Use Customer Experience Management

Customer experience management is the successor to the golden days of traditional direct marketing and a critical component within the vast and blurred world of customer relationship management.

CEM defines the management of cross-channel customer dialogues that positively influence the relationship with each customer and leverages all relevant knowledge of the customer at every interaction. Five steps to successful customer experience management are:

Step 1: Minding your customers’ business. A company must pay close attention to critical customer behavior by establishing metrics that enable the organization to monitor the pulse of its customer base.

Close tracking and inspection of set metrics enable the proactive identification of problems and crafting of solutions that positively influence core customer behaviors. The measurements most commonly used by companies to monitor their customer behavioral trends are:

• The customer attrition rate. It is well known that it is cheaper to retain a customer than to acquire a new one.

• The customer acquisition rate. This is the monthly and annual percentage of new customers in relation to the existing customer base.

• Customer profitability. This is the measure of a customer’s economic value to your business. Any behavior that affects customer revenue or servicing costs should be a parameter in calculating customer profitability.

• The customer growth index. This focuses on the additional purchasing behavior of customers. Every customer base has a certain amount of unrealized or unidentified revenue. Cross-selling and upselling are attractive approaches for added sales revenue.

Step 2: Create a holistic customer view. Your ability to manage your customers’ experiences is only as good as your customer information. The second step in creating successful CEM strategies is the aggregation of data to create a holistic, 360-degree view of the customer. As customer interactions take place, the output of these dialogues should be accessible throughout the organization. Customer data are collected or accessed from a number of data repositories in the enterprise.

Traditional data warehousing methods enabled organizations to consolidate product-centric views of their customers. However, new data sources that are channel-specific are becoming commonplace.

To support a multichannel environment, an additional level of database connectivity must be present so channel behavior becomes available as part of the customer view. For example, data collected during a customer service call should immediately be available to all other communication channels across the enterprise.

Although in concept this sounds simple, the ability to support a dynamic, 360-degree view of the customer is the major barrier in most companies’ CEM strategies.

Step 3: Deriving knowledge from your data. Information in the form of data has limited value unless it is turned into knowledge. A number of analytic techniques uncover patterns in data and turn this information into actionable knowledge.

Segmentation is the process of separating customers into homogeneous subsets or groups. Specific offers or experiences can then be crafted for each.

Segmentation is a subset of decision support, which entails interactive querying and report generation. Another popular method of decision support is online analytical processing. Both of these methods produce reports that will allow your organization to better target your customer base and understand the dynamics of various subgroups of customers.

Predictive modeling involves data analysis and manipulation in an effort to extract useful information that is not obvious to the naked eye. By developing predictive models, companies can identify groups of customers and prospects who are likely to behave in a particular way in the future.

Typical modeling applications include purchase activity, defection, response to communications, bad debt and product usage. For example, a predictive response model can be used to best select the audience for a promotional offer. Descriptive models are used to profile an individual’s characteristics within a given population. They are not designed to forecast a behavior, but rather to classify customers based on behaviors. For example, a descriptive model may be developed to profile the demographics of highly profitable customers that may then be used to target similar individuals in a prospect database.

Step 4: Campaign management. The fourth step is to develop highly targeted and personalized marketing campaigns. These campaigns should leverage the output of the knowledge discovery step merged with domain expertise. Defining your goals and evaluation criteria is a major step in the design of marketing campaigns. These measurements should tie into the customer metrics discussed in Step 1.

Marketers may try 10 or 20 configurations of a strategy before determining the one that is right for a campaign.

Once developed, the campaign management process begins. Campaign management is defined as the systematic creation, execution and management of marketing campaigns. The major components of campaign management include:

• Test design (option).

• Audience selection.

• Communication selection.

• Channel selection.

• Response tracking.

• Response modeling (optional).

• Reporting and evaluation.

In most cases, campaigns are managed through a software system.

The use of automated campaign management systems leverages computer processing, enabling the efficient management of multiple campaigns.

Step 5: Customer experience management. Customers interact with companies constantly and do so for various reasons – to purchase a product or service, to pay a bill, to resolve a problem, to answer a survey and more. All of these interactions, whether initiated by the company or the customer, form the customer experience.

In today’s multichannel environment, it is difficult for an organization to synchronize its communication strategies and provide a consistent experience across all channels. This difficulty is highly exposed across a company’s live channels.

It is rare for a company to have its Web site synchronized with its call center and branch/POS systems.

Enabling communications at all channels that focus on influencing critical customer behavior is a central element of CEM. A consistent message must be delivered to the customer, even if management of the various communication channels is spread across different groups in the company. Paying close attention to the different ways in which a customer comes into contact with a company, and optimizing that interaction, is the only way to enhance the customer experience.

Companies must be prepared to deliver a highly targeted and customized message to an individual when he chooses to communicate through his desired channel. As customer interactions become true customer conversations, the customer experience will become the catalyst to increasing customer satisfaction, loyalty and profitability. Customer experience management is how smart companies will communicate with their customers and prospects in the future. CEM is a concept that soon will be familiar to every CEO, marketer and administrator interested in a successful tomorrow.

• Rob Singer is vice president of West Coast operations at YellowBrick Solutions Inc., Morrisville, NC, a customer experience management solutions vendor. His e-mail address is [email protected]

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