How to Lose Customers in Five Easy Steps What common practices are resulting in anemic customer profits? How can the three I’s of marketing help to maximize customer value? As most marketing executives already know, losing valuable customers is all too easy. After all, organizations engage in a dizzying variety of customer interactions across a broad range of products and services. Combine that complexity with product-centric organizational structures and measures, and you've got a recipe for unwittingly engaging in practices that can drive away valuable customers. But it doesn’t have to be that way! Take a stroll through this e-book to learn how smarter customer interactions and more customer-centric measures can help you deepen and grow relationships with your most valuable customers. HOW TO LOSE CUSTOMERS IN FIVE EASY STEPS The five steps to failure » Here are five common practices that lead companies astray in the quest to maximize profitability. Click on the links below to get the story behind each one. Don’t collaborate. Let each group worry about its own customer interactions. Don’t find out what customers value. Just squeeze more value out of them. Why is it more important than ever to keep your customers happy? Don’t consider the customer experience. Just push price and product. Don’t measure anything. After all, marketing is more art than science. Don’t worry about tomorrow. Just focus on making this period’s targets. view video clip (37 seconds) Jeff Gilleland Global Strategist, SAS 2 Printer-Friendly HOW TO LOSE CUSTOMERS IN FIVE EASY STEPS Time for a new approach: The three I’s of marketing Redefine how you build value – for your customers and your enterprise. Since the beginning, most business models have been built around organizational structures, management and incentive plans, financial systems and the four P’s of marketing: product, price, promotion and placement. What does productcentricity cause marketers to lose sight of? Many companies have professed to shifting their attitudes, claiming to be “customer-focused,” “customer-obsessed,” “customer-driven” or whatever. But even to this day, the heart of most business models remains product-centric. That means companies frequently fall into the Five Easy Steps, whether they realize it or not. If you’d like to get back on track, replace the traditional focus on the four P’s. Instead, coalesce your energies around the three I’s: insight, interaction and improvement. Then exploit readily available technologies to excel in all three dimensions: Gain deeper insight – Understand and predict customer value at a holistic, enterprisewide level. Choreograph better interactions – Engage customers in a way that enhances mutual value. view video clip (1 minute 17 seconds) Gain continuous improvements – Measure and report KPIs that matter, optimize investment of sales and marketing resources, and continuously learn from every customer interaction. Martha Rogers, Ph.D. Founding Partner, Peppers & Rogers Group » Let’s break it down further. What does it actually take in order to achieve these three objectives? 3 Printer-Friendly HOW TO LOSE CUSTOMERS IN FIVE EASY STEPS Three I’s = One customer-centric, closed-loop business model What exactly are the three I’s of marketing? view video clip (1 minute 20 seconds) In order to... You must be able to... Deepen customer insight 1. Manage quality customer data. 2. Predict customer behavior. 3. Profile and segment customers. Choreograph customer interactions 4. Manage and optimize segment strategies. 5. Engage high-potential customers. Gain continuous improvements 6. Measure and report results. in marketing performance 7. Optimize marketing investment. 8. Apply lessons learned. Jeff Gilleland Global Strategist, SAS 4 » Let’s drill down into the opportunity, the challenges and the key steps associated with each of the three I’s. Printer-Friendly HOW TO LOSE CUSTOMERS IN FIVE EASY STEPS Insight Interaction Improvement Insight Deepen customer insight with superior data management and analytics. The opportunity Every interaction with a customer is a chance to get data that leads to deeper customer insight. Never before could you get so much information about customers and markets, transfer that information into usable knowledge, and guide the investment of resources with precision. How can analyticsdriven insights help companies treat millions of customers as individuals? The challenges Trouble is, data pours in from multiple channels, from incompatible computing platforms, in mismatched data definitions and redundant customer entries. Transforming it all into a clean, analysis-ready format can be a daunting challenge. The key steps view video clip (1 minute 20 seconds) Rich Martino Sr. VP of Market Information and Research, U.S. Bank Manage quality customer data. Establish a data management platform that integrates data from multiple sources, then cleanses and prepares the data to create a comprehensive view of the customer. Create customer insight. Most comapnies have simple analytics that tell you what was and what is, but few have an accurate view of what will be, why and what to do about it. Exploit predictive analytics to truly understand customers—not just past behaviors, but likely future preferences and purchase patterns. Then you can anticipate their needs, improve customer retention and find smart ways to cross-sell and up-sell. Profile and segment customers. Develop effective customer profiles and segments based on customers’ historical behavior, profitability and future potential. Don’t just use segments to support product-push campaigns, but to predict customer needs and respond accordingly. 