Chapter 3: One Girl in a Convertible... - It Takes More than a Database

Chapter 3: “One Girl in a Convertible ...”—It Takes More than a Database

Marketing to customers based on their purchase history data was what we did with CRM, and it worked for what we were trying to do—sell more of what we wanted to sell. But marketing based on the transaction database alone is not enough for CMR, where we are trying to serve the consumers or businesses by getting them to show us the solutions that will serve their needs.

This chapter’s title comes from a Warren Buffett letter to shareholders in which he said, “One girl in a convertible is worth five in the phone book.” He was explaining why he avoided the allure of the dot-com stock boom and kept his investments in companies with proven performance. For marketers it might be changed to: One customer who will communicate personal needs to us is worth five names in our database.

Connecting

The world changed after September 11, 2001, challenging marketers to reflect—as human beings, not just as marketers—on what their customer messages should be going forward. The United States was already mired in a recession , unemployment levels had risen, retail sales were flat, consumer debt remained high, and now the country was at war.

In times like these it would be presumptuous and foolish to believe that a transactional database could still provide the correct guidance for reaching our very confused and frightened customers. Never before in our history has the need been greater for establishing, nurturing, and creating strong relationships—and this holds true for both business-to-consumer relationships and business-to-business relationships. Customers want a sense of security; that can’t be achieved solely through targeted offers.

At the start of a chapter in his excellent book, All-to-One (McGraw-Hill, 2002), Steve Luengo-Jones quotes John McKean of the Center for Information Based Competition in Ohio. The quote captures our challenge: “Some 70 percent of delivering customer value is about making the customer feel like a human being. This is the most profoundly simple idea that everyone in the customer arena seems to miss .” ^[1] Steve goes on in that chapter to reinforce the point: “You have to get close to your customers, as close as possible, understand them, direct at each one of them all the good and appropriate benefits your company has to offer, communicate with each one of them in all the ways open to you, find out what each one wants or needs or both, then provide it for them.” ^[2]

That’s what CMR requires; getting as close to your customers as possible and using customer intelligence, not just collecting customer data, but connecting. And connecting means more than being available on the Web.

^[1] Steve Luengo-Jones, All to One—The Winning Model for Marketing in the Post Internet Economy (New York: McGraw-Hill, 2002), Chapter 5.

^[2] Ibid.

Asking the Right Questions

The results of ignoring customer intelligence and relying solely on customer data have been compared by one writer to steering a tanker by observing its wake. That’s what CRM practitioners have been doing for years , and it has often created problems. CRMGuru.com reports the story of a vice president of a large auto manufacturer who increased production of lime green cars after noticing a spike in quarterly sales numbers for such cars. It turned out that dealers were slashing prices of the hard-to-sell cars to get them off the lot. The company lost millions. If the VP had asked the right questions, he would have received the right intelligence. ^{[3 ]}

We had a similar experience with one of our retail clients . I was talking about what we could learn by tracking sales of trend items. One of the buyers left the room and came back with the report that a swimsuit with a zipper down the front had sold twenty-three units the day before. He immediately reordered, only to learn later that the twenty-three units sold in one day were a result of a high school swim team selecting the suit as the team uniform. Just as in the first example, if the buyer had asked the right questions, he would have received the right information.

Personalization

Research shows that the critical element in providing a positive customer experience lies in personalized and proactive service. Nearly 75 percent of one study’s participants said that personalization was a major factor in their “most satisfying ” purchase experience, on or off the Web. Seventy-three percent of the most positive customer experiences were due to personalization such as self-service, personalized voice or e-mail interactions, the ability to track purchases and requests , and knowledgeable customer service. Thirty-four percent of respondents cited a lack of personalized customer care in their “least satisfying” customer experience. ^[4]

Connecting with the customer and finding ways to provide a positive customer experience go far beyond the initial transaction. The more you can “delight” customers the more they will come back. Denny Hatch, contributing editor of Target Marketing, tells the story of a man who bought a $45,000 Lexus and experienced something memorable on his way home from the dealership when he turned on the radio and discovered a very small bit of personalized proactive service.

Hatch reports,

His favorite classical music station came on in splendid quadraphonic sound. He pushed the second button; it was his favorite news station. The third button brought his favorite talk station that kept him awake on long trips. The fourth button was set to his daughter ’s favorite rock station. Every button was set to his specific tastes. The new owner knew the car was smart, but was it psychic? No, the mechanic at Lexus took the trouble to note the radio setting on his trade-in and duplicated them on the new Lexus. What this technician did cost Lexus nothing—not one red cent. Yet it solidified the relationship. Customer delight? More like customer delirium. During the coming years, Lexus would have to screw up real time to negate that divine moment and cause the owner to switch to a Jag, a Mercedes or a Caddie. ^[5]

