Customer Retention Tools Report

Making your business memorable

The tools of customer retention experts

May 2007

Contents

Introduction

Personalised Communications
Personalised letters and greeting cards
Personalised email retention strategies
Telephone Contact
Customer Visits
Unexpected Extras - Gifts

Customer Feedback Surveys
Telephone interviews
Email and Internet feedback surveys
Getting started on your customer feedback surveys today!

Customer Relationships
Customer Relationship Management
Customer Relationship Marketing

Online Retention Strategies
Websites and email marketing
Internet Marketing

Customer Intelligence
Customer Analytics
Customer Intelligence

Introduction

Customer retention is the goal of any business operating with a view to profit - or so it should be. Customer retention and customer relationship management are just some of the terms used to describe the coveted habitual or loyal customer. But how do we go about achieving this end result - creating and nurturing long term, profitable relationships with our customers and clients?

This report aims to equip you and your business with these fundamental strategies and tools to get your customer retention campaign started. Remember the adage, touch early and often and never let too long a period go by without contacting your customers in some way.

As well as discussing the importance of a personal touch when communicating with your customers, this report identifies specific customer relationship fulfilment tools which can be used to make meaningful contact. These fulfilment tools including personalised greeting cards, are a sure way to make a lasting, memorable impression on current and prospective customers.

The part that email marketing can play in your customer retention strategy is discussed as well as ideas for implementing such a campaign. For example using an online magazine to act as a source of valuable information to your customers in an effort to build a lasting rapport and trust and the importance of using opt in lists for your email marketing initiatives.

Has your company considered the importance of regular customer feedback surveys? Not only are surveys important in building a profile of your customers to direct all other customer relationship marketing activities, but surveys also ensure a steady stream of feedback which can help highlight problems before customers are lost.

The most important tool in a successful customer relationship management program is your company’s customer data and the systems to turn this data into business intelligence. All other tools rely on the information stored in company databases to direct targeted communications about what customers are interested in, their preferences and needs. Customer Analytics and Customer Intelligence can further refine your customer data to direct customer relationship marketing activities ensuring your resources are working to retain your customers.

The merits of the internet as a retention tool are discussed as well as the opportunities that exist to develop your website into a powerful retention tool.

Remember to stay close to your customers, even if they are not currently buying. A range of tactics including greeting cards, telephone calls and web based communications can be used to ensure your business remains top of mind with your customers.

Many of the customer retention tools identified in this report can be put into practice in your business today. However, it may be necessary to outsource those areas where you do not have the professional skills or resources to effectively implement strategies. By outsourcing these activities you ensure your customer retention campaign is executed by professionals skilled in the areas of customer understanding and hence the tactics needed to implement successful customer retention initiatives.

SECTION ONE

Personalised Communications

Personalised letters and greeting cards

Personalised email retention strategies

Telephone contact

Customer Visits

Unexpected Extras - gifts

Customer relationship fulfilment tools! These refer to the many options available to businesses to make meaningful and memorable contact with customers. These tools include the actual contact, both physical and virtual, that occurs between your business and your customers.

Personalised letters and greeting cards

Business greeting cards as a customer retention technique helps keep your business name at the forefront and remind your clients of your products and services. As well as personalised letters, greeting cards can be used as a retention tool, no matter what stage in the sales cycle your customers are at. For example, some uses include:

1. Thank you cards

The best way to show your appreciation and tell your clients "thank you for your business" is by taking the time to send a business thank you card as opposed to a hastily punched out electronic message. Traditional thank you letters and follow up letters often end up in the trash, where as a witty business thank you greeting card can get passed around the office and posted on a wall.

2. Birthday cards

Impress and surprise your clients by remembering their birthday by sending personalised business birthday cards. Success with this tool requires you to have a well managed customer retention and Customer Relationship Management program in place.

2. Business prospecting cards

What sets your business apart from the many other suppliers delivering the same products and services as your business? An effective technique is to use personalised greeting cards for your business interactions. Many sales are lost when a standard follow up letter goes unnoticed. Do something unique and stand out from the competition.

3. Congratulations, Anniversary, Sympathy cards

Welcome cards, Congratulation cards, Anniversary cards and Sympathy cards. Retention is all about follow up and sending a hand written note to acknowledge your clients special occasion can make all the difference to impress them and ensure they remember your business the next time they are in the market for your product or service.

SECTION TWO

Advantages of greeting cards

As highlighted above, the advantages of personalised business greeting cards are undoubtedly their ability to create a memorable impression of your business. Other advantages include:

Personal: In a world of impersonal forms, letters and mass email, memorable corporate greeting cards are a refreshing customer retention tool that will add a memorable touch to your client interaction.

