Data application: getting personal

Most markets are oversupplied. Customer churn is only a click away, and your organisation’s ability to apply customer data in real-time may be what sets you apart. Matt Henkes examines how some firms are using customer data to give them that personal touch.

By Matt Henkes, staff writer

Customer service is an increasing differentiator in today’s crowded marketplace. But having mountains of detailed client information isn’t enough. It’s the application of that data that’s the crowd pleaser.

Unhappy customers can cause more problems than simply swelling the profits of a competitor. The internet has changed the way we communicate forever and everything they write is searchable. Each disgruntled customer is now a walking, talking and typing advert for the ineptitude of your business.

If you’re looking for a positive review, the power lies in knowledge and using it to make sure your customers really feel like you care when they deal with your organisation. “It comes down to customer insight. That’s the key thing for me,” says Jonathan Harman, president of EMEA business at Carlson Marketing. “You need to really understand your customers and have a genuine insight into what they require from you.”

He believes that managing customer experience is as much about attitude as it is about proper application of data. The data is there to enable you to provide the experience of course, he says, but it’s entirely possible to have a ruthlessly efficient information system and still deliver dreadful customer service.

“The bar is being raised all the time,” he adds. “What was good enough 10 years ago is certainly not good enough now. People will vote with their feet, and churn is only a click away.”

Not all customers are equal

The technology available today is allowing firms to make real-time decisions and offer relevant extras to customers while they are on the phone. In the contact centre, this means you can start profiling people and treating them in different ways.

The approach offers value to the customer through the facilitation of a personal touch. You can start offering more tailored products, for example, because you know that someone who is 18 is unlikely to want to buy a pension but might want a zero-balance credit card.

This relationship is also personalised from the company’s perspective. If a customer threatens to move to a competitor because they have been offered a cheaper deal, the smart organisation will be able to instantly make a decision, based on a calculation of that customer’s value, on whether to match the deal or bid them a fond farewell.

The decision is based on customer segmentation, which is not a new notion. Traditionally, customers may have been split into bronze, silver and gold segments. However, what is available today is far more dynamic, offering the capability to have customer segments based on thousands of likely measures, behaviours and drivers.

“The reality is that rather than treating someone as a high user or a low user, you can now start separating them into hundreds of different segments,” says Ramesh Harji, head of intelligent enterprise at IT and business consultancy Capgemini. “It used to be the big organisations with teams of analysts who would be able to do that, but there are lots of products coming onto the market now that are proliferating that segmentation capability.”

Simple is better

While the continual quest in customer service may be to achieve the segment of one, David Arrowsmith, UK strategy manager for business intelligence software experts SAS, believes that in marketing terms, it’s more effective to keep the buckets a little larger. “The only limitation on the number is the number of customers you have,” he says. “But if you actually think about it, if you’ve got 300 segments, how can you go and explain that to your team of 20 people in marketing? Actually it makes it unwieldy; something that you can’t sensibly use.”

For this reason, despite the vast amounts of information that major supermarkets, fir instance, gather about their customers, they will generally only separate them into perhaps eight or 10 segments.

However, the segment isn’t the finest level of complexity. Tesco provides a prime example. A Tesco Clubcard holder who buys a regular supply of wine from the store one day decides to join a wine club. They no longer purchase their wine from Tesco and within three months will receive a mail-out containing a number of wine vouchers and wine-based offers. It’s personalised, relevant communication.

The Tesco system recognises a change in consumer behaviour and takes action to try and change it. The layer of complexity is in dealing with the individuals in that segment. “You often get this misunderstanding, quite often at a senior management level, that having a very large number of segments is the best way to go,” says Arrowsmith.

Where an issue is identified, especially in the B2C sector, there is usually only a limited amount of time for the company to respond. Take the mobile phone market for instance. If a vendor’s data tells it that a customer has stopped using their mobile phone, the likelihood is they will have changed to another provider, meaning that the window of opportunity for them to respond is limited to days.

“The organisations that don’t do this so well fall down,” adds Arrowsmith. “The end game is to have the next level of complexity which works out that they’ve stopped buying something and that you want them to start buying it. Do you have a mechanism in place to address that?”

The danger is that it can be quite unnerving for a customer to suddenly realise that everything they’ve ever bought from the supermarket is held on a database somewhere. No one likes to feel like big brother is watching. The relationship only works if there’s recognisable value on both sides, argues Harji. “People are happy to share information with companies or with partners, as long as they believe that’s there’s value for them in sharing it,” he says.

Jonathan Harman believes this will become increasingly relevant as time goes on. “The customers are in control and they will ruthlessly punish brands that don’t use their data properly,” he warns. “I would call it the zero tolerance consumer.”

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