Dallas-based ClubCorp, a company operating 115 private golf courses, understands this kind of proactive service. Its employees work hard to learn things about their customers that will enable the company to empower them, like whether they want to be the driver or the passenger in the cart. With this knowledge they know ahead of time how to load up the cart. They even try to learn customers’ drink preferences so the right beverage is on the cart when the golfers arrive or is available for them on the roaming drink cart. ^[6]

Customer Loyalty

I learned a lot about empowerment and customer loyalty from Kenneth Kanady, education enablement manager of KANA, a leading provider of external- facing CRM solutions in Natick, Massachusetts. Kanady wrote a thoughtful paper he called, “Confessions of a Loyal Customer…When Being Satisfied Is Just No Longer Satisfying.” His paper is both a personal and professional perspective from a very, very loyal customer who also happens to be a corporate enablement manager within the CRM industry. He starts with six important messages:

Customer loyalty is influenced as much by your customer’s emotions and learning capacity as your own company’s products, services, processes, and prices.
Customer loyalty is a rare gift given to only a few over a lifetime.
Customer loyalty is not normally admitted aloud because its roots are not very well understood even by customers themselves .
The three key elements of customer loyalty are: engagement, enablement, and empowerment. The presence of all three can be significantly differentiating —the lack of one can be devastating.
Whereas customer satisfaction and customer confidence can be well managed and measured up close, customer loyalty is not really manageable at all and is best assessed from afar.
Stop offering special deals designed to get loyalty. Such things just don’t work.

Kanady defines engagement as the capacity that “helps me feel connected and affiliated .… Being able to engage them whenever, wherever and how I choose, conveys to me they are growing, open and accessible.” He explains that enablement creates the state of “achieving desired outcomes through the use of a business’s products or services,” and saves his strongest words for empowerment:

Empowerment is the feeling that customers develop ‘about themselves’ as a result of interacting with a company through its people, products, processes or services. Empowerment is what differentiates a ‘repeat’ customer from a loyal customer. I view customer loyalty as the steadfast emotional allegiance or commitment given to a business, product, brand or person. As such, loyalty is an emotional state of empowerment. It’s empowerment that keeps me coming back for more … keeps me loyal. ^[7]

Customer Empowerment

The advertising agency Brann Worldwide agrees that customers have taken control and says, “We’re not helping sellers sell anymore. We’re helping buyers buy.” The following case history explains how the company’s approach has changed: ^[8]

Bermuda was facing stiff competition for tourists from other islands, cruises, and even Europe. Although general media coverage had raised awareness of Bermuda’s appeal , conversion of leads was still lagging. The tourism industry was able to reverse a ten-year decline by connecting with customers and giving them the information they wanted, the way they wanted it.

In the past when prospects called 1-800-BERMUDA, the phone reps asked only for their name and address and processed the callers ’ requests by sending generic materials, the same information to each prospect.

With Brann’s help, the call center has been transformed into a customer-oriented service center that interacts with the prospects to determine what sort of vacation they are considering. A customized print-on-demand package is created around each prospect’s individual interests. With 11,000 possible variations, each package offers prospects the exact information they want. An e-mail is sent to those with Web access directing them to their own personalized Bermuda website which the system builds on the fly. The process of connecting with the customer continues with follow-up communications immediately after the customer’s visit to the island and even an “anniversary-of-your-visit” mailing to encourage a return trip.

By probing for details of callers’ lifestyles, learning what callers really want from their vacation, and using that intelligence for connecting with the customer, Brann has created a completely personalized buyer’s experience, giving power to the customer.

And it’s the customer experience that counts. Good customer experiences drive satisfaction, trust, and loyalty. Poor customer experiences have the opposite effect and can do great harm. According to a Brann Worldwide study “Marketing Practices That Drive Customers Away,” up to 50 percent of customers surveyed are so irked by common experiences of marketing, sales, and customer service practices that they’re ready and willing to stop doing business with the companies. Poor customer experiences often come from simple things: irrelevant offers, uninformed sales people, delays in answering—or even failure to answer—inquiries. It doesn’t take much to annoy customers.

“It’s no secret that companies are alienating current and potential customers,” says Nancy Hallberg, executive vice president and North American insight director at Brann. “Our findings suggest that the depth of the problem is much greater than most companies realize. If even a percentage of disgruntled customers vote with their wallets, many companies will experience losses ranging from 15 to 30 percent.” ^[9]

When customers get fed up, they aren’t just leaving—they are also engaging in anti- advocacy , warning friends , coworkers, and family about bad experiences through word of mouth, e-mail campaigns , and Internet chat rooms. Yet one more reason to take a fresh look at how we improve customer relationships and win loyalty.

The Internet Community

In the above context, the Internet is an enemy, but it can also be a friend. It is important to remember that the original intent of the World Wide Web was to facilitate interaction among people of similar interests. We now call this community. Because people are more loyal to communities than they are to companies, community on the Internet can be a powerful force.