Effective: The business world continues to get more competitive. To increase sales, companies have to find innovative ways to stand out from the crowd and connect with their customers.

Help people communicate: Business greeting cards allow you to communicate in a direct and powerful way. Business greeting cards can say a lot of things you normally couldn't say as a sales person, such as: "I've been trying to come up with a creative way to get your attention," or "Not another call from a sales rep." These statements get right to the point. Saying such things in person, or on the phone, might seem too forward or inappropriate. However, in the context of a creative card, a message of tenacity, humour and sincerity are conveyed.

Inexpensive: Businesses are always mindful of their bottom-line, making greeting cards an effective way to convey intended messages without a huge investment.

Quick: Research shows that it takes 5 to 10 exposures to a client before a sale is made. A lot of time is spent in composing emails and letters, where as it only takes two minutes to write a quick note, sign, address and mail a personalised greeting card.

Disadvantages of greeting cards

The visual impact of greeting cards is important as this medium may be pinned up in on office boards and displayed to many. Therefore it is important to spend time on creating a professional and visually appealing business greeting card as well as a memorable message.

Business greeting cards therefore take time to get right and are also fiddly with regards their preparation, especially when doing a mass mail out. Each card requires personal attention in compiling a message, individually addressing each envelope and putting stamps on envelopes.

TIP: Personalisation increases the effectiveness of
customer retention campaigns. In order to cement your relationship with your clients, contact must be regular and personalised. Personalisation increases the effectiveness of the marketing spend.

Personalisation of customer contact activities has the additional benefit in meeting customer expectations and reducing customer churn. In today’s multi channel, multi contact marketplace, customers expect companies to understand their needs and know which communication channels they prefer for different products and services.

Personalised email retention strategies

According to brand manager Mike Jarman of food specialist Elizabeth Botham, email is a fantastic tool for retaining customers and encouraging repeat interaction with your website. It is faster, cheaper and more interactive than its traditional counterpart, direct (printed) mail, and allows companies to reinforce and nurture their relationships with existing customers. Using email campaigns and newsletters can be a great way to reach and communicate consistently with customers.

Advantages of email marketing

Email marketing is most effective as a means of staying in touch with those clients who have already purchased from your business or who know something about your product or service from other communications and may be interested in learning more.

Email marketing is a great means of contacting all your clients and customers at once, quickly, easily and at little to no cost. By creating an email database and sending a mass email to your clients using “email group” allows you to ensure your communication is still personal.

An email newsletter or report can be an ideal leave-behind for a sales call that does not result in a sale or defined next step. It can also be the purpose of a call in which the objective is to make a brief introduction and offer something of value in exchange for gathering more detailed contact information.

A concise newsletter that communicates your expertise reinforces your brand and dependability, delivers real value to readers, and provides a path back to your website.

Email marketing allows businesses to monitor open rates. There are techniques available that record when your message is clicked and opened, as well what steps the recipient takes next (deletes message, forwards messages, clicks to website).This knowledge can be used to better understand your clients’ needs and interests.

The possibilities and uses of email marketing as a retention strategy are endless when communicating with your best customers. You can:

Run competitions
Promote special offers to existing customer exclusively
Target messages to select groups of your customers
Announce new product developments (encourage upgrades and trade-ins)
Send out an online magazine (act as a source of valuable information to your clients)

TIP: Harness the power of email to build customer relationships online. Create mailing lists of existing customers (ask them if they are happy to receive emails first and make it easy for them to sign up to your list), and send them personalised incentives to come back to your online store/website at regular intervals.

Section Two Resources:

[n.d] [Online Available: http://www.bcentral.co.uk/business-information/marketing/marketing-methods/email-marketing.mspx ] Build relationships with your customers - but don't spam, Mike Jarman [Last Accessed 11 May 2007]

SECTION THREE

Disadvantages of email marketing

The main disadvantage to email marketing is the virtual nature of the communication. There is first the possibility that your email does not get through your intended recipients’ firewall and virus software. If it does get past this, there is the possibility the email is deleted and never read (either sent to junk mail or mistakenly deleted).

There is also the disadvantage that email communication is not permanent. For example a business greeting card can be pinned up or placed on a desk for months and seen by many, whereas emails are seen only by the recipient and normally only once.

There is a common misconception that the sheer volume of email that we receive on a daily basis has ruined the effectiveness of email as a marketing tool. And the fact that spam has received so much attention in the news lately also hasn't done much to instil confidence in this medium. Consequently open rates for email are far lower than physical media. Nothing beats receiving an unexpected card in the mail with your name on the front!

Experienced email users have become accustomed to deleting, ignoring or blocking anything that carries even a hint of spam. In many cases, home users and business use automatic filters to remove suspected spam before it gets to the inbox. The result is email open rates are so low and delete rates so high that a legitimate commercial message sent to an unqualified mailing list will likely deliver a lower return on investment than the same message sent to a permission or opt-in list.

