Two key benefits of e-marketing
According to Jim Sterne e-mail marketing has two great benefits in the domain of cross-channel marketing. The first is measurability. E-mail marketing tools give insight in the type of actions recipients make, for example whether e-mails were opened or not or the number, whether the e-mails were forwarded, or resulted in a click-through to a particular landing page. The key strength is that every action or type of behavior is measurable.
The second major benefit of e-mail marketing, he argues, is testability. In his view e-mail becomes the major testing ground to test ideas and messages broadcasted to various different segments. By sending different messages to different audiences and then measuring the responses one learns which messages are more appealing and effective. The measured responses can then used as a basis of decision-making what messages to deliver to which audiences. E-mail marketing thus can help to make informed decisions which channels to allocate marketing budgets.
New business and customer retention
What is the value of a single e-mail address? What is the value of someone to opt-in? According to Jim Sterne e -mail marketing is not about generating traffic to a particular landing page. It should focus on answering the question what happens after target audiences visited the landing page: do they become loyal customers? In his view e-mail marketing should play a role in increasing customer loyalty and thus in growing Customer Lifetime Value. Key objective is to get valuable customers opting in your e-mail marketing campaigns. Testing and measurement are two key benefits that enable companies to get insight in how to allocate marketing budgets.
See video below:
maandag 22 december 2008
donderdag 18 december 2008
The impact of social-networking tools on CRM processes.
Yesterday I had a chat with a colleague on the exposure of brands via twitter. I referred to him that tweets can be shared and can be made transparent to anyone interested in your company. For example, check out http://tinyurl.com/4qedjj It is very interesting to get a reality check on customer experiences.
One of the key challenges for companies is to channel customer feedback posted in the various communities back into their organization. Employees should be exposed to signals and be active participants in the various channels.
The challenge was also mentioned in a recent Gartner report covering the impact of social computing on CRM processes; ‘As we approach 2009, social networking has begun adding another dimension to the customer experience. To a greater extent than ever, customers are forming opinions, seeking information, sharing experiences and creating content on social-networking sites that are outside the enterprise's control. The customer experience is entwined tightly with the organization and its employees, but the sharing of these experiences is largely, and for some enterprises entirely, outside of their control.’[1] Gartner.
[1] The Business Impact of Social Computing on CRM Processes – Gartner – 11 September 2008 – ID number: G00161100
One of the key challenges for companies is to channel customer feedback posted in the various communities back into their organization. Employees should be exposed to signals and be active participants in the various channels.
The challenge was also mentioned in a recent Gartner report covering the impact of social computing on CRM processes; ‘As we approach 2009, social networking has begun adding another dimension to the customer experience. To a greater extent than ever, customers are forming opinions, seeking information, sharing experiences and creating content on social-networking sites that are outside the enterprise's control. The customer experience is entwined tightly with the organization and its employees, but the sharing of these experiences is largely, and for some enterprises entirely, outside of their control.’[1] Gartner.
[1] The Business Impact of Social Computing on CRM Processes – Gartner – 11 September 2008 – ID number: G00161100
woensdag 17 december 2008
Customer intimacy as a recession proof strategy
‘Doing business is to differentiate yourself’. This quote was posted on our company blog[1] by an entrepreneur. One way of doing this[2] is to adopt a customer intimacy strategy. Companies adopting such a strategy ‘build bonds with their customers; they know the people they sell to and the products and services it needs’[3].
In this post it is argued that if businesses successfully execute a customer intimacy strategy they are more likely to survive the current economic downturn. The rationale behind this argument is that in challenging times companies need to focus on customer retention and satisfaction. Many companies, however, are unable to align their internal communication and collaboration processes with such a focus. In this article we provide food for thought on how to successfully execute a customer intimacy strategy in a business-to-business market space. Successful execution, it is argued, depends on the degree by which all people interacting directly or indirectly with a customer are able to work together effectively.
A customer intimacy strategy will furthermore provide companies with a more cost effective way to improve margins. In general, new business marketing campaigns see lower conversion ratios than campaigns targeted at existing customers. It is not strange therefore that in challenging times deep sell and cross sell strategies are becoming more popular.
In the next sections we adopt our own view on customer intimacy and elaborate further on this topic from a sales manager’s point of view.
Customer intimacy defined
In our view customer intimacy is about people collaborating in a structured and customer centric way to create customer value and achieve results. In the next sections we seek to motivate our definition.
It’s about people and communities
A distinguishing element in our definition is that customer intimacy is about people, and not necessarily about organizations. It is ultimately about people who build bonds and relationships with each other.