For example, when NASA set out to produce a map of Mars, it invited the Internet community to help identify more than 40,000 craters on the Martian surface. In a single day, more than 90,000 entries were recorded—1.9 million in two months. NASA called the work of these volunteers “virtually indistinguishable from the input of a geologist with years of experience in identifying Mars craters.” ^{[10 ]} The “customers” responded primarily to the opportunity to be part of that 90,000, not out of loyalty to NASA. But now they feel they have a special relationship with that agency.

Companies like Mercury Interactive, which provides indexes of business-to-business software products and services, are creating online communities where customers can gather to trade tips on how to fix problems and how to make best use of a product. The businesses can essentially eavesdrop on such discussions to get smarter about dealing with customers. Analysts say that by setting up and monitoring these online communities, companies can reduce customer service inquiries and sift through the dialog to glean valuable information from customers more efficiently than in the past. ^[11]

The folks at Dell understand this. On Dell’s Web-based service site you get access to a community of other Dell owners who ask questions and provide helpful answers. Of course, this is not surprising since Michael Dell founded his company on the principle of finding out precisely what the customers want and allowing them to have it exactly their way.

Another successful company, eBags, which sells luggage and over 4,000 related products, has had monthly sales growth of 50 percent since its launch in 1999. Their interactive site asks customers to return thirty days after purchasing to rate the products they bought, and more than 30 percent do. To reward this behavior, eBags posts all of their shoppers’ opinions on price/value, appearance, durability, and overall performance (good or bad), and whether the buyers would purchase the product again. Close to one quarter of eBags’s customers offer testimonials, and these are also shared with the community. ^[12]

Both eBags and Dell were ranked tops in their category by the Direct Marketing Association study, The Merchandising Scan, released in January 2002; and in June 2002 in the 3rd Annual I.Merchants Awards, eBags tied with Orvis for website of the year.

To help companies develop this sense of community for customers, a San Diego company called Akonix has developed a way for online shoppers to talk to each other in addition to sales associates . People can see who is logged into a store’s site as well as who is looking at a specific item. Shoppers can trade information about products and about their experiences with the company or its goods.

Akonix founder Dimitry Shapiro says, “Since the beginning of human time we have relied on the opinions of other people to help in our decision-making process.” That’s the kind of reassurance we need, but all that’s missing online. Shapiro reports that the human interaction increases sales because it gives people a sense of community within a website. “Right now,” he says, “people don’t feel any loyalty or obligation to make purchases online because they can easily leave a website.” ^[13]

Communities help us tap into the emotions of consumers. Kjell Nordstrom of the Stockholm School of Economics says, “Emotion is the great differentiator in a world where sameness increasingly rules. In an excess economy, success comes from attracting the emotional consumer, not the rational one. Companies can tap into the emotions of consumers by focusing on a specific tribe.” ^[14]

In their preface to Emotion Marketing: The Hallmark Way of Winning Customers for Life (McGraw-Hill, 2001), Scott Robinette and Claire Brand write, “If there’s one thing we’ve learned after nearly 90 years of leadership in the relationship business, it’s that emotion matters. From brand building and employee satisfaction to product leadership and customer loyalty, nearly every major success at Hallmark can be traced to effective creation, utilization, delivery, or exchange of emotional value.” ^[15]

^{[3 ]} Brian McManus, “10 Steps to Customer Intelligence Success,” crmguru .com, fall/winter 2001, p. 2.

^[4] “Personalized, Proactive Customer Service is Key to Satisfaction,” iccmweekly, March 7, 2002, p. 1.

^[5] Denny Hatch, “Delight Your Customers,” Target Marketing, April 2002, p. 33.

^[6] Eric Yoder, “Improving their CRM Game,” 1to1 Magazine, March 2002, p. 35.

^[7] Kenneth L. Kanady, “Confessions of a Loyal Customer … When Being Satisfied Is Just No Longer Satisfying,” CRM-Forum, April 8, 2002, p. 2.

^[8] “Bermuda Case Study,” blau.com, January 22, 2002.

^[9] “Seller Beware: Some Marketing Practices Are Driving Customers Away,” Brann-News, May 16, 2001, p. 1.

^{[10 ]} David Post and Bradford Brown, “Peer Production Promises to Leap in Importance,” informationweek.com, January 7, 2002, p. 74.

^[11] “Using User Forums to Improve the Product,” 3D-DMA Daily Digest, February 11, 2002, p. 5.

^[12] Michael Lowenstein, “On-Line Community: A Potentially Significant, but Underutilized, Internet CRM and Customer Loyalty Tool,” crm-forum.com, January 14, 2002, p. 2.

^[13] Kim Peterson, “Service with a J,” San Diego Union-Tribune, March 26, 2002, pp. C1, C4.

^[14] Jennifer Kirby, “Accessing Value Groups Through Online Communications,” CRM-Forum, April 8, 2002, p. 1.

^[15] Scott Robinette and Claire Brand with Vicki Lenz, Emotion Marketing: The Hallmark Way of Winning Customers for Life (New York: McGraw-Hill, 2002), p. xiv.