Permission and Trust in a virtual world

Customer retention involves building relationships and trust with your customers. This trust translates into all communication methods used, in particular email correspondence. An entire permission-marketing industry has sprung up on the premise that permission-marketing-messages are not spam and therefore will not carry the stigma that goes with the label. Since the recipient has granted permission to receive email marketing messages, they will not view the message as unwanted spam.

Permission marketing is based on the idea of opt-in. The recipients have opted in to a mailing list by checking a box in an online order form.

For example: “Would you like to receive future product information and updates from our company?” Or: “I do not wish to receive future product information and updates from company.”

Rule of thumb: Start with your own list

Compile the list of people who have done business with your company before. Add people who have been successfully contacted but have not yet purchased. Then add the people who have asked for further information directly from your company.

Email contacts can be solicited in many ways: trade shows, advertising and PR promotions, links on your website, links in your newsletter (encourage forwarding of your messages) and banner or online ads in other electronic newsletters.

Shaun Carrigan president and CEO of NetContent Inc

Telephone Contact

The key rule to business growth according to well known business writer Wendy Evans is to “build relationships regularly and relentlessly, creatively and caringly. Keep in touch with your prospect and client base regularly and relentlessly.” It is important to never let too long a period go by without making contact with your most valued clients. Making a telephone call is possibly the easiest means of staying in contact with your clients in an effort to build long term and profitable relationships.

Sales expert Steve Waterhouse, president of the Waterhouse Group, advises businesses to remain close to customers, even if they are not sending through purchase orders or visiting your business. He notes, “even if they are not buying, find an excuse to call them.” Your customers may not be calling you today, but in six months time when they do need your services, is yours the name that is going to be on top of the pile?

Advantages of telephone contact

Is a personal medium, an opportunity to build a rapport with clients and customers.
Provides a venue where you can easily interact with clients, answering any questions or concerns they may have about your product or service.
It is cost-effective compared to direct sales.
Results are highly measurable.
You can get a lot of information across if your script is properly structured.
Set-up cost is minimal.
Increased efficiency as you can reach more prospects by phone than you can with in-person visits.
Great tool to improve relationships and maintain contact with existing customers, as well as to introduce new products to them.
Shows effort and interest in customers.

Disadvantages of telephone contact

More people are using technology to screen out unwanted callers, particularly telemarketers. This confirms the need to keep in touch with clients on a regular basis, so they do not forget who you are.

Customer Visits

As with telephone contact, personal face to face interaction with your customers is essential in building a rapport with your best clients and maintaining a long term relationship. Customer visits represent visible interest in your customers and their business. It is therefore important to find reasons to visit your customers as often as possible. These may include:

To demonstrate new products and services
Follow up on a direct customer query
Drop off an invoice in person
Drop off marketing material, personal greeting cards or customer gifts

Not only will these interactions allow you to leave a memorable impression of your business, but the information gathered during visits can enhance future customer interactions. This is because you have gathered first hand data about your customers’ needs, requirements and expectations.

Advantages of customer visits

Demonstrates visible interest in your customers (Personalised interaction)
Ability to gather first hand information about customer needs
Gain a better overall understanding of customer expectations
Opportunity for customer to ask questions directly

Disadvantages of customer visits

Customer visits can be time consuming. There are only so many visits that can be made in a day as opposed to the number of telephone calls that can be made.

Unexpected Extras - Gifts

Customer retention campaigns do not only entail planned distributions on a regular basis. Cement your relationship with your clients by sending personalised gifts throughout the year to acknowledge milestones, business transactions and accomplishments. Creative tools, perfect to say 'thank you' or to celebrate the success of your favourite client, accompanied by a personalised card to provide that final touch include:

Chocolates
Floral arrangements
Gourmet hamper baskets
Vouchers (movie or theme park vouchers)

For the ultimate pampering experience, treat your customer to a relaxing, holistic massage that will help them feel re-energised and ready for their next business challenge.

Advantages of customer gifts

Tangible efforts which are not sales oriented
Creates a memorable and lasting impression of your business

Disadvantages of customer gifts

Can be expensive if large customer base exists

Section Three Resources:

[n.d] [Online Available: http://www.marketingpower.com/author17624.php] Using Email Newsletters as Marketing Tools By Shaun Carrigan [Last Accessed 11 May 2007]

[n.d] [Online Available: http://www.zdnet.com.au/news/business/soa/The-new-reality-of-customer-retention/0,139023166,120261750-3,00.htm] [Last Accessed 14 May 2007] Steve Waterhouse, president of the Waterhouse Group

SECTION FOUR

Customer Feedback Surveys

Customer Feedback Surveys - telephone interviews

Customer Feedback Surveys - email and internet surveys

Customer feedback surveys are important in customer retention programs as a means of gathering valuable information about existing and potential clients needs and determining where improvements to products and service delivery are needed. This data can be collated and centrally stored in a database to be used to guide all other retention strategies and initiatives, targeted to select groups of clients.

