Whether it's transforming an entire organization or implementing a new sales technology, the 2007 1to1 Impact Award Winners inspire ideas for building or breathing new life into any customer-focused organization. Read on for insight into initiatives and processes that may help you create your own winning strategy.
- Wachovia -- Customer Strategy
- GE Capital -- Organizational Transformation
- Astra International -- Tech Optimization: Full-Suite CRM
- Bath & Body Works -- Tech Optimization: Service
- Ring Bros. Marketplace -- Tech Optimization: Marketing
- Ingram Micro -- Tech Optimization: Sales
Wachovia wants to be the family bank for all of a family's financial products and services. To achieve this goal, the financial services giant optimizes the number of new households instead of maximizing the number of new individual accounts.
Wachovia launched this customer strategy in 2004, supported by a heavy focus on customer and marketing analysis. The bank needed to understand the impact of attrition, retention, and equity across all channels. So Dan Thorpe, group leader and director of analytics and senior vice president at Wachovia, and a small group of people from marketing designed a marketing mix strategy, built a customer equity database, and developed several econometric models to estimate marketing's impact on the components of customer equity, which for Wachovia includes customer acquisition, retention, and share-of-wallet.
The group considers such information as "What economic impact do our total marketing efforts have on our performance?" and "Given an understanding of what has worked so far, how best should the company allocate future marketing resources?" It also calculates long-term customer equity and lifetime value, applying customer equity as the long-term value of a household. This approach allows Wachovia not only to optimize its marketing spend, but also to balance short-term acquisitions with long-term value.
Top of Form
The foundation of the marketing mix method is Wachovia's 11 data sources covering about 60 DMAs (designated market areas), which are different channels where third-party data is collected. To dictate the optimal spend for each DMA, the marketing mix model uses SAS's customer intelligence product manager to incorporate and analyze both controllable and non-controllable variables, such as news coverage, brand perception, branches per capita, interest rates, competitors' rates, housing costs, and the consumer pricing index.
Wachovia takes that information and applies it to households to determine their overall value. Unlike many others in the financial services sector, Wachovia looks at the entire household to drive lifetime value. It looks at what drives a family's decisions. That's important because financial products revolve around lifestyle choices like mortgages, saving for college, or deferring taxes-and it's effective because of the interdependency between products.
Wachovia essentially analyzes where the different members of the households are in their lives, whether they're buying a home or saving for retirement. Then it uses media or ad spending to influence customer behavior, adjusting for perceptions and economics. To ensure that it's selecting the most appropriate ad/media mix, Wachovia experiments by taking small advertising footprints and testing where spending should increase or decrease. It can also reconfigure the marketing spend at the DMA level while keeping its total spend fixed.
The marketing mix model, which currently focuses on Wachovia's General Bank-the part of the bank that provides private and commercial lending, real estate, and investment products through Wachovia's 15-state banking franchise-gives directional insight about where to increase and decrease ad and media spend to yield a better return. And it predicts ROI across segments. Essentially, it explains the impact of the advertising variables that Wachovia can control and how they relate to customer equity and customer acquisition.
Since implementing the marketing mix model Wachovia has seen a 19 percent rise in customer equity. If that growth continues the company could potentially increase the value of its customer equity into the billions, Thorpe says. He adds that the company now recognizes overspending in some traditional media and underspending in some emerging media, so the company has made the appropriate adjustments in its 2007 strategic marketing purchasing plan.
Wachovia's overall marketing spend also has increased due to the model. CMO Jim Garrity says that spending in some areas in 2007 will increase by seven or eight times over 2006. The model has also revealed the significance of shifting more dollars online and increasing the marketing events budget. "The financial services category hasn't traditionally invested in media," Garrity says. "We're all moving toward segmentation because we can be more relevant in messaging and media."
For future sustainability, he adds, the company has moved from an intuition-based culture to a fact-based culture. "A fairly recent development is our ability to know by market what it costs to acquire a new customer," he says. "We literally found that the difference has been two times the cost in other markets. That leads to very explicit and strategic discussions with leaders of the business units to say it is important to acquire customers in xyz market."