5 Printer-Friendly HOW TO LOSE CUSTOMERS IN FIVE EASY STEPS Insight Interaction Improvement Interaction Choreograph interactions to improve the customer experience at every touchpoint. The opportunity Customers expect to receive a consistent experience across every channel and the sense that the company knows them, whether they’re interacting via direct mail, the Web, customer call center or in person at a branch office. The challenges Why are “treatment tracks” an important basis for customer interaction strategies? With thousands of campaigns to manage, spanning hundreds of customer segments and dozens of media channels and markets, many institutions settle for scattershot marketing. When customer interaction data is scattered around in data silos, it can be difficult or impossible to get a complete view of activities across the spectrum. It’s even difficult to know when not to communicate—when to pull back to avoid potentially alienating the customer. The key steps view video clip (31 seconds) Jeff Gilleland Develop and optimize segment strategies. What unique treatments should each customer receive? What’s the best bundling of price and promotion? What is the best strategy for up-selling, cross-selling and retention efforts? Armed with richer customer insight and targeted customer segments, marketers are becoming more selective and scientific about where they invest resources—and, in some cases, which customers they will even accept. Global Strategist, SAS Engage effectively with customers. Naturally, marketing success stems from targeting the right customers with the right offers at the right time—even in real time—while prudently avoiding spending on unprofitable prospects. With deep customer insight, you can effectively manage the customer dialogue across multiple products and channels, balancing the realities of budgets, sales capacity and other constraints. 6 Printer-Friendly HOW TO LOSE CUSTOMERS IN FIVE EASY STEPS Insight Interaction Improvement Improvement Don’t just defend marketing performance; actively and continuously improve it. The opportunity The results of every campaign can be captured to help refine customer segments and marketing activities the next time around, for a continuous cycle of improvement. Furthermore, spend that shows proven results gets budgeted again, gets applied wisely where it will deliver optimum returns, and then is more likely to be increased. The challenges How does the ability to measure, learn and improve translate into competitive advantage? Measurement and accountability are hard sells in creative organizations. But the only way to be sure you’re on track is to prove it. Even when marketing appreciates the need for measurement, it isn’t easy. Marketers are often forced to cobble together data from sales, marketing research, syndicated databases and other fragmented sources just to create a composite view of what (you thought) was happening. And it is usually a rear-view effort to support the annual plan, not a tool to guide real-time course improvements or to show credible ROI. The key steps view video clip (56 seconds) Jeff Gilleland Global Strategist, SAS Meaningful and ongoing improvement requires excellence on three fronts: Measure and report on all aspects of the marketing organization to align activities to strategies and goals, and to improve performance and accountability. Optimize investment across direct and indirect marketing. Analyze and optimize marketing mix elements, such as advertising, promotion and pricing…media plans by medium and market…and customer segmentation and treatment strategies. Continuously learn and improve through a closed-loop system—leading to a knowledge-based relationship with your customers that will differentiate you from the rest. 7 Printer-Friendly HOW TO LOSE CUSTOMERS IN FIVE EASY STEPS How do you get there? Start small. Assemble an integrated technology platform. Evolve in stages. You don’t have to do a flash cutover to a new business model. You can implement technologies in low-risk stages. Each investment builds on the previous one. You can test pilot programs within a single department or customer segment—and then roll them out more broadly as they prove their value. Integrate technology into a whole. You’ve gathered by now that the Holy Grail of customer value depends on big-picture perspective. If you want customers to place more faith (and dollars) in your company, you have to understand and manage the total relationship—spanning contact channels, products, related entities and time. How did U.S. Bank evolve from silos of product-centricity to enterprisewide customer-centricity? With today’s technologies, function-specific components can be integrated into a single, synergistic system. Information flow then transcends functional silos, organizational boundaries, computing platforms and specialized tools. Decisions can be made rapidly with full knowledge of underlying context and hidden interdependencies. view video clip (2 minutes 4 seconds) Rich Martino Sr. VP of Market Information and Research, U.S. Bank 8 So the last thing you want is niche software components that don’t play well with others. » Let’s take a closer look at the integrated technologies needed to realize the full potential of the three I’s. Printer-Friendly