It is important to remember that customer retention and relationship management is an ongoing process and that all tools and strategies work together towards achieving the end result - happy, retained customers.

Telephone interviews

One-on-one interviews are useful for gaining information about the perceptions and beliefs of your customers. According to the experts at toolpack.com the ideal way to get customer feedback is:

Using interviews rather than paper or electronic surveys, because a human interviewer can gain more in-depth information while achieving greater honesty.
Interviewing both your customers and competitors' customers, to explore perceptions and relative strengths and weaknesses.
Linking customer information with employee and operational information, to discover which internal issues directly affect customer satisfaction, retention, and market share.
Interviewing customers constantly, with regular updates so that trends can be established and closely monitored.
It is important to note that interviews are also important in gathering information useful to customer recovery efforts. Regaining old customers may be cheaper and easier than finding new ones.

Advantages of telephone surveys

In paper and online surveys, questions are fixed; they are placed down on the paper and cannot be changed. In contrast, in person interviews allows the interviewer to probe for deeper answers, ask for elaboration and examples, discover new relationships, and modify questions as the interview progresses. Interviewers can get detailed information on what causes problems or benefits.

Good interviewers can elicit more honest and sensitive information than surveys can. Surveys do not empathize or send messages of trustworthiness; they are simply there.

By using in person interviews, future change agents can also introduce themselves to clients and establish both rapport and trust (if sensitive information is handled well).

Disadvantages

Interviews take time, about 30 to 90 minutes each.

Interviewers can inadvertently impact the nature of the data, adding bias to the results with verbal and nonverbal reactions and with their choice of probes.

When interview results are coded more opportunities for bias creep in.

TIP: A cautionary note on interview feedback

Your credibility is on the line when you do an interview. Keep your promises of confidentiality and anonymity, particularly when you provide the feedback. Try to avoid interviewing in times of personnel changes, because your activities may be linked to the changes. Finally, it is normal to only present information given by more than two people, and to reword any responses so the source cannot be identified.

Section Four Resources:

[n.d] [Online Available: http://www.toolpack.com/d/customer-surveys.html] [Last Accessed 11 May 2007]

SECTION FIVE

Email and Internet feedback surveys

According to authors Schonlau, Fricker and Elliott, Internet and email based feedback surveys, although still in their infancy, are becoming increasingly popular because they are faster, better, cheaper, and easier to conduct than traditional surveys using telephone or mail methods. Among other findings, the authors determined that Internet and email surveys may be preferable to mail or telephone surveys when a list of email addresses for the target population is available, thus eliminating the need for mail or phone invitations to potential respondents.

Internet and email surveys are also suited to larger survey efforts and for some target populations that are difficult to reach by traditional survey methods. Although online surveys incur virtually no coding or data-entry costs because the data is captured electronically, the labor costs for design and programming can be high. Other advantages and disadvantages of online surveys include:

Advantages of email surveys

Inexpensive to administer (reduces time and paper/post costs)
Fast to administer
Fast response rate (usually within 2-3 days)
Flexible (suitable for both qualitative and quantitative data)
Good response rate (especially if pre-notice and follow-up sent)
Non-coercive (respondents can often feel pressure from the presence of an interviewer)
Eliminates tedious mail process
Anti-hierarchal (respondent can choose the order in which they read and answer questions)
Respondent can complete the survey in their own time
Overcomes shyness of respondents
Longer, and often, more self-disclosing written responses
Personalised approach (even bulk emails can be personally addressed)

Disadvantages of email surveys

Can be deleted by potential respondent easily
Potential technical problems
Multiple returns can occur (errors in submission)
Non-delivered email (outdate email addresses can be overcome by ensuring your CRM database is maintained)
Difficult to ensure respondent anonymity
Biased to computer users (non-representative sample, therefore non-generalisabilty of results)

Getting started on your customer feedback surveys today!

According to director of Genroe Adam Ramshaw, most attempts at customer feedback and satisfaction measurement fail to include three critical elements in the customer feedback survey and so fail to provide useful information to businesses.

He draws our attention to these familiar situations, for instance, have you ever heard these comments after you distributed your results internally?

"Gee, we scored 76 for customer satisfaction this month I wonder if that’s good enough?", "Wow, we improved 10 points from our last customer loyalty survey I wonder why?"