-- Mila D'Antonio
Visitors entering GE Capital Solutions' Danbury, CT, headquarters can't help but notice the etched glass trophy case behind the reception desk. It's full of awards from GE corporate and magazines like 1to1, which has singled out GE Capital for excellence and impact resulting from its organizational transformation initiative of 2005-2006.
In some ways GE winning an award for change management looks like a slam dunk. After all, former CEO Jack Welch has become a best-selling author on management and current CEO Jeff Immelt is lauded for moving the huge company toward a leaner structure and more innovative operations. But GE Capital Solutions (GECS) hardly needed to restructure its measurement and management around the customer when it was formed in July 2005 as a merger of three profitable commercial finance divisions. Its net income for 2005 was $1.5 billion.
"It's easy when things are going great to have an attitude of complacency," says GE Capital Solutions senior vice president and CMO Juan Corsillo. "But we have seen a tremendous amount of margin pressure and the competition in this space is phenomenal."
This "space" is the industrial, commercial, and franchise financing that GE has traditionally ruled. Changes in the financing business over the past five years have led Corsillo and his team to leave nothing for granted-not in a market where by Corsillo's estimation, risky hedge funds have added more than $1 trillion in liquidity to the marketplace.
GE Capital's well-documented use of the Six Sigma process and more recent use of Net Promoter methodology have helped center the company around the customer. Less well-known are the ways Corsillo and his team took 15,000 employees from a money-centric approach to the company's current culture, which stresses innovation and customer process over the legacy of superstar executives.
Good Things Come in Small Packages
To engage employees in the more intense customer-centric culture GE Capital launched a company-wide campaign called In Their Shoes, which asked employees to put themselves in the shoes of customers when doing their jobs. Each employee received a shoe box with the In Their Shoes logo on it; the box contained a copy of The Ultimate Question by Net Promoter co-creator Fred Reichheld and "In Their Shoes" notecards to encourage listing or sharing information about customer-based successes. The note cards have been used within GE to congratulate colleagues on a job well done.
The program also included a contest that recognized and rewarded employees who demonstrated exceptional customer focus. More than 700 people were nominated by their peers with 13 winners selected. An email announcing the 13 winners included a link to GECS's customer loyalty portal, which featured a profile of and story on each of the winners. Four grand prize winners each received a 4-day getaway of their choice (hotel, airfare for winner and guest), and the runners up each received a $500 American Express gift check.
The cultural change that ensued is based on employee innovation, and executive trust of that innovation. More than 20 times during 2006 employees were asked to attend small, offsite group meetings to tackle specific customer issues. One of these groups produced process improvements that increased construction business revenue by more than 40 percent. Another generated 12 ideas for growth in 2007. They presented the findings to CEO Immelt and, as a result, six of the ideas will be implemented.
"We think process can liberate innovation," Corsillo says. "It can make change happen. Innovation comes from a lot of different areas. I think sometimes people jump to innovation [solely] as new product development, but that's not the case."
GECS executives communicate that attitude continuously throughout the Danbury office. Signs all over the office urge employees to "participate in innovation." GE Capital recently launched an internal "innovation" blog so staff could post their own opinions and real-life experience with innovation. It had also established a customer loyalty portal to educate employees on other internal divisions' progress with their customer-centric initiatives, as well as to drive NPS progress.
Additionally, the site includes interviews with business leaders, relevant articles, and business updates on the In Their Shoes program and customer loyalty stories from external publications.
At the end of the day, GE Capital Solutions still lives by the numbers. And those numbers show that the company's cus-tomer-centric innovation has worked: Its 2005 $1.5 billion profit is expected to jump to $1.8 billion in 2006.
-- John Gaffney
Not content to be satisfied with a more than 30 percent sales increase from 2004 to 2005, AstraWorld wanted a way to ensure its continued success.
AstraWorld is a one-stop online shop for everything from purchasing vehicle accessories to tailoring an automotive wish list, as well as being the customer service division of Astra International, an Indonesian automaker that manufactures cars for Daihatsu and Toyota and operates a network of dealerships. Astra International CEO Hendry Yoga realized that to keep pace with the fast-moving Indonesian auto industry AstraWorld would have to improve how it handled customers' transactions and interactions.
