The last thing a customer wants is to be treated like a faceless number in a database. Ironically, that number may be connected to a wealth of information that instead helps companies provide personal service, more relevant communication, and a better experience-all while allowing those same organizations to increase wallet share and boost the ROI of their customer-focused initiatives.
According to a recent survey by 1to1 Media, companies' three primary uses of customer data are understanding customer value and profitability, crafting marketing messaging, and creating up- and cross-sell offers. But those goals are just the beginning when it comes to spinning data into profit. Here are six other approaches to consider when endeavoring to capitalize on customer data. They range from building customer trust to rethinking Web analytics to empowering employees with better data access. All have one lesson in common: Data can make or break your customer relationships-and your bottom line.
One: Share Ownership
Creating a single version of the truth and harmonizing that vision throughout an organization is imperative to getting the most profit out of data, according to Jill Dyche, a partner with Baseline Consulting and coauthor of Customer Data Integration: Reaching a Single Version of the Truth. Companies must have a plan for the data they collect if they are to link customer-based initiatives to an increase in revenue or profitability. Yet silos and departmental disconnects still stand in the way, as Dyche discusses with 1to1:
1to1: What's the biggest data challenge companies today face?
JD: It continues to be siloed systems; as much as people talk about it, the problem just isn't going away. As soon as companies integrate data they bring in new applications and systems that generate even more [information], and have to start the process over again. They lack the process for onboarding new systems in a sustainable way, and technology can't solve that problem. It's a cultural issue, and management still focuses on technology spending instead of data accuracy.
1to1: What problems does data create for sales and marketing teams?
JD: Unfortunately, sales and marketing believe that to reach a single view of the customer they have to agree on a single definition. Sales may see a customer as someone who has paid for a product, whereas marketing may say it's someone on the company's mailing list. Most businesses today think they have to make a choice, meaning someone will win and someone will lose, but that's not true. The key is provisioning data to divisions so that each can look at the same data in their own way. There only needs to be a single version of the truth as far as the customer records, not which data can be accessed.
1to1: Should companies hire a chief data officer to spearhead these initiatives?
JD: I don't recommend having a data czar, or CDO, or whatever companies want to call that person. Businesses tend to gravitate toward organizational solutions for process problems, and it doesn't work. They need to get the strategic importance of data into the company culture first so that when a data czar is hired, everyone knows what that person will do, what value they create, and what they're accountable for. The few times I've seen a CDO, it's been too early in the process. I've seen many more failures than successes.
1to1: Is there such a thing as having too much data?
JD: The amount of data a company collects, and many don't understand this, should be the amount they require to do business efficiently and effectively. It's dangerous to have too much data because it takes time, space, and money to forklift data from one system to another. If it can't be tracked back to a business requirement, then it's not worthwhile to collect. The ability to get data isn't a good enough reason to put it into the system.
Two: Eradicate Attrition
Foreseeing which customers are going to churn doesn't take a crystal ball. With the right data and timely analysis, most any company can take steps to reduce turnover before it happens. British courier service e-Courier built an online business in a traditionally offline market, and is growing in a very competitive market by foreseeing customer attrition and taking action to prevent churn.
"We have an automated system that knows who our client is, what traffic is like in their area, where every courier we work with is through GPS, and exactly what route they should take to deliver a package," says Jay Bregman, e-Courier's CTO. "Despite that, we were manually looking at spreadsheets with booking data and trying to detect variations. It was time-consuming and not very effective."
Bregman began using SeeWhy Software to detect churn because the business was growing too fast to continue manually tracking customer activity levels. Today when client booking patterns experience a drop-off, managers are alerted to follow up to see if there's a problem. "The longer the time elapses between behavior indicative of churn and when the actual churn happens, the harder it is to win back that business," Bregman says. "Generally if a client has an issue and doesn't tell us, if we follow up too late they've already found someone else."
Sometimes e-Courier's account managers experience false positives, like one client that lost power and wasn't able to place orders for a few days. Generally, Bregman says, they're impressed that e-Courier notices and appreciates the fact that the company checks in. As a result of being proactive, churn has been reduced by double digits, and, Bregman says, his team better understands customers.
"It's as if we have a dedicated manager watching their volume, Bregman says. "It's very personalized, and gives our clients the idea that we're focused exclusively on them."
Three: Build Customer Trust
Companies have a responsibility to protect the customer information they gather and to use it ethically. In fact, according to Martha Rogers, PhD, a founding partner of Peppers & Rogers Group and coauthor of Rules to Break and Laws to Follow, how well or poorly organizations protect their customer data has a direct correlation to the trust customers will place in those companies, as well as to the likelihood of customers increasing their loyalty or leaving for a competitor.
1to1: Is the price of protecting customer data worth it?
MR: Protecting data is a bargain. First, the data is the best way you have of getting more business from customers in the future, and if you haven't protected and cleansed that data, then you don't have access to the insight it provides. Second, there's a customer equity issue. If you protect privacy, you'll be of a higher value to your customers. That's so measurable that it's amazing any company would do anything but protect customers' data.
1to1: Why don't all companies? Is it simply a financial issue?
MR: Not at all, it's a philosophical one. I can't imagine a company saying they don't have the money to protect data; most of the time they just don't think about it. A lot of the problem comes from not taking the customer's point of view and thinking about where they'd want information accessed or transferred. Failure to ask those questions gets more companies into trouble than anything else.
1to1: What should a company do when a data breach does occur?
MR: It's imperative to apologize correctly and recover lost trust. Say you're sorry as soon as you can and without excuses. Make sure to also include what changes will be made to prevent a similar incident in the future. We've found that customers will forgive one breach of incompetence, but they will never forgive lack of goodwill. If a company didn't mean to compromise the data, they can recover with a good apology; if customers feel it was intentional then that mistake is fatal.
