Leveraging CRM Data for Profits

Quantifying loyalty goals and profits isn't easy but the ROI is phenomenal

If our business goal is to sell as much as possible without paying any attention to profit margin or operational expense, we will soon be out of business. IStock_000020168756XSmallIdentifying our best customers, figuring out how to nurture their business, and training our people to maintain the relationships, those are the strategies that make our business sustainable. Loyalty is a simple idea that is hard to practice. 

Harvard Business Review: Building Loyalty in Business Markets, 2005-Sept by Das Narayandas

The $40 million software firm Unitech Systems ... drew up a list of customers that together accounted for 80% of its annual revenues. After analyzing several years of data, the firm found a three-rung loyalty ladder in its markets: making repurchases, providing word-of-mouth recommendations, and paying premium prices. Unitech asked sales managers for information on the three parameters and used the data to place each customer on the loyalty ladder. The firm then calculated the average revenue from customers on each rung to evaluate that rung’s revenue potential and asked marketers to estimate the costs of moving customers up one or more rungs. The information allowed Unitech to classify its customers into four types, ...and to decide whether it wanted to keep them on the rungs they occupied, move them up, or reduce the time and money it spent and force some customers to move down the ladder.... 

Few companies try to build relationships with individual customers, because that approach differs entirely from current practice and, more important, requires considerable discipline in planning and execution.... State-of-the-art customer relationship management systems focus entirely on companies’ interactions with customers; that is a step toward managing customers, but it is only a small beginning. Companies still have a long way to go before they can say they manage individual customers in business markets. The silver lining is that this approach requires neither big ad budgets nor software programs; all it demands is a return to the basics of marketing.

 


Why lead generation is hopeless, but good business is not.

When I explain to business people that I build marketing databases, they usually respond by asking, "Can you give my any tips for generating leads?" Actually, I have quit framing my work that way, but I still encounter so many people asking "can you help me find new customers?" IStock_000019856923XSmall I have started to reply that, "I can help you value the customers and contacts you already have."

Nick Bird said it more elegantly than I can (emphasis added):

Traditional businesses ask - "How can we define the group of prospects who are most likely to want product X?" From this flows others such as "How can we increase the leads for X?"

The CRM business asks a different type of question. "Given our skills and resources, who can we build the most profitable long term relationships with?"

Nick's comment was made inside the LinkedIn Group for CRM Experts, which you could join... https://www.linkedin.com/groups/43621/43621-6059678651115462659, or you could find more excellent advice by visiting his profile: https://uk.linkedin.com/in/nickbirdcrmadvocate


Relative importance of CRM as a marketing technology

CRM technology is a given at most large companies these days, and it's often used as a data repository instead of a marketing tool, so no return on investment is expected. 

Good SEO and content marketing will bring in new customers, leading to increased revenue. Understanding and using the data in our CRM tools will help us improve our share of existing customers' activities, leading to increased profits and revenue. Why settle for revenue when we can have higher profits as well? How are our competitors handling this issue? 

eMarketer: What Technologies Are Most Important to Marketers?, 2015-Oct-1

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On the other hand, CRM's relatively low ROI expectations (23%) when compared to its overall marketing technology importance according to US B2B marketers suggests that, while ROI is obviously important to marketers, it's not the whole story.


To add new loyal customers, make sure your web site's personas are fresh

We know our web sites are most effective when they are regularly updated, but we may overlook an important reason to update: a new category of customer. While we may find a few exceptions, we generally want to expand our market to new categories. And the easiest way is to keep an eye out for new customers who don't fit our existing personas. At the same time, we need to be sure our existing personas still fit.  IStock_000028882264XSmall

Kissmetrics: 5 Ways to Align Data and Storytelling for Business Growth, 2015-Sep-24 by Shayla Price

To target the most influential consumers, data identifies which buyer personas have the most impact on lead generation. Teams then can create focused messaging to grab the customers’ attention.

Plus, research shows that by adopting marketing personas websites are two to five times more effective and easier to use.

For personas to be helpful, the data must be accurate.


Comparing CRM software and platforms

For many of us owning and operating enterprises, the process of selecting and maintaining a customer relationship management system is full of anxiety. We have hundreds of software products and platforms available. Figuring out which system is the 'best' is like buying a home for your family. Except that picking the wrong CRM can damage our businesses and livelihood.  IStock_000020463309XSmall

We owe it to ourselves to understand the playing field on which these CRM platforms operate. Not to be an expert, but to help us make common sense distinctions. Gartner is a research company that tracks and compares software vendors, and Leon Tribe uses their data to explain how the major players differ. These types of comparison help many of us narrow the field of solutions to consider. 

Leon's CRM Musings: Gartner Trajectories for Sales Force Automation 2013-2015, 2015-Sep-12 by Leon Tribe

The product to chase, Salesforce has remained in the top spot for the last three years. While others are getting closer, there is no doubt that for sales force automation, Salesforce is the tool of choice. Despite being firmly in the Dynamics CRM camp, I can understand this position. Salesforce was built to manage sales pipelines and sales opportunities and there is no reason to believe it does not do the job. However, for ... customer interactions outside of a traditional sale scenario, my belief is Dynamics CRM does a better job.... 

Since 2013, the Sales Force Automation landscape has changed from being dominated by four vendors to just two, Salesforce and Microsoft. SAP and Oracle are seeking to return with their cloud offerings and only time will tell if they have come to the party too late to make their mark. SAP [is] certainly making progress but Oracle [is] still struggling to make significant gains.

As for the leaders, Salesforce still holds the top position but Dynamics CRM Online is rising fast... 


Using Customer Data to Find New Profit Streams at Fox Networks and American Apparel

When I started my marketing career as an account executive at Ogilvy, we focused on advertising campaigns, but I was quickly drawn to direct marketing, starting with the mailings which Compaq was sending their customers. I enjoyed analyzing the data we gathered. When I left Ogilvy for Service Corporation International, I was thrilled to discover we could create entire new lines of business based on customer data analytics. Tq150824gdFor customers who had purchased funeral prearrangements, we offered estate planning, prepaid legal services, and senior fitness programs. They began to see SCI as a resource for their immediate future, not just their family's support after their passing. Marketing departments are often seen as 'overhead expense,' but this profit-seeking practice is one of the most tangible ways we can contribute to the success of our enterprises. 

ClickZ: How American Apparel is Moving to Value-Driven Data Analytics, 2015-Aug-12 by Susan Kuchinskas

According to [Chief Digital Officer Thoryn] Stephens, the lifetime value of a customer is an important metric, but it's not necessarily the most revealing. A former executive at Fox Networks, Tillster and Beachbody, he recounted how Fox used Adobe analytics to understand how to drive video ad starts and views of long-form video. It came up with four segments: "Foxaholics," casual watchers, international viewers and passive users.

Here's where the data versus insights story got interesting. While passive users seemed to be the least valuable because they didn't watch video or see ads, further analysis showed that these people used Fox's schedules to find out what to watch. That data helped justify billions of dollars' worth of agreements with Fox's distribution partners.

"This was a major epiphany for the business," Stephens said. Fox then segmented these users and showed them a home page with a more prominent schedule.