One can argue that organizations are also relevant. So why not adapt an organization perspective? In order to answer this question we build upon a simple assumption. Larger organizations are typically structured in silos[4]. These can be for example functional silos (e.g. marketing, sales, customer service, production, finance, HR) or geographic silos (e.g. subsidiaries in the Netherlands, the United Kingdom and Sweden). Members of these organizational silos interact with the customer. However, in many organizations these silos prevent effective customer centric behavior. One of the reasons is that the tools used by these departments to capture customer insight are also siloed. In other words, customer information captured by sales using as sales force automation tool are only visible by sales, complaints expressed by a French customer are only visible to customer service in France and accounts receivable information is only visible to F&A.
How to align people in a customer centric way? A community perspective could be useful to answer this question. Online communities essentially provide a way for people to organize themselves around a particular subject. Customer-centric communities therefore provide a way for people to organize themselves around customer related issues. Members of customer centric communities can consist of anyone who’s in touch with the customer. Insight is achieved because the interactions, the decisions made and the information produced are captured centrally and are shared collectively. Any member can not only re-use the knowledge captured in the past but can also leverage the social network around this customer to tackle specific issues.
It’s about collaborating in a structured and customer centric way
Another key element of our definition is that people work together in a structured and customer-centric way. Every decision or every contact moment should be governed by processes that are designed with a customer focus. These processes structure the way people work together and prevent that customer related decisions are out of sync with each other. Keeping people and processes in sync with each other ensure that every individual decision or activity contributes towards creating value for the customer.
It’s about creating customer value and achieving results
The last element addresses the common objective of creating customer value and achieving results. The goal of value creation for customers seeks to improve customer retention and loyalty. However, one should also take the contribution of your customer in the company’s profitability into account. There are costs involved in acquiring prospects or retaining customers. It is essential to understand how much customers are worth to you[5]. Customer value, for example, can be calculated as follows: ‘customer Lifetime Value = (Customer Acquisition cost + Contribution to your Profit - Customer Retention cost)’[6]
Executing a customer intimacy strategy: a sales manager’s perspective
Let’s suppose you are a sales manager. How will such a strategy affect your day to day activities? As a sales manager you are under constant pressure to bring in business. In positive economic times this is already a challenging task with sales professionals scattered over various locations. Your accountability for sales performance (budget) of a number of locations (territory) and product/service lines requires you to complete all required sales reports and detailed documentation by weekly deadlines. Many calls and e-mails are required to gain insight in the quality of the sales pipeline. This is a huge effort for many organizations because sales forecasts are primarily constructed in many Excel sheets. However, in challenging times the pipeline is under pressure and you cannot afford to wait for weeks to gain insight in the quality of your pipeline.
One of the key questions therefore is: In challenging times, what type of actions can you take as a sales manager to meet your sales targets? The first three steps address potential quick wins by creating structure in the sales department. Steps four to eight address potential areas of improvement in aligning non-sales processes and improving the ways sales collaborates with other departments. And finally, the last step addresses the objective to leverage teamwork and customer-centric social networks to strengthening the relationship with the customer.
Step 1 Capture customer related information: Just ask yourself the following question: To what extent are customers suffering the consequences from sales and other professionals leaving the organization? When valuable knowhow leaves the organization customers may perceive a radical deterioration of the service levels of the organization. Simply because all customer history is stored in the head of the employee that left the organization. In any organization people will leave and new people will join. Key therefore is to make sure that all customer know-how remains the property of the organization and that processes are in place to empower successors to have a full insight in customer history. HR processes can contribute as well. By having optimally aligned HR processes with your customer intimacy strategy you empower sales management with finding and retaining the right sales professionals for the right territory.
Step 2: Control your destiny: Make sure that you can rely upon the fact that sales processes are executed uniformly. Prevent that your sales professionals act as lone wolves. Uniformly executed processes give you control of your destiny. Not only because you facilitate a more efficient working style, but also because you have a real-time insight in the quality of your pipeline. Furthermore, you can trust the sales related key performance indicators (KPIs) such as actual versus budget and forecasted revenue because they are the result of a uniform and transparent sales process. Examples include standard ways of working for managing opportunities, approvals of quotations send to customers, etc.
Step 3: set a KPI for customer contact frequencies: When sales professionals have to manage a large number of prospects and customers the risk is that some of these accounts are not receiving any attention. Wouldn’t it be great to have processes in place that trigger sales to have at least a visit or phone call every month?
