Information technology can help organizations focused on serving their customers by relentlessly collecting and analyzing information about them and using it to deliver what buyers want. What attracts them to your company? What retains their loyalty? What causes them to leave?
According to the winter 2011 issue of Strategy+Business, which is published by Booz and Company, “Business-to-consumer companies are striving to build customer-centric businesses but many are unable to derive real value from their effort.” You must start by defining the qualities that characterize loyal, profitable customers.
Not knowing precisely who customers are and what they want will cause you to eventually lose them to information intensive competitors. Booz & Company states that only a small number of companies such as Charles Schwab, Capital One and Caesars Entertainment have optimized their success.
Competitive advantages using information technology can be created in many ways. Federal Express has become the “standard” of overnight delivery. It knows exactly where every customer”™s shipment is at any point and if delivery preference is with or without a signature. Information technology has kept prices flexible (overnight, next day or three-day delivery) and competitive.
Information technology enables targeted customers to get offers for things they want. Grocery chains that automatically produce diaper coupons when a frequent shopper buys baby food, but not diapers, are presenting relevant customer content. When a book purchase is made on Amazon, IT instantly delivers a listing of other popular materials on the same or similar subject that customers have recommended.
Behind the scenes, IT has collected information about what your preferences, interest and buying habits are. Before long, the only people paying the full retail or the “insult” price, will be people who prize their privacy so much they are willing to pay extra for it.
Technology can allow businesses to take advantage of every clue ”“ every transaction, phone call, bill and complaint contains relevant information. In the past, has your customer responded to emails, to personalized letters or to telephone calls? Does the customer have a history of ignoring mass mailings?
The mere collection of data is useless unless it can be used to capture the hearts and minds of the consumer. The Strategy +Business article states that market segmentation is key. “The most important question is; what is the purpose of segmentation? Schwab”™s approach segments investors by assets and their desired level of relationships support.”
In “Crafting Best-in-Class Business Intelligence,” authors Jamie Campbell, Kenny Kurtzman and Adam Michaels said, “The first step in designing a successful business intelligence strategy is to choose the right metrics. They should be closely aligned with the company”™s strategy and capabilities including both internal and external inputs.” What do your customers want that you have the capability of delivering better than anyone else?
Data about each customer can allow you to identify them and treat each individually. How does that customer like to receive information? How long has that customer been with you and what have their purchases been in the past? Based on their purchasing history, what other products or services might they be interested in?
Utilizing such knowledge gives companies such as Schwab, Capital One and Caesars major competitive advantages that result in major cost savings and inspired targeted marketing programs that produce eye-popping returns.
Those organizations that know their customers better than the competition ”“ and act on that knowledge ”“ will build relationships, gain loyalty and an even greater share of their purchases. Knowing customer wants always lead to increasing profits.
Questions for discussion:
Ӣ Are we utilizing information technology or just collecting information?
Ӣ How could we segment our customer base and make more relevant content offers?
Joe Murtagh is The DreamSpeaker, an international keynote speaker, meeting facilitator and business trainer. For questions or comments, Joe@TheDreamSpeaker.com, www.TheDreamSpeaker.com or call (800) 239-0058.
