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Common Sense Customer Inequality from Uncle Sam

Whatever your personal views on the US there is no doubt the world is shaped by its presence across the globe and particularly in good old blighty.  Our business sector is inextricably woven with the US and dominates many areas of commerce.  In fact, had it not been for America’s intervention in the Second World War, I probably wouldn’t be writing this blog – or anything else come to think of it – so a big, belated thank you for that.  I have another reason to be feeling a lot closer to my distant contemporaries from across the pond lately and that is down to a subject very close to my heart – customer inequality. Yes, you read it correctly.  It is important to consider how, in the ultra-competitive and economically challenging times we find ourselves in, businesses can leverage more opportunity by adopting a multilayered approach to customer engagement - in other words, not treating all customers the same way.   The application of this work ethic has been debated by the Peppers & Rogers Group (P&R), a US management consultancy business acknowledged for its forward looking approach to customer based strategies and business initiatives.  In a white paper, ‘The Service Level Differentiation Imperative’ they tackle the sensitive subject of treating customers unequally and the underlying reasons why this makes absolute sense.  There are too few people banging the drum on this subject and from my perspective it’s time to rip up the old rules of engagement and to wake up and smell the coffee.

The US is arguably far more advanced than the UK in many areas of marketing and customer engagement (or so they would have us believe) and does not shy from the early adoption of ideas and technology to help gain competitive advantage – in essence, anything to make a few more bucks – and why not?  It is, after all, partially responsible for the development of the now ubiquitous call centre and emerging field of CRM software.    Today, customers have a choice as to how they prefer to communicate with your business – email, chat, web, voice, fax, text, social media, self service IVR – the list grows.  The evolution of a multi-channel engagement model is both a blessing and a huge challenge for many businesses.  According to P&R, most businesses do not have either the customer insight or the operational wherewithal to deliver a ‘differentiated experience’.  Here lies the rub!   As businesses begin to engage on multi-levels the task of managing these interactions becomes more complex and critical.  By building in efficiencies such as self service there is the risk of alienating customers if the experience isn’t positive.  There is a temptation to drive customers down a particular road because efficiencies dictate this.  The growing use of IVR’s and other service facilities and outsourced international contact centres are two examples that don’t satisfy all customers’ requirements.  Getting this wrong can be expensive – conversely getting the balance right can drive revenues and enhance the engagement experience.  So, before we introduce carte blanche changes, it may be prudent to understand our customers a lot better.

Central to the process of customer analysis is customer value.  This nugget of information may not be all that straightforward to determine, particularly if it is just based on one dimensional metrics such as sales figures.  What about share of wallet and ‘group’ relationships?    I am in full agreement with Paul Jarman, CEO of iContact, who contributes to P&R’s paper when he says that: “You have to focus on the customer value, treat each customer differently and handle high emotional transfer points and be great at it.”  It is therefore essential to develop mechanisms that allow a monetary value (and other criteria) to be placed against each customer and marry this with the engagement touch points.  To do this, you are reliant on your customer intelligence - in other words all the metrics and facts you can amass from your customer interactions including on and offline data and transactional information.  But of course these aren’t the only source of customer information.   External aggregated databases, such as our own UK Business Universe, allow data cleansing and appending functions to be undertaken, among other services, to enrich the data further and this, together with an appropriate marketing engine, can amalgamate the data to create detailed customer profiles and values.  We take this exercise to its extreme in our Money Mapping process by classifying customers across a broad spectrum of values from what we call our Treasure Accounts at one extreme – our very best customers - to those relationships you should consider ditching because they lose you cash to keep at the other.  So, at the heart of any model for service level differentiation is your data strategy.  And, as we know, due to the dynamic nature of customers, this process is a moving feast that requires focus.  However, a word to the wise - without a coherent, central data policy you will battle to get the best out of your customer relationships and may face challenges with business retention.

Although the Peppers & Rogers Group white paper is focused more towards the contact centre operation, the fundamental narrative is the same for all customer engagement.  The need to balance the value contribution to the business and the service level delivery is essential.  Why? Simply because of cost and resource.  In an ideal world, there would always be enough staff available to be highly responsive to all customers regardless of the method of communication.  The reality is that many businesses look to reduce head count and replace this with automation and self service because it makes commercial sense.  In my opinion, there is nothing wrong with this evolution as it actually suits many people and no doubt we will begin to see and experience more and more of this approach to servicing customers in the UK.  But, what I do advocate is that this is undertaken within a framework of accurate customer knowledge.   Your best customers should always be given priority because you do not want to lose them and lesser value customers similarly receive an appropriate, acceptable experience.   So, there we have it - agreement on both sides of the Atlantic – who’d have thought?  After all, I suppose it’s not NASA science!