasing marketing ROI. Many companies have recently started to take steps in breaking this silo and ensuring there is better synergies between these two departments. Here are the survey findings:
- Less than 20% of respondents said that their sales and marketing organizations were "extremely collaborative", and most others felt that the two groups had "intermittent relations and interactions".
- Looking at the ways in which sales could add value to marketing messages and communications, survey participants felt that engaging strategically with customers to better understand their problems and needs was the most valuable contribution.
- Two of the most important roles that marketing can play in optimizing sales performance were cited as "fielding campaign services that generate and nurture leads and opportunities", and "providing customized value-selling content and presentation materials".
- Only 12% of sales and marketing professionals said that they have a well-integrated, real-time view of all customer interactions, and only 37% reported good visibility into prospects, sales pipeline, deal flow and conversion rates. At the same time, 20% indicated that marketing currently hands leads to sales but has no insight into conversion and sales closures.
- 13% said that most sales leads are never captured, qualified, or acted upon, while 11% reported that they have no on-premise or on-demand customer relationship system in place.
- Among those who have customer relationship applications, only 13% viewed the application as "highly valued and widely deployed", while 42% reported growing acceptance and adoption. And, while CRM systems tend to be mandated and adopted across the sales function, they tend to be more selectively embraced by marketing teams.
- Data analytics, reporting, and forecasting tend to be the biggest deficiencies in optimizing the functionality and usability of current customer relationship management solutions. The top three areas highlighted by nearly 50% of respondents were: the ability to easily create analytical reports; customization of the application; and forecasting capabilities.
- While 50% said they had "pretty good" or "extensive" visibility in to customer accounts and business activity, the remaining 50% said that they often had trouble finding customer account data, did not have enough information, or had no information at all.
A slow economy does not always mean death-knell for brand marketers. The ones who mine customer data, identify purchase patterns and discover useful insights will be the ones who will win in this environment. At Cequity, we continue to advice companies to walk this path with 3 specific strategies:
- 1. Accelerate your customer database management strategy
- 2. Embed analytical thinking within marketing teams where use of data & analysis is made mandatory
- 3. Micro-market - Identify smaller & smaller segments and increase campaign velocity with relevant offers
Here's what the article has to say:
According to Experian, companies that can gain useful customer insights through integrated marketing techniques will benefit from greater agility than their competitors and will be able to more quickly adapt to market changes and provide products, services, and value propositions that are more closely tuned to customer needs and purchasing patterns.
Collect insights, not just data
According to Marie Myles, director of marketing consulting at Experian's Integrated Marketing division, "Based on our experience with some of the world's largest consumer brands, the turbulent economy simply means a re-doubling of efforts to derive even more valuable intelligence from every consumer interaction."
Actions for brand growth
- 1. Understand customers and their needs
Customer insight needs to be continually revisited to ensure that it is up to date, focusing research investment on this area and not solely on the brand. Marketers need to use this intelligence to create engaging and relevant messages based on a solid understanding of each customer's preferences, needs and behaviors. This will pave the way for true one-to-one communication and enhanced brand loyalty.
- 2. Analyze and segment
Customer profiling, clusters or RFV models are essential to identify which customers are spending the most, how to uplift sales and to detect high value customers that show signs of diminishing value. As new trends emerge, marketers can use this insight to adapt and refine retention marketing techniques on a personalized basis.
- 3. Adapt products and services
It is imperative to assess the environment and for marketers to re-evaluate their propositions. In a changing economic climate brands need to be responsive to evolving buying habits. By taking this approach, marketers will be able to offer a better service to customers, making it harder for competitors to lure them away.
- 4. Integrate channels to increase customer engagement
Customers expect to be contacted through different media. Companies need to understand these media links and weave different online and offline messages to build compelling, engaging and personal experiences. Integrating channels at different stages of the customer buying cycle and customer management programme will drive benefits including a more consistent and persistent message.
New customer attrition within the first three to six months can be up to 200 percent higher than annualized rates. And the simple act of calling or sending a letter to new customers to thank them for their business and explain the features of the product they just purchased can go a long way in ensuring their satisfaction.
Research shows that because customers with two or more services are 33 percent less likely to leave the bank, cross-selling should a major objective of an on-boarding program. Research also shows new customers are six times more likely to open new accounts when compared to prospects. And 75 percent of cross-sales from retail checking customers occur within 90 days of account opening.
The cover story on on-boarding in the ABA’s Bank Marketing magazine says banks need to: “Create a structured program to cross-sell new people and lock them in — so that deposits don’t go out the back door as fast as they come in the front.”
Here is an interesting article from the Bank marketing magazine: Interestingly Ron Shevlin has this take about how cross selling along with On-boarding is just such a bad idea! His view is that we should ensure that the on-boarding process focuses on “helping your new customers make the best use of the products or services they’ve ALREADY signed on for”. He goes on to add that “In many respects, developing a customer relationship isn’t very different from developing a personal relationship. There has to be some mutual trust, mutual benefit, and some degree of engagement. Sorry for the crude analogy, but cross-selling new customers practically immediately after they become customers is like asking someone you just met at a bar back to your place.”
Read Ron’s interesting comments on cross selling At Cequity , we wonder how this process works out in the “growth markets”. Especially in under banked countries like India where there is just such a mad rush to acquire new customers that the entire notion of running a “welcome process” seems just so alien! And yet the On-boarding process is also so strongly linked to even “regulatory” processes like “Know your customer” which bankers are supposed to follow!