Step 4: Control customer retention costs In challenging times the customer retention cost is also influenced by the risks a customer will or will not meet its obligations to pay his or her bills. Companies should always keep an eye on how costs related to customer retention affect customer value and the contribution a customer makes to a company’s profitability.
Step 5: Leverage complaint handling processes as an effective marketing tool: The following quotes emphasize the importance of complaint management: ‘Every company strives for increasing customer satisfaction and loyalty. But, without effective complaint management, it's only a matter of time before the seemingly sweet company-client relationship may turn sour.’ … ‘Complaints are at the core of customer relationships and retention. Businesses that develop an active complaint management program as an integral part of their Customer Relationship Management system will learn to thrive amid change. If customers are the lifeblood of a company, their complaints offer concrete opportunities to build a strong, loyal audience and to refine products and services. ‘ [7]
Step 6: Empower your sales professionals with tools that enable them to respond to customer facing issues and requests more quickly. How much effort is required to send a product sample or brochure to a customer? How many calls are required to initiate such an activity? Key is to provide sales the tools that can trigger such processes with a minimum of effort. Furthermore, sales should be triggered once the requested samples or brochures are received by the customer! Why invest in expensive marketing materials and product samples without any process in place to make sure that every request is acted upon by sales? One way therefore to improve the quality of the pipeline is to ensure that expensive marketing activities are followed upon by sales.
Step 7: Improve profitability by solving friction points in how sales and marketing can work together. According to Gartner companies can improve profitability by solving friction points in how departments and subsidiaries work together Companies that have vertically automated marketing, sales, customer service, finance and operations lose opportunities to improve profitability. Simply because these departments cannot collaborate effectively!
It is not strange therefore that a large number of leads and prospects generated by marketing are not acted upon by sales! Organizations needs to make sure that processes between sales and marketing are optimally aligned. Leads should be distributed to sales quickly and without any hassles. Sales should have continues insight in marketing campaigns or available marketing materials or product sheets to make compelling arguments to their customers.
Step 8: Build a community of involved people around your customer: Key is not only to get sales working together with other department. It is absolutely critical to gives sales full insight in any contact moment regardless which department. Can you imagine how many people interact with your customer? In order to answer this question I had a look at how many people interacted with a particular international customer. We served this client from multiple locations in the world. It was found that during a period of 5 years at least 300 people from various departments (sales, marketing, support, consultancy, finance, R&D, etc.) had some kind of direct or indirect relationship with this customer! Of course, only 20 percent of these people had more intensive contact than the other 80 percent that were mainly involved in particular issues, such as sending out an invoice. Key in executing a customer intimacy strategy is to make the relationships of the many people involved with this customer transparent to all others. By doing this people can easily find each other and address customer issues collectively.
[1] http://www.exact.nl/blog/mkb-voor-mkb/ ‘Ondernemen is jezelf onderscheiden’, R.E. Muntinga van Muntinga Koek
[2] The Discipline of Market Leaders, Michael Treacy and Fred Wiersema; 1997: In this book three three different business strategies that successful companies can adopt to command leadership in their markets: these are operational excellence, product leadership or customer intimacy.
[3] The Strategy-focused Organization: How Balanced Scorecard Companies Thrive in the New Business Environment,By Robert S. Kaplan, David P. Norton, 2001, p. 87)
[4] ‘A silo is a tall, selfcontained, usually sealed cylinderthat often contains commodities’ … ‘A silo is also a metaphor for organizational units that contain their own management team and talent and lack the motivation or desirre to work with or even communicate with other organizational units’; Spanning silos, David Aaker, 2008, p. 2
[5] http://www.bnet.com/2410-13240_23-57055.html -‘ Customer lifetime value [CLV] is a way of measuring how much your customers are worth to you, over the length of time that they remain your customers.’
[6] http://www.curema.be/content/view/34/30/lang,en/
[7] Complaint Management: The Heart of CRM, Bernd Stauss, Wolfgang Seidel, 2005
In this post it is argued that if businesses successfully execute a customer intimacy strategy they are more likely to survive the current economic downturn. The rationale behind this argument is that in challenging times companies need to focus on customer retention and satisfaction. Many companies, however, are unable to align their internal communication and collaboration processes with such a focus. In this article we provide food for thought on how to successfully execute a customer intimacy strategy in a business-to-business market space. Successful execution, it is argued, depends on the degree by which all people interacting directly or indirectly with a customer are able to work together effectively.