These facts may be interesting, but what do they mean about your ability to retain customers and ultimately to your bottom line. Ramshaw advocates a customer satisfaction measurement approach to feedback surveys that includes three critical elements resulting in useable information.

Overall Customer Feedback index/indices questions

Many customer loyalty surveys never ask the critical and key questions: how much customers like you as a business and how to match this to customer loyalty and ultimately profit. Consider these examples of effective questions:

"Please think about all of your experiences with Company X. Please rate your overall satisfaction in your dealings with them, where 10 is very satisfied and 1 is very dissatisfied?"
"How likely is it that you would recommend Company X to a friend or colleague, where 10 is very likely and 1 is very unlikely?"

Satisfaction driver questions to include in feedback surveys

Now that you have an overall customer satisfaction measurement you need to understand what drives customer satisfaction for your business. To do this you need to include a set of questions that measure your performance on the different drivers of customer satisfaction, for example:

"How do you rate the technical competence of our staff?"
"How accurate and complete was our documentation?"
"Did we answer the phone quickly enough?"

Finally, How can you improve

There are two versions of this question: general and specific

"Please tell us the one thing you would like to see changed about us?" (General)
"How could we improve our responsiveness to you?" (Specific)

Section Five Resources:

Schonlau, Ronald D. Fricker, Marc N. Elliott , 2003, Conducting Research Surveys via Email and the Web Matthias

[n.d] [Online Available: http://eureka.peoplelogic.com.au/link/id/45a274f7447380c346a5/page.html] [ Last Accessed 11 May 2007] Customer Loyalty Surveys Adam Ramshaw.

SECTION SIX

Customer Relationships

Customer Relationship Management

Customer Relationship Marketing

Customer Relationship Management

A major trend in the world of customer retention and relationship marketing is the shift away from the shotgun approach to mass advertising to a more narrowly defined, rifle approach to targeting your most profitable existing customers and prospective new customers who are most likely to purchase a product or service from you. The advancement of building a database to take advantage of this rifle approach is one of the most effective and strategic choices a company can make towards increasing their customer retention efforts (Schoenbachler, Gordon, Foley and Spellman 1997).

Importance of CRM to customer retention

A CRM database is a collection of data, such as customers’ names, addresses and purchases, which provides marketers with information that enables them to make better decisions in working toward accomplishing the company’s objectives. More specifically Schoenbachler et al (1997) define database marketing as “gathering, saving and using the maximum amount of useful knowledge about your customers and prospects … to their benefit and your profit.”

Marketing databases have become an integral asset to business, largely due to the evolution of relationship marketing and the realization that in order to be competitive, companies need to build a relationship with their customers which is based on more than just price (See customer relationship marketing). Marketers learned that it is easier and less expensive to get an existing customer to buy again than it is to acquire a new customer. Database marketing aims at building a profitable individual relationship with each customer. The relationship should make the customer feel that he or she is recognized and receives personal service and attention (Schoenbachler et al 1997).

Advantages of CRM

A central database of detailed and segmented customer intelligence is the cornerstone to all customer retention activities and initiatives. The advantages of database marketing include:

The ability to gather data at every touch-point with customers - whether it’s telephone, face to face, web site, email or snail mail.
Segmenting the data to enable the full scope of the customers’ relationships with a business to be fully understood. Acting on this information is a vital part of CRM, treating segments differently according to their needs/preferences, and, crucially, their profit making potential.
Integrating the knowledge gained from data segmentation with the information from customer touch-points, and feeding this all throughout the business to provide detailed histories and predictions of individual customer behaviour.
Have the scope to range from simple Excel Spreadsheets to more complex Outlook, Personal Information Managers (PIMs) and systems such as true CRMs.
Can be hosted online in Browser formats, ensuring 24/7 access and easy synchronisation for sales teams on the road.
Can be hosted in-house on business servers for easy access and control.

Section Six Resources:

Denise D. Schoenbachler, Geoffrey L. Gordon, Dawn Foley and Linda Spellman Understanding consumer database marketing Journal of Consumer Marketing VOL. 14 NO. 1 1997 pp. 5-19 © MCB University Press, 0736-3761

SECTION SEVEN

Advantages of in-house Database Management

Sense of security: sensitive client data may remain in their facilities.
Compliance: some governmental regulations require strong governance of enterprise data.
IT departmental control: may be worth the additional cost and overhead to control the process and adhere to customer contact.
Unrestricted 24/7 access: all sales, customer support and other channels may be able to tie directly to this hub. (Acxiom White Paper 2007)

Disadvantages of CRM

Inevitably problems will arise when implementing a CRM strategy. “People are the main barrier,” says Michael Juer of SalesPathways Ltd. “CRM is about cross -functional working and the breaking down of departmental barriers. It can also make people more accountable.”