At the time, AstraWorld's standalone CRM solution was hindering the company in its efforts to build strong customer relationships. The problem was that the CRM system didn't integrate with Astra International's ERP system. As a result, AstraWorld required additional resources to conduct administrative tasks, such as manually uploading information between the two solutions. "This lack of information goes against CRM fundamentals, such as having a single view of the customer and having real-time and accurate information," Yoga says. "The market has become very competitive, and if a customer does not obtain first-class service, they will look for it elsewhere."
The solution was to implement mySAP CRM. From November 2005 to May 2006 AstraWorld integrated the application with Astra International's mySAP ERP. This included integrating AstraWorld's customer database, sales information, and the cars' service records. Doing so would allow AstraWorld to achieve end-to-end business integration for enhanced customer efficiency and improved responsiveness to customers.
The newly integrated technology suite provides both AstraWorld and Astra International with robust customer intelligence by bringing together analytic functionality and relevant customer data from across the enterprise, including financial, human resources, and the supply chain. As a result, the company eliminated activities like the data input, verification, and editing processes that no longer provided added value. Along with improving service efficiencies and simplifying the business processes, the system integration has resulted in faster response rates to customers' needs and wants. One benefit, for example, is a personal service that sends reminders of such events as customers' taxes coming due or when their vehicles need to be serviced. It even emails birthday wishes.
The quality of service has also improved. The contact center staff has gained access to detailed customer data like personal information, make and model of car, record of previous requests, and order history. With that information they can now be more responsive, as well as better measure and analyze customers' needs, and deliver solutions to meet them.
With the integration, AstraWorld has shortened the time necessary to generate reports, increased staff productivity, raised customer satisfaction, increased leads, and improved sales. "Automotive distribution has become a very competitive industry and everybody will do their best to attract and retain their best customers," Yoga says. "However, AstraWorld is uniquely positioned to offer end-to-end services to our members."
-- Mila D'Antonio
Bath and Body Works is a $2 billion business with 94 percent brand recognition. How many ads does the company run to have such a high level of success? Zero. Its strategy is to build brand advocates and encourage positive word of mouth with great products, and more important, a top-notch customer experience.
Last year the company added a full-service Web site and a catalog to its 1,550-store retail channel. Along with these new touchpoints came the strategy and technology to provide a consistent experience and a holistic view of the customer. The company wanted to think big but act small with customers, no matter what channel they use. A multichannel customer is worth three times a single-channel customer, so strengthening that relationship is critical to long-term success.
"Our goal was to ensure that we were really looking at our customers in a 360-degree view," says Pati Crowley, director of customer experience for Bath and Body Works. "If you just have software and you don't have a defined customer experience and customer strategy with it, you're probably going to save money, but you're probably not going to drive top-line sales and really have a revenue argument."
Bath and Body Works worked with Astute Solutions to implement its Web-based CRM solution, ePowerCenter, to get that 360-degree view. "It has really driven tremendous value in integrating the customer into everything we do," says Sharon Leite, vice president of store operations. "And it's really allowed the organization to be more aligned on where we need to go with the customer proposition and the value we bring to the customer."
Using ePowerCenter, the company instituted voice of the customer surveys in spring 2006. At the end of a call associates engage customers in a survey, "although it is so conversational that they don't realize it is a survey," Crowley says. The questions are designed by Bath and Body Works' market research team, and deliver real-time customer feedback about such topics as store design, a product launch, or a selling initiative. Each week may bring new questions. "This insight provides the brand the highest level of real-time quantification possible and ensures a 360-degree view," Crowley says.
Crowley and her team can track customer feedback, as well as report and analyze in-depth customer trends. Contact center employees also now have access to detailed, integrated customer and product information in a knowledge management system that allows them to answer almost any customer question immediately. For example, agents can quickly respond when a customer calls asking what ingredients are in a certain product.
The company knows technology isn't enough-contact center agents contribute significantly to the customer experience, so each agent is trained just like in-store associates. In addition, they participate in the P.A.C.E. (Productivity, Accuracy, and Customer Experience) performance review matrix. Agents are monitored and measured on such indicators as customer satisfaction and first-call resolution, and conduct self-assessments about their delivery of the customer experience. There is also a "voice of the associate" program to gain internal insight on how to be more effective as an organization. The results are delivered to the executive committee and owners are assigned to correct and streamline the process.
