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And knowing when to let go

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Women are more loyal than men. Or at least, that is what women told the Ipsos Mori 2010 consumer customer loyalty survey.

The study found that three out of five British adults are loyalty scheme members; 67 per cent of women belonged to at least one, compared with 57 per cent of men; and about 68 per cent of women are loyal to a supermarket compared with 59 per cent of men.

This might seem frivolous, but if one way your company wants to generate repeat business is by launching a loyalty card scheme, it is worth knowing that it will work better on women than men.

beers

Men only here for the beer

Unless your business is a pub or a bar, that is, because men are more loyal to their local than women.

Either way it might be worth checking if one gender predominates in your customer database and to manage the expectations of your marketing department accordingly.

There are numerous ways that IT can support activities that generate loyalty. Most begin with know-thy-customer analysis which reveals purchasing patterns among customer groups or insight into the behaviour of certain high-value customers.

Staring at the database

With money tight, customers are likely to put off purchases for as long as possible. Relevant offers are a great way to prompt them into action or bring the sales cycle forward.

But progressive profiling means more than just staring at the customer database until you see profitable patterns. It will require action from sales teams, such as asking customers a new question each time they have reason to contact them.

One marketing tactic is to ask customers to recommend friends and reward them when their friends purchase. To do this, you need a system that can handle unique IDs and track other activities besides simple transactions.

Lots of companies send their customers generic newsletters, but few know their customers well enough to tailor these communications. How difficult is it to capture a date of birth and send a relevant offer each year as a birthday gift?

And there’s a defensive dimension to this. By analysing purchasing behaviour you can spot lapsed customers who could be resuscitated back to profit.

Early warning

Dale Vile

Dale Vile

“You have to understand the dependencies, the leading and lagging indicators,” says Dale Vile of Freeform Dynamics. “There is also an element of calculating probabilities. If an event happens this month, such as a price hike or a mishandled call, how likely is it to result in customer churn next month?”

Once you have established the normal patterns of purchasing for a high-value customer, you can set up an early-warning system.

“Manage by exception,” advises Sage customer relationship management (CRM) evangelist David Beard. “If a customer who usually orders every month doesn’t order for three months, trigger an alert to show this customer has dropped below a threshold.”

What happens next depends on the type of business. The alert could be on a sales dashboard: call Mr Deep Pockets for a chat. Or it could trigger an email to Deep Pockets containing an automated discount offer (although there is a risk that he may spot the pattern and exploit it).

"How difficult is it to capture a date of birth and send a relevant offer each year?"

There should also be a level of integration between customer service and sales, so that if a valued customer complains, for example, sales staff are alerted.

Bathroom equipment distributor Romaqua does this with its Sage 1000 CRM system.

“We log any feedback we receive and generate reports. Based on these we can take appropriate action,” says Frankie Powell, managing director of Romaqua.

Powell’s team can also assess whether a problem is a one-off or part of a pattern that needs to be dealt with to avoid losing the customer.

Spot the trend

Most of this can be done without sophisticated business intelligence tools, as Dale Vile points out. “Analytics and data warehousing have their place. However, most of the time people need only a few key bits of information at the decision-making point, such as a customer’s payment history or service history,” he says.

Companies tend to think of business intelligence tools as providing analysis for egg-heads, but it is actually the guys in the call centre, the sales desk or the reception desk who need the right nugget of information that they can pull up when dealing with a customer. And that requires relevant knowledge.

“You need to find out what are the key business processes or parts of business processes that touch the customer,” says Vile.

Ask yourself: what information would give front line staff that extra thing they need to delight the customer?

It doesn’t have to come from a CRM system – it could be practice management or a hotel booking system.

It is worth remembering, however, that despite your enthusiasm for supporting customer loyalty, not every customer is worth keeping.

“There are those customers that habitually switch, chasing the lowest possible price. So by spotting the trends and identifying them, you can let them go, instead of offering them a discount or spending marketing budget on them,” says Vile. ®

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