HOW TO LOSE CUSTOMERS IN FIVE EASY STEPS Technologies that enable a best-practice approach » C lick on the text in blue to learn more about the specific technologies that support the three interdependent parts of a customer intelligence marketing platform. Customer insight is about deepening your understanding of individual customers and treating customers as individuals. It requires technologies to integrate and analyze data across products and channels. To maximize success, you need tight integration between your customer insight and customer interaction technologies. Why do recent advances in technology make this an exciting time to be a marketer? Customer interaction is about managing customer dialogue. Interaction technologies include marketing mix optimization, behavioral triggers, digital marketing and real-time decision making (to name a few). These interaction technologies are only as good as the customer insight that fuels them—which leads us back to the integration imperative. Improving marketing performance is about measuring and reporting what matters. It’s about aligning organizational activity around actions that create value with the customers that matter most. It’s about integrating the learning that occurs with every customer interaction—which again leads us back to the integration imperative. view video clip (2 minutes 43 seconds) Jeff Gilleland Global Strategist, SAS 9 Printer-Friendly HOW TO LOSE CUSTOMERS IN FIVE EASY STEPS Summary: Better approach... better outcomes What to do: What you’ll gain: Deepen customer insight. • A 360-degree view of customers spanning all contact channels, products and services. • A ccurate customer segments (the basis for “treatment tracks”) and foreknowledge of customer behaviors. • A ccurate assessments (and scoring) of present and lifetime customer value. Choreograph better interactions. • Steadily improved returns from marketing campaigns with each iteration. • Marketing programs synchronized across units, product lines and channels. • Triggered in real time by various customer milestones or behaviors. • Profitable interactions. Measure to gain continuous improvements. • Campaign results automatically plowed back into ongoing improvements. 10 • Quantifiable proof of the results from marketing spend. • O ptimized ROI, given available budget, channel capacities and other constraints. Integrate technologies and processes. • A cohesive, enterprisewide marketing platform that spans customer groups, products and channels. • A foundation for customer-centricity even in the most product-centric organizations. Printer-Friendly HOW TO LOSE CUSTOMERS IN FIVE EASY STEPS Learn more! Customer-centricity is a journey. The following white papers and Webcasts will give you ideas on how to get going, how to avoid obstacles and how to keep detours to a minimum. White papers: Competing on Customer Intelligence Building Competitive Advantage Based on the Three I’s of Marketing integrating technology to achieve competitive advantage. Customer Experience Maturity Monitor The State of Customer Experience Capabilities and Competencies This research report from SAS, Peppers & Rogers and Jubelirer Research provides insights into building authentic and profitable long-term customer relationships. The Total Economic Impact of SAS Marketing Automation This study illustrates the financial impact of implementing SAS Marketing Automation in the credit/debit cards business, in one European country, for a global retail and commercial bank. 11 Printer-Friendly HOW TO LOSE CUSTOMERS IN FIVE EASY STEPS Learn more! Webcasts Tips from the Trade - How to Execute Campaigns That Deliver ROI In this Webcast, we explore how successful companies are enhancing their approach to campaign management to operate more effectively, including segmentation techniques, contact policy management, and using predictive analytics to drive decision making. Tips from the Trade – Competing on Web Analytics This Webcast features a panel of thought leaders who will discuss best practices in online analytics. It explores how a successful online analytics strategy is built upon specific key performance indicators, integration of online and offline data and appropriate use of social networking sites. Stop Guessing - Start Knowing: Strategies to Optimize Your Marketing Campaigns Our expert guests will tell you how integrating customer value into your business model can improve both short- and long-term profitability – and why customer value management is so critical to your organization’s long-term success. 12 Printer-Friendly HOW TO LOSE CUSTOMERS IN FIVE EASY STEPS About SAS Why partner with SAS? SAS is the leader in business analytics software and services, and the largest independent vendor in the business intelligence market. With innovative business applications supported by an enterprise intelligence platform, SAS helps customers at 44,000 sites improve performance and deliver value by making better decisions faster. Since 1976 SAS has been giving customers around the world THE POWER TO KNOW ®. www.sas.com view video clip (2 minutes 43 seconds) Jim Goodnight SAS and all other SAS Institute Inc. product or service names are registered trademarks or trademarks of SAS Institute Inc. in the USA and other countries. ® indicates USA registration. Other brand and product names are trademarks of their respective companies. Copyright © 2008, SAS Institute Inc. All rights reserved. 493057.0808 CEO, SAS Printer-Friendly