“The average small dealer's business is usually very reactive,” says Allan Blackwell. Even if they are collecting data on customers, it's hard to make time to sit down and plan what to do with it. Allan Behrens points out a related issue: “There is a balance to be found between the investment in systems and services to create customer focus, and the bottom line of overall business benefit.”

Other disadvantages of CRM include:

Resources in terms of time as well as experienced and capable staff in the creation and maintenance of databases.
Risk of data sharing and interpretation of information meaning across different sectors.
The risks associated with the security of client's privacy
A problem that sometimes presents in companies of smaller size is the lack of formalization of the procedures and the lack of the employees' interest in the importance of databases and CRM to the customer satisfaction goal.
Data often misused or not used at all to guide customer relationship marketing efforts.
CRM systems mismanaged with out of date data.

Getting started on your CRM Program

Has the rot set in so deeply that your database needs a complete overhaul? Specialist in Small Business CRM solutions, Perry Norgarb believes this is the perfect chance to turn this seemingly insurmountable task into an opportunity. This is an excellent excuse to re-establish contact with your clients and let them know you care. You can always put lapses down to data crashes but tell them you have fixed the problem!

Importantly, help your staff understand what you need from the data to facilitate more accurate marketing and reporting and hence the success of your business and their careers.

By creating a sense of pride and ownership in the company database, you are nurturing the essential process of buy-in, necessary for the success of your CRM initiative. Don't compromise this critical tool by allowing your CRM software to be infected by inferior data.

Customer Relationship Marketing

The importance of Customer Relationship Management Systems comes to the fore when creating effective customer relationship marketing strategies. The aim of customer relationship marketing is to acquire and retain customers by providing them with optimal value in whatever way they deem important. This includes the way businesses communicate with customers, how they buy, and the service they receive. Michael Juer, Director of SalesPathways Ltd, a sales and service consulting business specialising in helping companies to adopt CRM strategies, offers a straightforward overview: “Essentially CRM is a customer focused business strategy which brings together customer lifecycle management, business process and technology.”

Doug Faber, international marketing director of CRM vendor salesforce.com says if managed correctly, a CRM system allows details of every customer transaction to be stored and shared with others in a firm, significantly improving the quality of future service. Every time a customer calls, staff can instantly access details of their previous purchases and any outstanding issues. If there is something they usually order but have not done so for a while, staff are able to prompt them. Fabre says from a customer’s point of view, such systems make them feel valued and more likely to return in the future. Hence, the link between a well managed CRM systems and building lasting customer relationships.

This approach to marketing is called relationship marketing and it involves understanding the needs, goals and desires of key stakeholders, which include customers, employees, marketing partners and the financial community, who all have an impact on the success of a business, illustrating the importance of a well managed CRM system.

Relationship marketing involves developing separate offers, messages and services that relate to the individual needs of stakeholders. The aim is to capture the largest share possible of each customer’s expenditure by building loyalty and focusing on customer value.

Advantages of customer relationship marketing

Customer details including purchasing behaviours, promotional impacts and payment histories can be used to target marketing efforts.
Understanding of customer requirements allows businesses to build and maintain meaningful and lasting relationships

Disadvantages of customer relationship marketing

Relies on up to date CRM systems
Can be time consuming to analyse and align customer needs with promotional strategies.

Feedback loop of database marketing and relationship marketing

Database marketers find increased marketing efficiencies in the use of planned CRM databases. A database which can be updated with promotions and responses to these promotions is, perhaps, the most valuable benefit of the database. Marketers no longer have to accept John Wanamaker’s lament that “half of what I spend on advertising is wasted - the problem is which half?” Promotions can be tested to determine what types of offers are most effective, the best timing of offers and the segments most responsive to different offers. Database marketing efforts are measurable, unlike most alternative promotion methods (Chandler 1994).

Perhaps the greatest advantage database marketing has over traditional mass marketing is that it creates a feedback loop. Through database marketing, an information flow can be created both to the customer, as in mass marketing, but also from the customer. The customer information received can be invaluable in many ways. For example, it can be used to assist in creating more successful customer relationship marketing programs (Schoenbachler et al 1997).

Section Seven Resources:

Do-It-Yourself Customer Data Integration Hubs: The Advantages and Disadvantages, An Acxiom White Paper 2007

[n.d] [Online Available: http://www.customerserviceneeds.com/8938.phpIs [Last Accessed 24 May 2007] Your CRM (Customer Relationship Management) System Doomed To Fail? Perry Norgarb

SECTION EIGHT

Online Retention Strategies

Websites and email marketing

Internet marketing

Websites and email marketing

According to the authors of Understand Online Customer Service Jennifer LeClaire and Lisa Picozzi, the Internet allows companies to make it easier for customers to do business with you because they can do it right from their desktop any time of the day or night. While online customer support is certainly different than traditional methods, there are some distinct advantages to online retention strategies.