At Cequity, we have always believed that "earning points" in a loyalty program is a means to an end and not the end itself. Many companies fail to see the data from such programs holistically and tend to treat it too tactically leading to managing the points rather than an effective customer management service intent with which they started these programs. One of the few companies that have made this transition happen is Harrah's Entertainment. Here's what David Norton, CMO of Harrah's Entertainment had to say on loyalty card scheme:
Pointillism is a painting style in which the artist dabs small dots of primary colors on the canvas. Viewing the artwork at nose-distance, you see nothing but adjacent points. But step back, and suddenly you see Georges-Pierre Seurat's A Sunday Afternoon on the Island of La Grande Jatte.
Analysis of customer behavioral and transactional data can similarly suffer from such granular myopia. Individual data points viewed without an overall perspective not only masks the larger view, it also blinds you to opportunity.
When I joined the company in 1998, we designated customers who played $400 in a given visit to one of our casinos as VIPs who received preferential treatment. But a customer who played $402 during one visit, triggering VIP treatment, might play only $398 on a subsequent visit and receive no such treatment. More importantly, customers who played only $50 a day but visited 50 times a year received no differentiated service at all.
As our goal is to see the total picture of a customer's play with Harrah's casinos, members earn credits across any one of our 12 casino brands. This feature not only benefits our members; it also allows us to measure their cross-market play. A third of our revenue comes from members playing in a property other than their home property-whether home is Las Vegas, Atlantic City, Reno, New Orleans or Tunica.
Our Total Rewards database also gives us unique insight into our customers' total relationship with Harrah's-including their non-gaming spend. Historically, Harrah's Entertainment earned 80 percent of its revenue from gaming; our initial data analysis revealed that we received less than a third of our customers' non-gaming budget. Once we acquired the Caesars Entertainment family of properties, however, non-gaming revenue-from hotel stays to fine dining to entertainment to shopping-became a significant portion of our business. Caesars Palace provides a strong gaming revenue stream from a relatively small number of VIP players, but many Caesars customers come to Vegas for non-gaming entertainment. We can now encourage non-gamers to use their Total Rewards card, for stays at Caesars Palace, trips to the spa and on our shows and still receive all the benefits of our loyalty programmes. Today, $2.1 billion of our revenue comes from non-gaming activity-and we want the total picture of those customer relationships too so we can customize their marketing and service interactions and thus increase marketing roi.
Companies spend millions and millions of dollars running marketing programs to both acquire and retain customers. But, we do believe that in an increasingly multi-channel environment, companies will be able to realize multi-fold returns on their spends, only if they automate the marketing process. Erick Slack writes:
Perhaps the biggest stumbling block for companies debating whether to purchase a marketing automation platform is the fear it will be a high investment getting wasted. But if you're a business leader, you should really be concerned with how a marketing automation platform can increase sales. Whether you want to capture more leads, qualify the strength of leads or determine the value of leads after a marketing campaign, marketing automation platform can help, which inevitably results in higher sales numbers.
Marketing-automation solutions integrate marketing and lead-management programs to improve their effectiveness. Criteria for determining the strength of leads can be combined with tools for permission-based emails, direct mail, customer surveys and market-research solutions to ensure that you're targeting the right customers.
Improved Sales Opportunities
Marketing automation also helps ensure that sales and marketing departments are in harmony about how to achieve the desired increase in sales. The software can provide tools, research prospective leads and conduct personalized marketing campaign services. According to strategist and business adviser Jill Konrath, "The only way to capture the attention of corporate decision makers is to create a very personalized message based on in-depth research of their firm."
Marketing-automation software additionally helps you determine if your last marketing campaign was a boom or a bust. Whether campaign planning is done for short-term results or is part of a long-term strategy, you'll have access to real-time information about all of your company's marketing and lead-management efforts. Analytical tools give you the ability to track campaign success or failure, and can help companies create metrics and protocols for crafting consistently effective marketing campaigns. This results in more leads, which naturally boost sales.
Given these benefits, many companies have realized the value of having an automation platform for their marketing campaign planning and have proceeded to take action to show quick wins and expand, once a business case is built with the right ROI metrics.
At Cequity, in many of the client engagements with CMOs across organizations, we always highlight the changing marketing environment, where the world of "monologue marketing" has shifted to "conversational marketing". This necessitates in marketing departments an understanding of data, closed-loop marketing competency - leads to conversion to relationship integrated messaging and marketing measurement. Here's an interesting article on how to increase marketing roi:
Many of today's marketing organizations were built and optimized for a scenario in which they had nearly complete control over the consumption of messaging. Changes in technology and society however have dramatically altered this picture. Due to shrinking reachability, and greater addressability the control has shifted to the customer. To remain relevant, therefore, marketing organizations need to re-optimize around the reality of this changed environment.
To truly optimize, marketing organizations need to reinvent themselves from the ground-up.
The core foundation of the marketing organization needs to be remodeled around the customer. Organization structure, segment valuations, KPI's, everything needs to be defined in terms of the customer.
Where the strategy piece was about establishing where you wanted to go, the tactics is about steering things on course. The hard part, of course, is figuring out what and where you need to measure to generate useful information critical for making the right adjustments. While analytics is clearly the center piece, user experience and insights also plays an important role in this stage. Together, these groups need to work together as a team to map out a course for continuous interaction improvements.
From an operational structure perspective the execution piece remains the most unchanged. It's not so much the how, but rather the what that has changed. Messages will still be delivered multi-channel, but the content and plan behind the message will be radically altered.
A couple of generalized thoughts on this topic; First, content is going to explode. In the age of conversations, each interaction is going to need a much more refined, personalized piece of content. Not only is more content going to be created, but will need to be managed.