Understanding customers Is everyone’s job
Going to market effectively these days, no matter what business you’re in, means relating to customers as individuals — even if there are millions of them. In a previous post, I described how U.K. retailer Tesco built detailed profiles of customers and then used these insights and a flexible supply chain to customize their products and offers.
How, precisely, did they do this? Creating products and services for market segments of one (“mass customization“) isn’t easy. The only way it can happen: marketing, IT, operations, and human resources functions must collaborate in unprecedented ways. As John Kennedy, vice president of corporate marketing at IBM, told me, success requires that companies execute the marketing basics they’ve always done — getting to know customers better; helping them in the buying process and tailoring offerings; and developing their trust — but, crucially, updating and amplifying them in light of new technologies. The biggest changes, not surprisingly, are in the marketing function, itself — the source of these new, more detailed customer insights. But the insights won’t be useful unless companies change core business processes and employee behavior. Here are some illustrative ideas in each of the three areas:
Getting to know customers better depends on getting them to share more information, as Tesco did with its Clubcard. It means building a profile of each customer, based on transaction and social media data (e.g., their comments on Facebook and LinkedIn). IBM has built a customer database called Blue Insight, an analytics cloud computer system that unifies hundreds of software applications for more than 200,000 IBM consulting, sales, technical and marketing people. Blue Insight integrates marketing campaigns (and the customer inquiries they spawn) across digital, social, mobile and traditional marketing channels. It provides sales and marketing professionals with insights on customers, which in turn helps IBM tailor communications based on this deep customer knowledge.
Helping customers includes offering information to make their buying process easier, as, for instance, Netflix and Amazon do with their product recommendations. They’re using tailored suggestions to drive customer loyalty. When done well, it feels like a service. For example, Marcus Sheridan, an owner of River Pools and Spas, a 20-employee installer of in-ground fiberglass pools in Virginia and Maryland, overhauled his company’s marketing by shifting almost exclusively to using educational blog posts and videos. In a recent article, Sheridan described how he answered customers’ most common questions about fiberglass pools regarding prices, problems, and competitors. Now when you enter these questions in a search engine, River Pools web pages appear prominently. Clicking on these pages shows a company that is educating customers, not hawking products. By addressing common (and often difficult) questions in such an up-front way, the impression customers get, said Sheridan, is “Oh my gosh, these guys are so honest.”
Developing customer trust requires managing interactions sensitively in an environment of increased transparency. This transparency works both ways. Companies know far more about their customers by analyzing all the data they collect on them. In turn, customers know far more about the companies they buy from through social media — their family, friends and work colleagues talk about companies and their products every day, often not in flattering ways. How a company behaves, and how it responds to this new customer knowledge, have now become moments of truth, as well as the coin of the realm in customer interactions — adding to or subtracting from brand equity. Disgruntled customers can make a video on YouTube to broadcast their tale of mistreatment, as Jarrett Seltzer did when Verizon billed him $2,345 for its equipment when his home burned down. The video went viral, and caused Verizon to change its policies.
But enhanced marketing capability, by itself, is not sufficient for gaining maximum customer intimacy. All the company functions must collaborate towards this goal. Leading marketers are looking to influence all their customer interactions by working closely with operations and their chief human resource officers on the company culture. IBM is analyzing its brand using a “Corporate Reputation and Brand Analysis” system, and it has launched an initiative to address the full range of interactions with customers.
The IT organization is also crucial in becoming intimate with customers. Besides helping analyze customer data, IT can also increase the number and value of online customer interactions. Consider the Cleveland Clinic, the multispecialty academic medical center rated one of the top hospitals in the United States. In a recent HBR video, Paul Matsen, chief marketing and communications officer, and CIO Dr. Martin Harris described how the marketing team works with IT to deepen online relationships with patients by using the web more effectively. For example, marketing wanted to attract patients who need very specialized medical procedures. So it worked with IT to place online ads when people use key words in online searches. The ads steer patients to information relevant to specific medical needs and provide the ability to schedule a consultation from the Cleveland Clinic’s specialists. While this may be seen as a pretty basic story of paid advertising, it also highlights the necessity of collaboration across functions in order to achieve close knowledge of, and high value for, the customer.
As I’ve said previously, translating customer data into insights is hard. But turning these insights into new customer experiences and revenue is even harder. An even bigger challenge is getting all the functions of the organization to work together to create the most value from detailed customer insights.
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