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e-Xpertise in Industry - Issue #7 September 2000 |
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CONTENTS: IT POWERED LOYALTY
- FEATURE ARTICLE BEST PRACTICE
IN CRM - GOOD PRACTICE DAN JANAL'S GUIDE TO MARKETING ON THE INTERNET - BOOK REVIEW ROPER STARCH: ONLINE
OPINION LEADERS ARE HIGHLY INFLUENTIAL - e-CHAT FROM THE EDITOR...... SELLING IT TO INDUSTRY Welcome back after the summer break. In this issue, we look at developing customer loyalty, its value and how the web and email can be used to explore what works and what doesn't. Good practice continues on the loyalty theme by looking at best practice for implementing Customer Relationship Management (CRM) systems. This issue's book review is Dan Janal's Guide to Marketing on the Internet whilst e-Chat presents research on the influence on the web equivalent of word of mouth. Quote for today: 'Success is getting the right
customers and keeping them' FEATURE ARTICLE - IT POWERED LOYALTY The majority of sales and marketing managers would say customer loyalty was good for the customer and the supplier in that it reduces the cost of sale. Yet, customer relationship management (CRM) systems have a less than impressive track record with a success rate of 3% (The Times, 13th May 2000). Does this mean IT has little to offer when developing customer loyalty? The reality is that for start-ups customer loyalty is not a high priority. They have a window of opportunity to take advantage of their technology lead. Customers make infrequent purchases and so repeat sales are unlikely in the near future. Also, there is no scope for cross selling as they have only one product. Start-ups therefore goal their sales force on new business. It is only when the market matures, more competition exists, costs of sale increase and growth rates decline that customer loyalty and the ability to 'own the account' become more attractive. Yet it is difficult for companies to change their 'get new' sales and 'deals to new customers' marketing culture. This culture undermines IT systems designed around developing lifetime customer relationships. The strongest form of loyalty is based on convenience (ref.: Enterprise One-to-One, Peppers & Rogers). I.e. make it easy for the customer to teach you about their business and remember it. With each interaction, it becomes more convenient and valuable for the customer to use your solution/service. With infrequent purchase decisions, this knowledge and memory can be applied to guide other customers. When a competitor comes along with a similar product, customers are reluctant to switch. It is time consuming to teach the new supplier their needs in order to get the same level of service. For resellers, learning-centred loyalty provides the ideal environment in which to cross sell. It also protects against the recent tendency for developers and manufacturers to supply customers directly from web portals. A critical element of loyalty is remembering what the customer has taken the time to teach the organisation. Typically, much of this teaching is directed at the sales person. The web and email are ideal tools to capture, memorise and make customer specific information available to all. Unfortunately, sales staff are notoriously poor at documenting this knowledge. In a 'new sales' culture this information is of little personal value. One way to overcome the reluctance of sales staff is to require them only to document the differences of each customer rather than everything about them. This may be as simple as a list of predefined titles in the notes section of your email or contact management system. Sales staff enter bullet items under the appropriate titles. This reduces their work by 80% and enables other staff to review the situation in seconds from their desktop. An associated issue is to make sure the list price is the quoted price. If new customers get good deals, savvy existing customers always want you to think of them as "new". For the same reason, it is advisable to rethink marketing programmes that offer special deals to new users. Loyal customers represent the best opportunity to cross sell new services and products at healthy margins. If you offer all products to all customers, you will lower the margin. Yet, if you work with the accounting department to calculate the lifetime value of customers as opposed to the value of each transaction you can then identify these most valued customers (MVC) within the electronic contact manager. Everybody who then interacts with these customers knows their importance to the business. To take full advantage of customer loyalty you need a range of products or services that you can cross sell. However, this often ends up in a bewildering range of choice and pricing that detracts from the convenience on which the loyalty is based. Programming a web site to select complementary solutions based on prior customer knowledge is a major task. By contrast, a simple and effective alternative is to set up a web site in which selection is based around customer stories. Customers choose the stories closest to their own situation and, in so doing, select the complementary solutions that others have found most useful They can also be provided with an on-screen click to get telephone based support and guidance. Proactive personalised communication with your MVCs is also important. Marketing can be tasked with developing a series of emails that send selected information relevant to each MVC's identified needs. The ability to handle this task is a standard feature of modern mailing list management programs. The idea can be taken further by using the email to invite MVCs to a part of your web site where they can have an online discussion with other customers in a similar position yet further down the road in terms of implementation. We've examined some of the issues related to customer loyalty and provided some ideas on how your existing IT tools, including the web and email, can help you to explore what works and what doesn't. With this experience, an investment in a CRM system has a higher chance of success. We have also set up an online discussion to continue to explore the issues associated with customer loyalty and ideas about how it can be developed. Ian Dabney GOOD PRACTICE - BEST PRACTICE IN CRM Data mining, blended dialling, web-enabled call centres, CT servers and IVR, sales force automation, computer telephony, field force automation, collections and billing support. These are a selection of the "software technologies" on show at a recent CRM Conference and Exhibition in the USA. Despite the fact that CRM is over-hyped, it is a valuable approach and, if implemented correctly, CRM software can help address critical business issues. It can help reduce customer churn and increase the share of current customers' spend. |
CRM is not a computer system; it is an approach to business. For many years, IBM has been renowned for CRM, except they call it Account Management. In fact, CRM software is the last thing you should buy. According to Gartner, 90% of all CRM systems fail because they were the first thing the customer bought. Let's look at some guidelines collected from people who have been actively involved in CRM implementations. They are, by and large, the same as for any other major enterprise application. 1. Know what are you trying to accomplish - or don't do it! Set clear, measurable, project objectives e.g. reduce cost per lead by x%, increase response rates by y%. If in doubt, keep the chequebook in your pocket. 2. Appoint a project manager with clout and support him or her with .... 3. ...... an executive sponsor and management backing. The road will not be smooth and the company's commitment will need reinforcing. One major software vendor is doing a CRM implementation world-wide, using its own software. Certain country managers have been 'reluctant' to adopt the new system, preferring to continue with their own particular systems. Time to get the big stick out? For senior management to have a world-wide view at their fingertips, everyone has to be on board. The executive sponsor will ensure this happens. 4. Enlist and train team members - but avoid too many fingers in the pie. Limit the inputs to the system requirements and make others 'observers'. 5. In an industrial environment,
consider how the system will integrate with your ERP or SCM solutions.
