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Know your customers

Customer Relationship Marketing made easy

Marketing = Exploitation

If you have read my previous articles, you will remember my definition of marketing:

"Marketing is about exploitation … we learn everything we can about our customers, marketplace, competitors, technology, politics, environment, etc - and we then exploit our knowledge to provide the customers with the products they want, think they want, or that we can persuade them they want."

So we are not exploiting our customers (not all of us!), we are exploiting the knowledge we have of our customers - what makes them tick, and makes them buy products from us.

What do you know?

Depending on your market, and the time you've been in business, I suspect that you know the buying patterns of your customers - is it seasonal, at the beginning or end of the month, biannual, etc.

If you operate in the business-to-business environment, you probably know many of your client's company details, and some of their personalities. Who buys, who is the 'gatekeeper,' and who influences the decisions?

Do you also know the product or specification preferences of your customers? Do they buy a standard product specification? If you do, you are now starting to get the knowledge needed to exploit your customer understanding - in other words, marketing!

Holding customer data

So you think you know your customers? But where is this data stored? Do you hold it all in your head, or is it in the head of a number of people in your company? What if someone falls under a bus - what happens to the information?

Do you have piles of business cards in a file or shoebox? Can you search your contacts quickly, and what extra information have you stored about them?

Do you have an address book? Do you store additional information in the book, or do you use an electronic version, such as Lotus Notes or Microsoft Outlook? These programmes offer additional fields to store home addresses, spouse's names, birthdays, hobbies, etc. Are you using this to store additional information about your customers?

Once you have a large number of contacts, your address book will start to burst, and your email programme will creak. So the next level is a contact database. This is most simply defined as a glorified email system, but it also stores letters and logs telephone calls, etc. If you place this onto a server, a number of staff can access the same information on a single customer, providing a consistent experience.

Such systems store historic data. But what if you want to predict whether a customer is likely to buy? Data modelling and assessing the propensity to buy are features that you find in Customer Relationship Marketing or CRM systems. They take the historic data and evaluate what that customer has done, comparing it to similar profiles of customers who have completed a sale.

If money is not a problem, and you want to integrate your customer data with your accountancy system, then there are software packages that will know what your customers buy, when they buy, how long they take to pay, etc. These systems, if properly managed, will allow you to exploit detailed information to the benefit of your company and customers.

Customer Relationship Marketing

Money is always in problem in business, and often a 'relationship' is difficult to quantify. CRM has received bad press over the years, with large companies selling over-specified products that then sit under-utilised in companies, becoming white elephants.

A relationship with a customer is not about technology – the shoebox would suffice, except that you want better access to the information. If you are looking at implementing a relational database of customer information, it does not have to cost the earth. The important factor is to understand the data, and how it relates to your customers. Whether you hold the data in that shoebox, or use the most expensive integrated system – you must understand why you have the data, and what the data can tell you.

Personalisation

One of the reasons that we want to understand more about the customer is to be relevant to them. Have you used the Amazon website? They offer products that match your profile, based on your browsing, purchases and other similar customers. In short, your relationship is being personalised.

If, like Amazon, you deal with customers online, don't try to sell them products every time they visit – give them free information, support, or other services and make them relevant.

But we should also see personalisation as a trust-building exercise, as customers will develop a 'friendship' 'People buy from their friends' is a popular mantra – and personalisation is part of that process. But friends also understand that they should not get too personal, and this is something that few machines can understand.

The Law

The law that applies to this area of marketing is the Data Protection Act, which requires customers to agree to you holding specific, personal information about them. You are able to hold anonymous data, but that is of little use to 'exploit'.

If you are using your data to send messages to your customers, you will need an 'active' opt-in. This is to say that the customer has agreed, positively, to receive information from you. If you also want to sell the data to other companies (a lucrative business opportunity), you will need a separate opt-in for this.

There is, however, a clause for companies where customers buy a product without stating a preference (this is only when no option has been offered). Even if the customer breaks off the buying process, an intention has been initiated, and the so-called 'soft opt-in' has been agreed to. This allows you to send the customer information about that product or similar products only.

If you operate in the B2B marketplace, you are currently exempt from this law – it only applies to individual consumers. But I would argue that business people are also consumers, and business people will get used to being treated as a consumer, so it is best practice to apply the same rules to businesses – always get an opt-in.

What can you do?

You can always ask your customers questions – just as you would do face-to-face. But don't ask too many questions at once, as this puts customers off. Instead, use so-called Golden Questions to find a single fact about the life or opinions of your customers. Golden questions can ask for favourite colours, hobbies or such like, where those questions may help you plan entertainment events, or the personalisation of messages.

Have you ever had information on many different pieces of paper, or in different files? It is difficult to see a complete picture of a person if your data is strewn over a wide area, so consolidate and co-ordinate your customer data, providing access to everyone who needs it.

Show your employees that there is a tangible benefit to sharing the data and keeping the central database up-to-date. Customers will notice your attention to detail, and will enjoy the relevance of the relationship.

How much does this all cost?

The cost of the shoebox depends on the shoes, and simple e-mail programmes are often bundled into the cost of operating systems, or have another benefits as communications tools.

If you are looking for the low-end customer databases, you can expect to pay about £100-£300 for the programmes, and it is advisable to include some budget for training.

Onto CRM systems, these start getting more expensive, being anywhere between £2,000 and £12,000 depending on what features you are looking for. Again, training is a must, but you should be able to negotiate this as part of the purchase.

The fully integrated systems are very complex. There are some standard low-end options available, but generally you will be paying vast sums of money and should insist on full training. Another option, instead of buying off the shelf, is to get a bespoke system built. This is not cheap, but will offer you exactly what you want.

CRM for the masses

Building relations with your customers does not have to break the bank, and the benefits are considerable. But you must understand what you are collecting, why you need it, and how you intend to use it. Be a friend to your customer and reap the long-term benefits.

About the author

Thom Poole is a Chartered Marketer with the Chartered Institute of Marketing, and a member of the Marketing Society. A marketer with over 19 years experience in online marketing and web strategy, Thom is strategic marketing consultant for Jack Marketing Solutions, working with SMEs. He also teaches people web design from beginners to professionals, as well as CRM, eCommerce, etc. A regular speaker on the CRM and e-marketing event circuit, Thom has also written a book on ethical e-marketing, called "Play It By Trust". The book is available at the publishers as a hardback or download.

Article first appeared in the Daily Telegraph Business Club, April 2006
Also appeared in the Customer Management Community e-zine, April 2006

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