Friday, November 17, 2006

Does Customer Value Creation mean digging deeper into your customer’s pockets?

I recently read an interview in CMC Insight.com concerning Customer Value Creation. CMC is the leading CRM information, news advice and best practice service in Europe.
What caught my eye was the fact that the interview was with another Adrian. Adrian Payne, Director of CRM at Cranfield School of Management at Cranfield University, UK.

It is not very often I find another Adrian and less often to find one in the Direct Marketing Industry. In any event, the interview with Professor Payne was interesting to me on several levels. He suggests that Customer Value Creation begins with identifying what represents value to the customer. This is very practical and sound Marketing advice. Unfortunately what I see here in the US is the creation of Customer Value described in strictly financial terms such as RFM, and LTV. I am not saying RFM, and LTV are not important, all I am suggesting is that Professor Payne may have something. However, before we all go off and try to redefine our Customer Value formula consider some statistics that he mentions. Keep in mind these are European stat’s, according to the Professor, Customer Value is used by 60% of all firms but only 5% actually have a structured approach. So what is a CMO to do? The good professor suggests that value creation is really a process and pursuit within an organization to create an outstanding or perfect customer experience, at an affordable cost! The Professor further suggests that Value Creation begins with a marketing audit of the five core processes, of Strategy Development, Value Creation, Multi-Channel Integration, IT Management and Performance Management. Including within this audit should be consideration of such broader issues like, does the value a customer receives get as much attention with senior management as the value they receive by way of the revenue and profits from that customer.In other words, is management looking only at RFM and LTV? The interview goes on from there and the Professor includes a number of case studies and real world examples of Customer Value in both B2B and B2C companies.

Wednesday, October 25, 2006

Multi/Integrated Channel Strategies and Organization Structures

INDUSTRY TRENDS:

  • Flat organizations work better than hierarchical
  • Less influence from central headquarters
  • Integrated functions versus centralized functions
  • Global companies are migrating to decentralized management
  • The number of channels is driven by the type of products sold
  • Management focus on market segments versus product groups assumes integration of data
  • The role of sales managers (business unit heads) is changing to manage multi-channel (direct sales force, direct mail, Web, Telephone sales)
  • Functional Corporate Structures (e.g. HR,IT, Accounting, Sales) have poor inter-unit coordination and create environments with restricted views of the organization
  • Product Divisional Structures are difficult to integrate and coordinate across product/division lines
  • Hybrid Combination Structures (combining product divisions and Headquarter functions) create environments with high administrative costs and high levels of conflict between divisional and corporate functions
  • Matrix Structures (joint functional and products heads) create environments that require dual systems to support functions and product lines. They are difficult to manage and expensive to integrate

TYPES OF ORGANIZATIONAL STRUCTURES:

  • Pluralistic=Different channel for different product groupings or product categories
  • Monolithic=Integrates the different channels via IT/Database Marketing, Minimizes conflictBy creating focus on different functions

Tuesday, October 24, 2006

Information, Not Data, Will Drive Future Corporate Success!

In order to assess how it is information and not data that drives success, you need to consider data within the context of the current business environment.
You can best describe today's environment as multi-channel, multi-media, multi-disciplined and multi-cultural.
It is an environment where businesses are placing more and more pressure for a Return on Marketing Investment. An environment where the customer is the central focus of business and it is the customer experience that is the “real” definition of Brand.
It is an environment where data and technology proliferate, while privacy legislation is at an all time high.
It is in this environment of convergence and conflict that we must consider the evolution of data to actionable information
In years past, demographic data was in some instances (e.g. auto registrations) very available but focused on public compilation and individual company single source data.
Today, as multi-channel marketing matures, data sources are expanding exponentially. Combined with the speed of technology, data is becoming highly available across corporate silos. The future will only bring more data and will require better technology to manage it.
However, today’s environment is not without its issues. As companies test and evolve CRM/CDI technology they are beginning to see that not all data is the same. Many multi-channel environments have matured with separate and often opposing goals, and objectives, often within competing organizations. The new channels have also had in many cases different maturity rates, resulting in the incompatibility of the newer supporting technologies. Things as simple as product descriptions and designations will and do vary. The result is that customer experience is more often characterized by circumstance than strategy.
While these circumstances all exist corporate goals are placing more emphasis and focus on the customer, and achieving better ROI.
However, in the future it will not be data that is the issue but information. It will be how data is integrated and how through analytics and segmentation the much-needed information is created.
It will be the continued dedication to accuracy and value of the source data that will drive this change. It will be the strength of the technology and the level of experience across all types of business and consumer data that will effect how successful you are.
Success will be driven by the ability to adapt, and by determining how you are maximizing your relationships with your existing customers. Success will come only through real and detailed understanding of your customer, and how they can and when they can, be interacted with. However, to accomplish this you first need to build the tools to react to your customer needs in real time.
To be successful you will need to truly personalize your communications through consistent messaging, and consistency within channels and you will need to “build to order” your brands, regardless of which channel a customer buys from.
This type of transformation of data into information will build the brand, but it will require the best data, analytics, and segmentation available.
The journey to this future will not be without its challenges. Even today, the demographic landscape continues to change. We live in a society that is getting older, living longer and is richer than prior generations. Households are not and cannot be defined the same way they were just a few short years ago. For example, Urban Tribes and same sex marriages challenge our traditional definitions.
The challenge then, is how to segment and to develop an understanding of the changing demographics, and how difficult it is to integrate data from disparate groups/channels.
Integration today holds the promise of one location to, store, import and maintain customer data, one resource, accessible across all channels from a single location.
But how can you get there? Individual internal organizations do not see the issues. They are too focused on their day-to-day activities. They currently use technology and data in a way that does not enable them to envision the power of multiple messages developed by multi-media.
I believe the solution is through developing a real understanding of the complexity of data integration and an understanding of the inconsistencies that multi-channel data can present. I believe that by evolving the right combination of technology with data, transforming the data into actionable information, successfully applied to customer behavior can become the required knowledge to drive future success.