These systems contain customer 6. Ensure there is sufficient time
and budget. Almost invariably, this will take longer and cost more
than expected. Just think of the effort in producing a single customer
database. Now multiply by a positive integer between 2 and 6. That's
probably closer to how much effort will really be needed. It is
not just a matter of loading data into a new database. There will
be many instances of the same customer in 7. Implement in stages, demonstrating and publicising success as you go. Make sure that management is kept aware of the successes. If you are doing it across a number of sites in a country or in a number of countries around the world, do it one at a time, solve the problems, learn from the mistakes and the next one should be easier. 8. When it comes to choosing software, identify which business areas you are trying to address and choose a vendor with appropriate applications. There is no point buying a system which has good call centre capability if you don't run call centres. 9. Ensure that whoever is implementing the system understands both the software and your business. 10. Good luck! Edwin Ecob BOOK REVIEW - DAN JANAL'S GUIDE TO MARKETING ON THE INTERNET, Dan Janal, Paperback - 408 pages
(31 December, 1999) This book is probably best for people who already know about marketing but who want to gain more insight into how they should integrate the Internet with their other marketing activities. What's really refreshing about this book is that for once the Internet isn't being put forward as a panacea for all the ills of the world or the only answer to all life's marketing problems. The approach is logical and reasoned but above all pragmatic. I found it easy to read, with enough well chosen examples, case studies and illustrations to retain interest. It would be easy to skim the book and conclude that there is little new here that extends the frontiers of knowledge. While the book has no world changing insights there is still plenty to provoke thought and discussion. When all's said and done, most marketing and management is actually common sense and this book abounds with common sense. The remarkable thing about common sense, as Oscar Wilde observed, although not in exactly these words, is how rare a thing it can be. Dan Janal is a respected Internet Marketing specialist with a number of successful books to his name and he has been a regular speaker in Internet related subjects on the US seminar circuit. If you want a good grounding on Internet marketing this is a good place to start. If you want a book giving detailed reasons for specific designs and examples of good practice then this probably isn't the right book for you. Try Jakob Nielsen's 'Designing Web Usability' that we will be reviewing in the next edition. Bob Brown e-CHAT - ROPER STARCH: ONLINE OPINION LEADERS ARE HIGHLY INFLUENTIAL New research indicates that successful online viral marketing campaigns, or "word of mouse" marketing, is driven by a particular segment of opinion- leading Internet users. A study commissioned by Burson-Marsteller and carried out by Roper Starch World-wide indicates that about 8 percent of the US Internet population are "e-fluentials", or people who are very likely to influence the surfing habits of other users. In the off-line world, one person was thought to influence the attitudes and behaviour of 2 others. One e-fluential, however, influences an average of 8 other Internet users. E-fluentials are Internet experts and spend more time online at more sites than average users do. They also email twice as many people, are almost twice as likely to visit corporate websites and are attracted to new products and technologies. They are 4 times as likely to be asked by other users for business and technology advice. Dr. Leslie Gaines-Ross, chief knowledge and research officer at Burson- Marsteller, describes the e-fluentials as "cyberworld town criers...[who] are able to express their opinions at extraordinarily high rates, using the Internet as their virtual soapbox". www.bm.com/efluential/IN_FRAME.html Cambashi researches best practice and assists IT suppliers in best practice implementation. For more information on Cambashi services please email info@cambashi.com e-Xpertise in Industry operates as an opt-in email. The opt-in policy means we never intentionally send any email to anyone who does not wish to receive it. To subscribe: send an email with the word "subscribe" in the subject line to : expertise@cambashi.com For removal : send an email with the word "remove" in the subject line to : expertise@cambashi.com © Copyright 2001 Cambashi Ltd |
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