Event-driven marketing techniques to influence customer-managed relationships

MyCustomer.com
6

Before we get into the detail of this week’s editorial, can I say how pleased I am at the launch of the EDS super-storefront on the CRM-Forum this week. We've expanded the concept of the storefront somewhat with a number of improvements for both the superstore owner and our members, and the EDS superstore is the first to go live (more coming shortly). The immediate benefits for you, the members, are two-fold: firstly the distractions of banner adverts don't exist within the superstore, and secondly, you get the ability to interact with the superstore owner much more directly, if you choose to do so. We hope a third benefit in the not-too-distant future will be that superstores will be used to deliver CRM-related services directly to you. I'm very keen to push that idea forward so please contact me if you are interested in delivering services to the CRM-Forum membership via a superstore. We hope the CRM-Forum can help scale-up rare CRM skills and deliver them to the global marketplace through such services.

Working on this superstore was the first time I've had the pleasure of working with EDS and I was surprised how different they were as an organisation from what I'd expected. I guess the words "systems integrators" raised expectations in me that I was pleased were wrong. An example of this was the in-house CRM bible they have written and use: All to One, by Steve Luengo-Jones (not One to One!!). I found the strong marketing focus from a systems integrator very refreshing, and was impressed enough to do something I've been planning to do for a long time: launch a book review service on the CRM-Forum. We hope to have a review of All to One up in the next two weeks, but if you can't wait, you can go out and buy it at Amazon. Now that we've started, we hope to do regular reviews of books on CRM, so if you've just written a masterpiece on the subject, why don’t you send us a copy for review?

But now to the meat of this week's editorial. Last week we looked at the characteristics of the Internet channel from a CRM perspective and came up with four key concepts:

  • The internet is a self-service channel, so the customer is in control of, and manages, the communications process.
  • The sales and marketing steps which each customer takes on the Internet are much more numerous, and much smaller.
  • Different customers may play many different roles in an Internet environment.
  • There are many different routes to the role that a specific customer wants to adopt at any particular time.

Let's try and demonstrate these concepts with some examples from the CRM-Forum. Firstly, let's look at some of the steps that a member of the CRM-Forum might make before we can maximise the member's value:

(Click on the image to view full-size)

E-Community membership steps

And they can take a number of routes on the way to maximising the value they get from the CRM-Forum:

E-Community membership routes

These characteristics of how people behave when interacting with a website create the challenges that face marketers when we try and embed a self-service sales and marketing process into the website. Some of the challenges we need to address include:

  • How do we identify which customers are ready to take which step at any one moment of time?
  • How do we insert into the consumer-managed communications process those messages that we want to deliver to specific customers?
  • What are the major elements of each of those communications that must be there to maximise the likelihood that a customer will take a particular step?
  • How do we measure the effectiveness of our attempts to persuade customers to take these different steps?

These challenges are fascinating, and need to be addressed. There is an obvious similarity to the implementation of sales and marketing messages into a service-focused customer contact centre. In such a centre, customers are calling in with specific service issues they want resolved, and organisations frequently want to be able to insert, at appropriate moments in the conversation, the right sales or marketing message - provided that message is relevant. Once they have started a dialogue with a customer, they need to be able to continue the dialogue until the customer makes a decision one way or another.

Frequently, these sort of requirements are tackled with a number of facilities:

  • Firstly, develop a set of segmentation and propensity models which identify the target audience for a particular opportunity. The segmentation model can be used to measure the potential value of the relationship, in other words a segmentation with current and future value.
  • If the segmentation and propensity model identifies the target audience for a particular offer, it does not identify when that offer is relevant to a particular customer. Increasingly, event triggers are used to make sure the message is delivered only when it is relevant to a particular customer. The event may be a particular bit of transactional behaviour, some change in geo-demographic status, or as simple as the customer demonstrating interest in the product/service.
  • Once an appropriate customer is identified as ready for a particular offer, there then needs to be a set of communications which are used to highlight the product/service with the customer, and to try to convert the sales opportunity.

How, if at all, does this apply to the Internet channel? The first point to note is that the process needs to be much more accurate to be effective in that channel. In a call-centre, most of the communications are delivered by human beings (the customer service rep), and so if a message is poorly targeted the CSE has the flexibility to drip the communication. In the website, the message is usually delivered by the machine, and will usually be delivered, come what may, to the customer - relevant or not.

On the web, we need to expand this approach in a number of directions:

  • Instead of only considering purchases, we need to identify all the significant steps and roles that a member may take on the website. Obviously, we can't do everything at once, so we'll probably need to prioritise the high-value steps/roles for processing first.
  • We also need to have a clear understanding of the benefits for each member of each step/role, and this is likely to vary by customer segment, so again we need a segmentation in place. For example, in the CRM-Forum, the value of any particular role or step is likely to be different for a member who works for a client-side company, to a CRM consultant, or to someone who works for the supply-side of the industry. We need to understand very clearly what the value proposition is for every step/role for each of these segments.
  • How do we persuade customers to take the particular step that we want them to take? A carrot and stick approach has been known to be effective in persuading people to adopt a particular approach so perhaps we should better understand for each proposition what the carrot is, and what the stick, and again by customer segment. I also believe that it is useful to have a reward, as well as a carrot. The carrot is the anticipated reward for taking a particular action, but it is also valuable to have an unanticipated reward. The best reward for customer loyalty I've ever had from British Airways - the world's favourite airline - was a half-case of wine which they sent me one year as a thank you for having travelled so much with them the previous year. The reward was so much more effective because it wasn't anticipated, but arrived unexpectedly. It wasn't a right I was due, but an unexpected thank you.