Advantages of online retention strategies

Lower customer handling costs.
Improved efficiencies due to the use of posted ordering instructions and Frequently Asked Questions (FAQ) lists.
Increased rate of customer retention if you make online shopping easier and more convenient than real-world shopping.

Disadvantages of online retention strategies

On the other hand, there are some shortcomings associated with virtual customer service that you should be aware of:

Your relationship with customers will be less personalised because of the nature of online shopping, and they may have greater expectations of you as a result. After all, they can always run down to their local mall merchant to buy similar products from someone who knows them personally.
There's a higher learning curve for your support staff as they learn to deal with customers in the virtual realm.

Internet Marketing

Email marketing and electronic newsletters as retention strategies have proven successful for many online companies and as bandwidth restrictions are reducing at a high rate and technology improving day by day, affiliate promotions via video email or strategic mining of potential customers through will be part of the Net experience.

The downside to developing online marketing programs is the management time required to create them. Contacting, soliciting and negotiating with affiliate sites or developing a successful customer retention program is indeed labor intensive. But once a program is in place, it is usually a matter of monitoring subscription activity, managing fee allowances or adding new dynamics to an existing program.

Take the time to listen to your customers - Q&A

Every prospect and customer wants personal attention. One way you can provide it is by giving them an opportunity to ask questions. Only interested prospects will take the time to ask questions. Many will buy from you if they get valuable information from your answer. You can often include a promotion for your product or service as part of your answer.

Answering questions is not time consuming. The same questions will be repeated over and over again. But you only have to answer each question once if you save your answer to a permanent file. Copy it into your reply whenever you get that same question again ...and revise it slightly to personalize your response. You can answer questions quickly and your prospects will appreciate your personal attention.

Tip: If you find yourself personally answering a lot of questions, add a Questions and Answers page to your website. Post the answers to your most frequently asked questions. It will reduce the number of questions you have to answer individually. But remember, it also deprives you of an opportunity to impress prospects with your personal attention ~ Bob Leduc

Every customer wants fast results, easy procedures and personal attention. Most won't ask for these benefits. But they won't buy from you unless they get them. Make sure you provide all 3 of these special benefits ...and look for ways to improve the quality of each. Then watch how quickly your sales increase.

Web Seminars and Blogs

As well as ensuring your website is a source of valuable information to your customers, why not offer web seminars and blog pages to your website. These initiatives cement your position as a reliable and relevant source of information to your customers as well as taking the initiative to show your customers that you care enough to share your knowledge and information with them or that you are happy to discuss any questions/issues/comments they may require assistance with.

The Essential Components of Online Customer Service

Features that should be mandatory on all websites and which assist in ensuring visitors return and ultimately result in happy, repeat customers, include:

1. Web-based facets, such as simple navigation and design, fast image download times, and fast access to information.

2. Human facets, such as quick email responses, toll-free customer service phone numbers and offline purchasing assistance from customer service representatives.

3. Product information, such as descriptions, specifications, pricing, FAQs, bundling, smart shopping carts, and cross-purchasing suggestions.

4. Incentives, such as gift wrapping, promotions, money-back and on-time-delivery guarantees, and offers of free shipping and handling.

5. Trust factors, such as explanations of secure transactions, information regarding privacy of data collected, branding (company logos and slogans), and endorsements by and/or membership in the Better Business Bureau, professional associations, etc.

6. Fulfilment follow-through, such as confirmation e-mails, an automated shipping/tracking system, prompt delivery, and email satisfaction surveys.

Understand Online Customer Service Jennifer LeClaire and Lisa Picozzi,

Section Eight Resources:

[n.d] [Online Available: http://www.workz.com/content/view_content.html?section_id=487&content_id=6181] [Last Accessed 11 May 2007] Understand Online Customer Service By Jennifer LeClaire Co-author: Lisa Picozzi

[n.d] [Online Available: http://ecomhelp.com/KB/internet/kb_internet-3-special-benefits-every-customer.htm] [Last Accessed 14 May 2007] 3 Special Benefits Every Customer Wants from You By Bob Leduc.

SECTION NINE

Customer Intelligence

Customer Analytics

Customer Intelligence

Customer Analytics

Customer Analytics comprises all programming that analyzes data about a business’ customers and presents it so that better and quicker business decisions can be made. SearchCRM.com.

Customer Analytics is about monitoring customers’ behaviour. Information generated from such activities allows businesses to better understand:

Who their top-10 revenue-generating customers are? Most profitable customers?
What products are customers purchasing?
Which customers have the highest rates of return?
Which customers present a potential risk of bad debt?