Four: Accelerate Data Access
Publishers Clearing House knows firsthand that the faster customer data can be accessed, the faster that information can be used to drive revenue. The company has long been a leader in direct mail marketing, but until recently its Web properties were completely disconnected from its traditional business. Since its online marketing efforts consist mainly of time-sensitive special offers, sweepstakes, and contests, PCH needs to reach customers quickly and measure response immediately to create the most relevant offers. Immediate data gives the marketing team the opportunity to quickly revise and personalize offers, which helps to increase responsiveness and boost profits.
"We lacked cross-channel, customer-centric data visibility for our marketers, and the timeliness of the information we use to communicate with customers was too delayed," says Rob Befumo, director of email marketing. "Both problems were a symptom of our in-house processes and a result of legacy systems for the two different channels."
When PCH wanted to create a new email campaign, for example, it had no way of knowing which online customers were already loyal direct-mail customers-which would identify them as more likely to respond. When it did send out an offer, data like response and delivery rates took days to see, and creating a follow-up campaign could take as long as a week. Befumo and his team partnered with e-Dialog to improve the timeliness of PCH's campaigns, as well as to connect online and offline data and to create a better system of warehousing data.
"We noticed a significant improvement in the delivery and response immediately after we went live," Befumo says. "Now we have a benchmark for our KPIs and we've seen increases in sales revenue, new customer conversion, and payment on our 'bill me' offers."
Since much of PCH's business is billed later, the company closely tracks payment risk and open balances. Now that customer data is refreshed more frequently and customers are tracked across channels, the company is able to limit risk and better manage customer selection for certain offers.
The biggest change, according to Befumo, is in retention. "We can identify lapses in customer engagement much quicker thanks to more accurate and efficient data systems," he says. "Initially we had a database to identify potential win-back customers and target efforts appropriately, but going forward we'll begin reactivation programs earlier to prevent them from getting to that point."
Five: Link Channels
When 1-800-Flowers.com plants a seed with a new customer, it aims to grow that relationship over time-not only within that brand, but also among it 11 other brands. One challenge the retailer faces in doing so is linking customer data across the brands, as well as across the four channels customers use to interact with the company: in stores, on the phone, through catalogs, and online.
"Our enterprise data warehouse contains everything from order information to customer name and address to brand and channel IDs, occasions, demographic information from third-party sources, and recipient data," says Aaron Cano, director of database marketing. "Basically, we know who buys what for what occasion for whom and where it's sent."
According to Cano, it took years to build out the company's comprehensive view of the customer through data mapping, identifying all the possible customer touchpoints, cleansing databases where customer information overlapped, and identifying customers as they move between sales channels. Partnering with SAS, 1-800-Flowers.com developed the infrastructure in such a way that employees who need to access data have it at their fingertips using custom dashboards.
Now, whenever the company launches a new brand beyond its traditional flower business, it goes through an integration process to share data with the rest of the enterprise. The brands also get the benefit of all the research 1-800-Flowers has done by developing the database.
"We're successful because it isn't just marketing that buys into the processes," Cano says. "Merchandising, fulfillment, operations, and finance all use the customer knowledge to make decisions, as well." He says the proof of this success is in the company's loyalty and retention rates, which show that the more times 1-800-Flowers engages customers during the year, the more of its sister brands they discover. A customer who receives a cross-promotional offer for Popcorn Factory after buying flowers, for example, may not have realized the two brands are part of the same company.
1-800-Flowers' next move is to capture data from blogs, Twitter, and social networks. By doing so, the company can identify customers using online channels and take advantage of the unsolicited feedback about its products and service to improve its overall strategy.
"It takes a long time for an organization to become analytical," Cano says. "But at the end of the day our customers become more loyal to us because we're relevant and we treat them like individuals."
Six: Rethink Web Analytics
More than 20 percent of marketers consider Web activity the least valuable data they collect, according to a recent survey by 1to1 Media. Although the reasons for this vary, many respondents said they haven't yet mastered how best to use the information.
Not surprisingly, some pundits say Web analytics is the biggest source of data companies aren't taking advantage of. According to Akin Arikan, author of Multichannel Marketing: Metrics and Methods for on and Offline Success, companies that make Web analytics a higher priority will find additional ways to increase revenue and become more relevant to customers. He shares some advice here on how to get more from Web analytics.
1to1: Where are companies missing out when it comes to harnessing data from online sources?
AA: The biggest gap I see is between Web analytics and marketing. More and more people are researching online before they make a purchase through any channel, but most direct marketers don't speak to the Web divisions in their company. Web analytics is seen as a reporting tool that makes websites user-friendly, but not for learning about customers.
1to1: Why aren't Web analytics being used for customer intelligence?
AA: Part of it is cultural because the e-commerce guys grew up in a separate unit in many cases; they're young, and they're dealing with so much data that the focus is on visualizing it best and summarizing everything. Using Web analytics on an individual level would seem like drowning in quicksand to them. Relationship marketers think they're integrating online and offline because they look at transactional data, but they don't think about all the other data out there. They don't own the data and share the misconception that Web analytics are only useful in a summary-level report.
1to1: What impact can changing that view have?
AA: Right now Web analytics can be highly lucrative. With experimentation companies can make messages more relevant and track which are most effective. They do testing and segmentation so well now that they've neglected looking at the other data available. There's only so much segmentation you can do; after a while there are decreasing returns on increased effort. Companies need to look at how customers are behaving online, connect that to behavior in other channels, and bridge the gap between the Web team and other marketers.
How do embracing master data management and eco-friendliness fit in with customer data? Find out at www.1to1media.com/links/ecodata.html
For the complete results of 1to1 Media's customer data survey, visit www.1to1media.com/links/datasurvey.html