A customer intimacy strategy will furthermore provide companies with a more cost effective way to improve margins. In general, new business marketing campaigns see lower conversion ratios than campaigns targeted at existing customers. It is not strange therefore that in challenging times deep sell and cross sell strategies are becoming more popular.
In the next sections we adopt our own view on customer intimacy and elaborate further on this topic from a sales manager’s point of view.
Customer intimacy defined
In our view customer intimacy is about people collaborating in a structured and customer centric way to create customer value and achieve results. In the next sections we seek to motivate our definition.
It’s about people and communities
A distinguishing element in our definition is that customer intimacy is about people, and not necessarily about organizations. It is ultimately about people who build bonds and relationships with each other.
One can argue that organizations are also relevant. So why not adapt an organization perspective? In order to answer this question we build upon a simple assumption. Larger organizations are typically structured in silos[4]. These can be for example functional silos (e.g. marketing, sales, customer service, production, finance, HR) or geographic silos (e.g. subsidiaries in the Netherlands, the United Kingdom and Sweden). Members of these organizational silos interact with the customer. However, in many organizations these silos prevent effective customer centric behavior. One of the reasons is that the tools used by these departments to capture customer insight are also siloed. In other words, customer information captured by sales using as sales force automation tool are only visible by sales, complaints expressed by a French customer are only visible to customer service in France and accounts receivable information is only visible to F&A.
How to align people in a customer centric way? A community perspective could be useful to answer this question. Online communities essentially provide a way for people to organize themselves around a particular subject. Customer-centric communities therefore provide a way for people to organize themselves around customer related issues. Members of customer centric communities can consist of anyone who’s in touch with the customer. Insight is achieved because the interactions, the decisions made and the information produced are captured centrally and are shared collectively. Any member can not only re-use the knowledge captured in the past but can also leverage the social network around this customer to tackle specific issues.
It’s about collaborating in a structured and customer centric way
Another key element of our definition is that people work together in a structured and customer-centric way. Every decision or every contact moment should be governed by processes that are designed with a customer focus. These processes structure the way people work together and prevent that customer related decisions are out of sync with each other. Keeping people and processes in sync with each other ensure that every individual decision or activity contributes towards creating value for the customer.
It’s about creating customer value and achieving results
The last element addresses the common objective of creating customer value and achieving results. The goal of value creation for customers seeks to improve customer retention and loyalty. However, one should also take the contribution of your customer in the company’s profitability into account. There are costs involved in acquiring prospects or retaining customers. It is essential to understand how much customers are worth to you[5]. Customer value, for example, can be calculated as follows: ‘customer Lifetime Value = (Customer Acquisition cost + Contribution to your Profit - Customer Retention cost)’[6]
Executing a customer intimacy strategy: a sales manager’s perspective
Let’s suppose you are a sales manager. How will such a strategy affect your day to day activities? As a sales manager you are under constant pressure to bring in business. In positive economic times this is already a challenging task with sales professionals scattered over various locations. Your accountability for sales performance (budget) of a number of locations (territory) and product/service lines requires you to complete all required sales reports and detailed documentation by weekly deadlines. Many calls and e-mails are required to gain insight in the quality of the sales pipeline. This is a huge effort for many organizations because sales forecasts are primarily constructed in many Excel sheets. However, in challenging times the pipeline is under pressure and you cannot afford to wait for weeks to gain insight in the quality of your pipeline.
One of the key questions therefore is: In challenging times, what type of actions can you take as a sales manager to meet your sales targets? The first three steps address potential quick wins by creating structure in the sales department. Steps four to eight address potential areas of improvement in aligning non-sales processes and improving the ways sales collaborates with other departments. And finally, the last step addresses the objective to leverage teamwork and customer-centric social networks to strengthening the relationship with the customer.
Step 1 Capture customer related information: Just ask yourself the following question: To what extent are customers suffering the consequences from sales and other professionals leaving the organization? When valuable knowhow leaves the organization customers may perceive a radical deterioration of the service levels of the organization. Simply because all customer history is stored in the head of the employee that left the organization. In any organization people will leave and new people will join. Key therefore is to make sure that all customer know-how remains the property of the organization and that processes are in place to empower successors to have a full insight in customer history. HR processes can contribute as well. By having optimally aligned HR processes with your customer intimacy strategy you empower sales management with finding and retaining the right sales professionals for the right territory.
