No one will dispute that customer relationship management is important. As a retailer, understanding your customers’ wants and needs, and employing a corresponding strategy to cater to these requirements, is a fundamental component of building successful, profitable customer relationships.
But what about the relationship between retailers and those consumers who are not your customers?
With average response rates to direct marketing campaigns at around 5 percent, and conversion rates among respondents within the same range, there is a considerable number of potential customers who either have missed your message or — more importantly — have responded to your message and were not compelled to take action.
It is this latter group of consumers — those who were interested enough to come to your store or site but did not complete a purchase — who are your hottest prospects. This is where the market share opportunities lie — where millions of customers, and dollars, are waiting to be snatched up by smart marketers.
In short, the failure of your initial marketing communication is really your opportunity to “begin again more intelligently.” More specifically, if you knew why these people did not act on your message — or had enough information to form an opinion as to why — what would you do differently in your next marketing effort?
This idea is the basis of what is called prospect relationship management, a new concept that applies the principles of CRM to individuals who are not your customers but should be. And in this new era of consumer empowerment, where shoppers are presented with thousands of options at the click of a button, it is a concept that is more important than ever.
In the offline world, PRM has never been a viable option simply because in this realm it is a financially and logistically inefficient process. Traditional consumer feedback vehicles such as store intercepts, suggestion boxes and telephone surveys — the offline retailers’ primary means of interacting with prospects — are limited in two key areas: gathering the necessary data and the ability to act on the data.
Data gathering is hindered by both physical constraints — How do you stop every consumer who leaves your store without a shopping bag? How can you even tell if a consumer saw your sales circular but did not visit the store? — and inaccuracy of the data (Surveys only capture what consumers tell you they do, not what they actually do).
Acting on the data is even more difficult. Most offline market research/feedback vehicles depend on information gathered from anonymous consumers, which precludes subsequent contact with respondents. And yet, even if these individuals could be contacted again, the ability to deliver them timely, personalized and compelling offers or messages in a cost-efficient manner is virtually impossible.
The Internet is a different story. Not only is it a medium that is unhindered in achieving these essential objectives, but it actually excels at it. In essence, it is the Internet’s unique ability to collect and act upon detailed consumer data efficiently and effectively that makes it the only vehicle through which to conduct true prospect relationship management.
The process begins with collecting the necessary data — including both self-reported and behavioral information — to form as complete a picture of each shopper as possible.
Eliciting self-reported information from Internet shoppers, such as demographics and competitive store/site visitation, is best achieved through consumer permission and privacy policies. Although consumers still have concerns about how their personal information will be used over the Internet, asking for permission to market to them and guaranteeing not to share their information without their express consent are common Internet practices that ease apprehensions and facilitate the sharing of accurate data.
Once a consumer’s self-reported information is collected, it is crucial to the process to build on each individual’s profile using the unprecedented tracking technology of the Internet to gather behavioral information. Knowing which of your messages and incentives were seen, acted upon or ignored creates a fuller picture of each consumer and allows you to identify your best prospects, i.e., the individuals who viewed your message but did not make a purchase, sign up for your newsletter, enter your sweepstakes, etc. In addition, each consumer’s profile continues to expand as you learn key facts such as his interests in certain product categories and what types of incentives increase his responses.
Armed with this information, the Internet’s unique technology allows you to target and re-contact your prospects quickly and efficiently with customized messages and incentives to increase their propensity to become your customers.
Personalized e-mails and Web sites are ideal vehicles through which to communicate with prospects because they can be customized based on each individual’s previous response to your message. Having a wide variety of e-marketing tools to tailor both the way the message is presented and the type of incentive you offer is also important, as each consumer is motivated differently.
The Internet provides the ability to deliver a myriad of options efficiently, including surveys, category newsletters, coupons, free shipping offers, rebates, gift-with-purchase offers, free samples, incentive points, sweepstakes and contests.
The primary benefits of optimizing your consumer communications through the PRM process are increased sales and market share. When applied over time, prospect relationship management provides invaluable consumer insight into what turns a prospect into a customer, allowing you to retool your marketing efforts to capture more customers during your initial campaigns. And, once you have turned prospects into customers, PRM turns to CRM as you use customized messages and incentives to move each customer relationship efficiently along the consumer life cycle.
So next time a shopper indicates an interest in your product but balks at the point of purchase, do not walk way — use prospect relationship management to turn this “failure” into market share.
•Jim Leichenko, marketing communications manager at CoolSavings, contributed to this article.