Employee empowerment is a big part of Bath and Body Works' strategy. Agents are empowered to solve a customer's problem with up to $25 per call. "We call it 'reason to return' strategy-if a customer had a pain point, our goal is to put them back in the store and to change whatever that experience was," Crowley says.
There was a mentality that the strategy would lose the company money. But in reality, when agents give coupons or other incentives, that customer ends up spending twice the company's average dollar sale. "And in the more egregious situations we issue gift cards, and even those have a profit value to the organization," Crowley says. "The financial department scrubbed the numbers three times because they honestly didn't believe it. And for this reason, we are not bound to a monthly budget in terms of customer goodwill." That drives customer advocacy and positive word of mouth.
Creating a 360-degree view
The company is also using ePowerCenter to track customers' reactions to its in-store experience. Stores change product placement and d?r every three weeks. The company previously relied on market research and anecdotal information to judge its success. Now Bath and Body Works publishes a toll-free number on every receipt, inviting customers to call the contact center with comments or questions. Crowley estimates that more than 62 percent of call center calls are driven by that access. In addition, employees can track purchase and visitation trends.
"We were very underdeveloped from a reporting capability, so once we got the engine that this technology provides, it really advanced our credibility within the organization, not only from a qualification but a quantification perspective," she says. "And it really helped us measure changes in loyalty, and understand the correlation between customer engagement and profitability."
Bath and Body Works has seen some impressive results from its technology optimization. From an efficiency perspective, the contact center exceeded $32 million in sales generation and cost reduction in 2005. On the customer side, customer satisfaction in the call center is 94 percent, and its compliment-to-complaint ratio runs 20 to1. First-call resolution is 90 percent. Employee turnover is only 5 percent, and the employee promotion rate is 45 percent.
Four years ago the contact center was considered the complaint department. "We've really changed from that," Crowley says. "The contact center has to be part of the brand, be considered a brand asset and part of the overall strategy."
Bath and Body Works' strategy is certainly considered a brand asset. Its success has led to plans to roll out similar customer-centric efforts in other Limited Brands companies, such as Victoria's Secret and Express. Says Leite: "We're the beta for the brand."
-- Elizabeth Glagowski
It's a New England stereotype as old as the Puritans. People north of New York are cold. Parochial. Set in their ways. "Can't get theyah from heyah," goes the old saying.
But for all the iconic New England penchant for simplicity, Ring Bros. Marketplace, a one-store gourmet food market in Cape Cod, has broken the mold. They got "heyah from theyah" in a customer-centric sense by reaching beyond the regional myth of being old-fashioned. Ring Bros. earned this year's Impact Award for technology optimization in the marketing category by using a high-tech loyalty marketing solution to reach an audience that might have been stereotyped as luddites.
"I was shocked," says Ring Bros. co-owner Rich Pimentel. "I did take into consideration the reputation of our clientele as being a little old-fashioned. But this worked big time. Maybe our customers are a little younger, a bit better educated. This connected."
The connection was formed in April 2006 via mobile marketing. Many grocery stores struggle with moving loyalty initiatives beyond the point of sophisticated discounting schemes. But Ring Bros. uses mobile marketing to build loyalty by connecting with its local customers, as well as the weekenders and vacationers who live part-time on the Cape, which is largely a summer-autumn destination.
The upscale grocery store wanted to offer its customers a loyalty program that would both reward their patronage and enable Ring Bros. to communicate with customers in real time, with measurable impact. Facing the out-of-reach cost of advertising in major metropolitan newspapers, the ineffectiveness of traditional circulars, and limited budgets, it selected a solution from MobileLime to offer a customized mobile rewards program via cell phone to directly influence buying behaviors before and at the point of sale.
Customers can opt in to receive weekly emails, text messages, event-oriented alerts, specials, and savings on hundreds of items. Customers' cell phone numbers are their member numbers. Ring Bros. split its customer groups into residencies (e.g., local, Boston area, and New York), and sends mobile messages to each with different offers and event notifications based on such information as whether a customer is traveling to the Cape or is already there.