Step 2: Control your destiny: Make sure that you can rely upon the fact that sales processes are executed uniformly. Prevent that your sales professionals act as lone wolves. Uniformly executed processes give you control of your destiny. Not only because you facilitate a more efficient working style, but also because you have a real-time insight in the quality of your pipeline. Furthermore, you can trust the sales related key performance indicators (KPIs) such as actual versus budget and forecasted revenue because they are the result of a uniform and transparent sales process. Examples include standard ways of working for managing opportunities, approvals of quotations send to customers, etc.
Step 3: set a KPI for customer contact frequencies: When sales professionals have to manage a large number of prospects and customers the risk is that some of these accounts are not receiving any attention. Wouldn’t it be great to have processes in place that trigger sales to have at least a visit or phone call every month?
Step 4: Control customer retention costs In challenging times the customer retention cost is also influenced by the risks a customer will or will not meet its obligations to pay his or her bills. Companies should always keep an eye on how costs related to customer retention affect customer value and the contribution a customer makes to a company’s profitability.
Step 5: Leverage complaint handling processes as an effective marketing tool: The following quotes emphasize the importance of complaint management: ‘Every company strives for increasing customer satisfaction and loyalty. But, without effective complaint management, it's only a matter of time before the seemingly sweet company-client relationship may turn sour.’ … ‘Complaints are at the core of customer relationships and retention. Businesses that develop an active complaint management program as an integral part of their Customer Relationship Management system will learn to thrive amid change. If customers are the lifeblood of a company, their complaints offer concrete opportunities to build a strong, loyal audience and to refine products and services. ‘ [7]
Step 6: Empower your sales professionals with tools that enable them to respond to customer facing issues and requests more quickly. How much effort is required to send a product sample or brochure to a customer? How many calls are required to initiate such an activity? Key is to provide sales the tools that can trigger such processes with a minimum of effort. Furthermore, sales should be triggered once the requested samples or brochures are received by the customer! Why invest in expensive marketing materials and product samples without any process in place to make sure that every request is acted upon by sales? One way therefore to improve the quality of the pipeline is to ensure that expensive marketing activities are followed upon by sales.
Step 7: Improve profitability by solving friction points in how sales and marketing can work together. According to Gartner companies can improve profitability by solving friction points in how departments and subsidiaries work together Companies that have vertically automated marketing, sales, customer service, finance and operations lose opportunities to improve profitability. Simply because these departments cannot collaborate effectively!
It is not strange therefore that a large number of leads and prospects generated by marketing are not acted upon by sales! Organizations needs to make sure that processes between sales and marketing are optimally aligned. Leads should be distributed to sales quickly and without any hassles. Sales should have continues insight in marketing campaigns or available marketing materials or product sheets to make compelling arguments to their customers.
Step 8: Build a community of involved people around your customer: Key is not only to get sales working together with other department. It is absolutely critical to gives sales full insight in any contact moment regardless which department. Can you imagine how many people interact with your customer? In order to answer this question I had a look at how many people interacted with a particular international customer. We served this client from multiple locations in the world. It was found that during a period of 5 years at least 300 people from various departments (sales, marketing, support, consultancy, finance, R&D, etc.) had some kind of direct or indirect relationship with this customer! Of course, only 20 percent of these people had more intensive contact than the other 80 percent that were mainly involved in particular issues, such as sending out an invoice. Key in executing a customer intimacy strategy is to make the relationships of the many people involved with this customer transparent to all others. By doing this people can easily find each other and address customer issues collectively.
[1] http://www.exact.nl/blog/mkb-voor-mkb/ ‘Ondernemen is jezelf onderscheiden’, R.E. Muntinga van Muntinga Koek
[2] The Discipline of Market Leaders, Michael Treacy and Fred Wiersema; 1997: In this book three three different business strategies that successful companies can adopt to command leadership in their markets: these are operational excellence, product leadership or customer intimacy.
[3] The Strategy-focused Organization: How Balanced Scorecard Companies Thrive in the New Business Environment,By Robert S. Kaplan, David P. Norton, 2001, p. 87)
[4] ‘A silo is a tall, selfcontained, usually sealed cylinderthat often contains commodities’ … ‘A silo is also a metaphor for organizational units that contain their own management team and talent and lack the motivation or desirre to work with or even communicate with other organizational units’; Spanning silos, David Aaker, 2008, p. 2
[5] http://www.bnet.com/2410-13240_23-57055.html -‘ Customer lifetime value [CLV] is a way of measuring how much your customers are worth to you, over the length of time that they remain your customers.’
[6] http://www.curema.be/content/view/34/30/lang,en/
[7] Complaint Management: The Heart of CRM, Bernd Stauss, Wolfgang Seidel, 2005
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