Market View: Use your intelligence!

Customer Relationship Management (CRM) has had bad press of late, argues Duncan Painter, CEO of Clarity Blue. Industry analyst firm Gartner Dataquest recently revealed that 41.9 percent of CRM licences bought by businesses go unused. Despite this, analysts still predict the CRM arena to grow in coming years, with AMR estimating that global revenue for CRM vendors will rise at a compound annual growth rate of 19 percent between 2002 and 2006, from $12 billion to $26 billion.

But what does this mean for organisations and their customers? According to the most recent Direct Marketing Information Service (DMIS) figures, direct mail is certainly on the rise. DM expenditure rose by 4.6 percent in the first quarter of 2003, with total expenditure rising to £658.2 million. Yet research conducted by ClarityBlue at the Technology for Marketing (TfM) show in February 2003 revealed that one third of UK businesses are not confident their marketing campaigns are targeting the right prospects and customers. This, coupled with the fact that one in three people said their companies did not give preferential treatment to more lucrative customers suggests firms are missing a trick.

Maybe it all comes down to false perceptions of CRM. CRM is all too often equated with customer retention strategies. Firms have been conditioned to think that CRM is all about reducing churn. But when companies have millions of customers interacting with the business through multiple channels, the challenge of integrating and analysing huge amounts of customer data often proves too much for traditional CRM systems. A new approach is required. I believe Customer Intelligence is the only viable answer.

By gathering accurate, comprehensive information on customers and prospects, Customer Intelligence enables an organisation to make the most of business opportunities. The term encompasses strategy, analysis and technology. In a nutshell, it is the nerve centre of any CRM initiative.

Customer Intelligence is a much-needed lifeline for customer-focused enterprises. It maintains a comprehensive single-person view of both customers and prospects, providing the intelligence that drives, in near real time, management of all four phases of the customer lifecycle ? in other words, the targeting, acquisition, retention and growth of customers. Ultimately, Customer Intelligence provides companies with the ability to understand and maximize the value of their customer relationships. And the time is ripe, considering Gartner recently stated that 55 percent of CRM projects have failed to meet their goals.

It is alarming how many organisations treat all customers as equals. A CRM strategy should do precisely the opposite. In today?s competitive environment, customers expect to be enticed and wooed. If organisations do not treat their more lucrative customers differently they simply will not retain them. Similarly, they should be more audacious in the way they attract prospects. The hottest prospective customers need to be enticed by the boldest offers. After all, these customers are extremely desirable and there is a lot of competition to attract them.

For instance, rather than offering a hot prospective customer £25 for transferring credit card balances ? the same sum they would offer a customer with less impressive credentials ? banks should offer bolder incentives, such as £200 per new customer, provided they meet an agreed set of criteria. However there is an obstacle preventing organisations from daring to differentiate their most lucrative prospects in this way: firms are simply not confident that their customer data is correct.

Firms need an in-depth view of every single prospect and customer. Only when this level of intelligence is easily available can a business accurately differentiate between profitable and unprofitable customers, and more importantly determine how to tailor interactions with them according to their value to the business.

Rethinking old attitudes towards churn is key. The telecoms industry will soon be in this position with Oftel?s ruling over call termination charges. Although the smarter mobile operators will do all they can to hold on to their most lucrative customers, I predict they will try to shed the so-called low value customers as pricing structures change over time. For some firms, losing customers will be a vital part of their game plan.

Clarity Blue can be contacted at 01727 890 500 or via email at [email protected]

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