With these tools we hopefully have the information to identify who should be communicated with when, which leaves two issues outstanding: 1) what (and how) we say to them - the contact strategy, and 2) how we measure whether we're being effective with these efforts. More on that next week, I hope.

As I am sure you can see, we're developing a very rough-and-ready methodology for sales and marketing interactions in the e-channel, however I'm sure many you have alternative methodologies or better approaches, so ... any comments on this editorial can be made here, either by using the 'add a comment' link below, or by writing directly to me, Richard Forsyth, at [email protected].

Regards,

Richard Forsyth
The CRM-Forum
The independent resource centre for CRM

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19th Nov 2001 19:29

I will be very interested in a discussion of what kind of stick can be used to balance the carrot. The picture of applying a sharp whack to the rump of reluctant users is amusing, but to complete the metaphor, how can we do this without causing them to kick over the cart and jump the traces?

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19th Nov 2001 19:29

I will be very interested in a discussion of what kind of stick can be used to balance the carrot. The picture of applying a sharp whack to the rump of reluctant users is amusing, but to complete the metaphor, how can we do this without causing them to kick over the cart and jump the traces?

Thanks (0)
avatar
20th Nov 2001 15:22

Jean,

I had a funny feeling when I wrote about 'carrots and sticks' for customers that I would have to re-visit the concept, and I'm glad you've raised it.

Let me try and give you some ideas as to how it might turn out to be relevant.

Firtly, I have never been a fan of the idea that CRM is necessarily about only being nice to your customers. A relationship is a two-way thing and imposes responsibilities on both parties to the relationship. For example, in banking, companies are trying to address the issue of what they do with unprofitable customers. The sticks applied to try and persuade customers to become more profitable are various and potentially quite incentivising, and include:
- we are imposing higher transaction charges
- we will only provide you with some products
- you can only use cheaper channels
- please go away to one of our competitors.

I have known banks which have adopted each of these sticks.

(continued in next comment)

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avatar
20th Nov 2001 15:22

(continued from previous comment)
Let's take a case much closer to home, and on the Internet - the CRM-Forum. We have a very interesting problem which is that the vast majority of our members are unprofitable for us. This is important because it potentially threatens our survival, and the services we can offer to our members.

We want to be an independent resource center for CRM where you can get un-biased information on CRM. If members are not willing to pay for that service, then an alternative option is to get the supply-side to pay for the service. That will lead to more advertising, and a potential loss of independance (how long can I keep biting the hand that feeds me??).

So we are considering (and we'd be very interested in member response to this idea) of offering members:

A carrot: pay an annual subscription and we'll give you a site free of advertising, free downloads, and other services to be defined,

or a stick: don't pay an annual subscription and we'll up the amount of advertising on the site that you have to put up with, and you also risk our loss of independence. We'll also need to ask you for data about you which helps us profile our audience for advertisors.

I'd be most interested in your and other members comments on the effectiveness of this carrot and stick.

Please note that we are not yet committed to this idea, but are seriously considering it internally.

Regards,

Richard Forsyth
The CRM-Forum

Thanks (0)
avatar
20th Nov 2001 15:22

(continued from previous comment)
Let's take a case much closer to home, and on the Internet - the CRM-Forum. We have a very interesting problem which is that the vast majority of our members are unprofitable for us. This is important because it potentially threatens our survival, and the services we can offer to our members.

We want to be an independent resource center for CRM where you can get un-biased information on CRM. If members are not willing to pay for that service, then an alternative option is to get the supply-side to pay for the service. That will lead to more advertising, and a potential loss of independance (how long can I keep biting the hand that feeds me??).

So we are considering (and we'd be very interested in member response to this idea) of offering members:

A carrot: pay an annual subscription and we'll give you a site free of advertising, free downloads, and other services to be defined,

or a stick: don't pay an annual subscription and we'll up the amount of advertising on the site that you have to put up with, and you also risk our loss of independence. We'll also need to ask you for data about you which helps us profile our audience for advertisors.

I'd be most interested in your and other members comments on the effectiveness of this carrot and stick.

Please note that we are not yet committed to this idea, but are seriously considering it internally.

Regards,

Richard Forsyth
The CRM-Forum

Thanks (0)
avatar
20th Nov 2001 15:22

Jean,

I had a funny feeling when I wrote about 'carrots and sticks' for customers that I would have to re-visit the concept, and I'm glad you've raised it.

Let me try and give you some ideas as to how it might turn out to be relevant.

Firtly, I have never been a fan of the idea that CRM is necessarily about only being nice to your customers. A relationship is a two-way thing and imposes responsibilities on both parties to the relationship. For example, in banking, companies are trying to address the issue of what they do with unprofitable customers. The sticks applied to try and persuade customers to become more profitable are various and potentially quite incentivising, and include:
- we are imposing higher transaction charges
- we will only provide you with some products
- you can only use cheaper channels
- please go away to one of our competitors.

I have known banks which have adopted each of these sticks.

(continued in next comment)

Thanks (0)