In four months 1,800 customers signed up; that number has grown at a steady 5 percent per week. Since April mobile marketing campaigns have spiked daily transactions by an average of 75 percent. Average spending per transaction among Ring Bros. non-loyalty customers is $20. That number doubles to $40 among Mobile Rewards Members. Although accounting for only 6 percent of all transactions, loyalty transactions account for 10 percent of sales revenue.
"Customers like being a part of this program," says Michelle Deziel, MobileLime's senior vice president, marketing and operations. "From the retailer point of view it makes a loyalty program a one-to-one marketing vehicle."
-- John Gaffney
Ingram Micro has found a perfect intersection of its own need for new revenue streams and its reseller-customers' need to offer new services. For that insight and execution it has earned the Impact Award for technology optimization in sales.
As the technology division of one of the world's biggest distribution companies, Ingram Micro logged $29 billion in sales for 2005, putting it at number 72 on the Fortune 500. In the United States it has met or exceeded earnings for the past three years.
However, pricing and profit pressure in almost all categories-from HP PCs to Cisco routers-make organic growth tough. At the same time multichannel communication, marketing, and sales are making it easier for suppliers to forge direct accounts, compelling the company to increase the strength of its relationships with its resellers.
These two challenges became the focus of Ingram Micro executives. It found its solution in service contracts. With hundreds of thousands of products sold each month, Ingram saw the potential to sell an equal number of service contracts attached to those products-a prospect that
represented millions of dollars in additional revenue. In turn, its reseller-customers could get help from Ingram managing and tracking the service contracts sold to end-user customers.
"The overall objective was to create a mutual win-win situation," says Justin Crotty, Ingram Micro's vice president of services for North America. "We saw a way to generate sales and revenue. And our accounts could stop leaving money on the table in what was a lucrative but overlooked opportunity."
Starting from scratch
The challenge at the beginning of the initiative was technology and data. Crotty and his team had investigated entering the service contract business before. Success could only be achieved by knowing details about which end-user customers had purchased service contracts in the past, when those contracts would be up for renewal, and which possessed uncovered assets (products unprotected by service agreements).
In the fall of 2005 Ingram Micro integrated its data with manufacturer data to determine the status of tens of thousands of service contracts. About six months later Ingram Micro worked with MaintenanceNet to introduce its Reseller Services Portal. The Web portal automates the renewal process for service contracts, making it easier for Ingram Micro's reseller-customers to drive incremental revenue on product sales. The system provides complete visibility into uncovered assets, expiring service contracts, technology refresh opportunities, and registration information for HP, IBM, and Cisco products, with additional manufacturers to be added. Ingram Micro has made the system available at no charge to its resellers. Its revenues come from percentages of contracts sold.
The impact for Ingram and its reseller-customers has been substantial. Resellers can better maintain relationships not only with Ingram but with their end-user customers. Up to 90 percent of renewal opportunities are now broadcast to resellers; resellers know when customers' contracts are set to expire. So the majority of Ingram Micro's end customers now receive regular communication from their resellers regarding their fulfillment of service contract needs.
This data is only as good as the original registration data. If a product is not properly registered, it can prevent resellers from recognizing future service renewal opportunities or, worse, from even appropriately providing end customers with the services they are due.
Recognizing the dependencies between registration and renewal rates, Ingram Micro embarked upon a company-wide campaign to improve HP product registration rates. Ingram focused on HP because HP had correlated its sales information to track expiring services and pursue renewal opportunities and discovered that Ingram Micro's HP service business had almost 16,000 expiring contracts that had not been renewed.
The Ingram Micro campaign was also driven by pride: Ingram Micro had never been able to rise above a 68 percent registration rate for HP, which prevented it from earning important incentives and rebates. Now it's at 90 percent.
Ingram Micro has added an estimated $5 million to its top line from the portal program since April. The system has enabled the company to create data-based relationships with 5,600 resellers. It has achieved a 172 percent increase in overall service contract renewal opportunities, compared to pre-portal sales numbers.
"It has also added tremendously to our sales team," Crotty says. "It's another tool at their disposal. If I'm an Ingram sales rep, I can use this portal to tell resellers how they can make more money, learn more about their customers, and communicate better with their suppliers."
-- John Gaffney