Information generated from Customer Analytics reports, monitor and report on performance using key indicators such as:

Defining who your best customers are based on factors such as revenue, frequency of purchase, cost to service. Allowing businesses to direct marketing activities to retain high-value customers.
Analyse customers buying patterns, rates of return, time to pay, and other factors to detect customer satisfaction issues before they affect your bottom line.
Track the number and age of receivables to identify and deal with potential sources of bad debt.
Identify your high-demand products and cross-sell opportunities.
Help sales people understand customer purchase patterns and trends in various market segments, to improve sales efforts. (www.cognos.com.au)

According to Roman Lenzen behavioural data goes beyond knowing that a customer has purchased a certain product. It involves capturing customer events and actions over time and using these stored interactions to determine typical behaviour and deviations from that behaviour. Customer analytics exploit customer behavioural data to identify unique and actionable segments of the customer base. These segments may be used to increase targeting methods. Ultimately, customer analytics enable effective and efficient customer relationship management.

Advantages of Customer Analytics

Customer interactions that can be analysed include anything from browsing and purchasing to paying and communicating with customer service or sales. It is these interactions that may be used to develop customer profiles and eventually predict future actions. It is important to understand which of these interactions were marketing-driven and which were due to chance. Understanding the impact of marketing, risk and customer service decisions and how those decisions influence customer behaviour must also be tracked.

Customer analytic applications enable enhanced customer relations resulting in increased efficiency and customer profitability.

Disadvantages of Customer Analytics

The data miners who develop the analytical applications need to have a basic knowledge of the overall business process at hand and work in conjunction with departmental representatives.

The most time-intensive part of the analytical process is data extraction and transformation. Transforming the raw data into actionable behavioural -identifying attributes takes work, but over time, the processes become streamlined.

Importance of Customer Analytics

Model application and scoring is best completed using a tool outside the database environment. This process includes extracting data, transforming the attributes, scoring the models, updating the clusters and storing the results back in the database. Placing the scores and clusters in the database allows marketing, customer service and risk to use this information for all customer relationship management (CRM) decisions

~ Roman Lenzen

Customer Intelligence

Britton Manasco describes Customer Intelligence as the process of gathering, analyzing and exploiting information of a company's customer base. Information is typically obtained about customers existing and future needs, customer decision making processes, customer behaviour and trends as well as using data about the competition, conditions in the industry, and general economic, technological, and cultural trends.

When businesses think about populating their customer information file (whether it is a data warehouse or operational data store), they look internally at their customer databases. These sources, typically management systems, call centre systems and sales systems, contain information the organization has about each customer and each customer's "touch points" with the company. Manasco notes that while these sources of information are critical, they do have a major deficiency in that they only contain information that the company has collected about its customers.

Businesses could be much more effective in their marketing efforts if they could augment or enhance their customer data. There are a variety of external data sources that can be used to do this including:

Personal demographic data including age, household (and personal) income, marital status, number of children, credit card debt, home ownership and net worth. Critical business questions that could be answered using this data include:

What are the buying patterns of people in a specific income bracket?
How do sales patterns change as people migrate from one age group to another?
Which products sell better to homeowners and which sell better to renters?
What are the characteristics of customers who buy certain products?
Who are the other customers who share these characteristics and do not buy these products?

Screening out people who do not fit particular profiles, businesses are not wasting time and money and or bothering customers with offers they are not interested in.

According to Lisa Loftis, Jonathan Geiger and Claudia Imhoff external data sources, in addition to business’ internal databases, can significantly enhance marketing capabilities. Armed with more complete data about customers and prospects, companies can perform more comprehensive customer analytics and can be much more effective in their marketing efforts.

Advantages of Customer Intelligence

More effective and targeted customer relationship marketing initiatives
Target marketing budgets

Disadvantages of Customer Intelligence

Access to external data sources may be restricted and/or expensive

Section Nine Resources:

[n.d] [Online Available: http://www.repeatcs.com.au/wordpress/] [Last Accessed 24 May 2007]

[n.d] [Online Available: http://www.crm2day.com/library/EpAVkVpFyZoxUYKRLg.php] [Last Accessed 25 May 2007] Roman Lenzen Originally published by DM Review Magazine, June 2004

[n.d] [Online Available: http://www.crm2day.com/customer-intelligence/] [Last Accessed 25 May 2007] by Britton Manasco

[n.d] [Online Available: http://searchcrm.techtarget.com/originalContent/0,289142,sid11_gci994359,00.html] [Last Accessed 25 May 2007] Customer intelligence - the next generation Lisa Loftis, Jonathan Geiger and Claudia Imhoff Intelligent Solutions Inc

[n.d] [Online Available: www.cognos.com.au] [Last Accessed 25 May 2007]