Given the strong business pressure to improve Marketing's accountability, the race to better understand the customer is in high gear.
Data warehouse, data-mining and customer relationship management (CRM) systems promised a seamless flow of intelligence and insight to executives' fingertips. Instead, many organizations grapple with expensive software installations that are difficult to implement and even harder to use.
The end result is a far cry from improving Marketing—it is lost revenue, wasted money and a reduced ability to understand customers.
While technology can bring data and information together and make it accessible, only marketing science and customer measurement can provide the insight to directly inform the organization about who the customers are, what they are looking for, whether they are satisfied, and what would make them loyal consumers.
Last week, Roy Young identified 15 major new books on the topic of customer focus; this article looks at one of the best of these new titles in more depth.
An Overview
Consumer Insight: How to Use Data and Market Research to Get Closer to Your Customer by Merlin Stone, Alison Bond and Bryan Foss (Kogan Page, 2004) in association with the Market Research Society (UK), is a guidebook focused on what to do with data and marketing research to extract optimal intelligence.
The authors provide a much-needed remedy that aligns the analytic parameters of data and customer information and offers welcome relief to companies that are being asked to leverage critical information assets and investments.
To that end, understanding the value contained within corporate data—by linking multiple frames of customer intelligence—leads to improved business processes, customer measurement and insight analysis. This integrative framework, presented so well in the book, enables businesses to harness the torrents of data coursing through today's information systems, while supporting the delivery of enriched customer intelligence and insight across the organization.
Achieving a strategic alignment of insight, communication, and IT systems continues to elude many companies, particularly around the issues of gaining competitive advantage, generating greater return-on-investment (ROI), and improving success rates of marketing and business activities. [1]
Given the extraordinary importance of marketing research and customer measurement in binding together and guiding a strategic and competitive business alignment, it is odd that this "analytic" perspective is so little discussed and so neglected by many organizations. This book remedies that situation by focusing on integrating the principles, techniques and methods of marketing and management science:
- How to construct a broad-based, strategic analytic framework to better support marketing and customer intelligence
- How to increase customer understanding and improve insight generation
- How to deliver on the path from research, through measurement, to management
Right from the beginning, this is a book about bringing multiple sources of potential customer insight together to truly drive business success. Thus, the book is not just about "new" ways to garner customer insight but also about the process and management of insight generation.
After lining out the playing field of consumer insight, which includes both market research and database marketing, the authors stress the importance of linking and carrying forward insights that can be used at the primary customer touchpoints (sales, marketing, customer service) to improve the experience, and ultimately the business impact, for the consumer.
This stress on solving the problem of insight to action, which they call "Head and Halo," is an effective frame for focusing on the customer/consumer, as so many organizations purport to do, but in reality do not.
Stone, Bond and Foss go further: insight and knowledge must be managed to be effectively used. Communication of insight and intelligence cannot be wrapped up easily; it consists of a multidimensional set of factors. But to achieve the most important step, transformation, it becomes a requirement. This book offers fundamental advice and guidance to that end (chapters 11 and 12).
As with past efforts from Foss and Stone and Kogan Press, this book excels in offering practical guidance in every chapter. This is achieved by the use of checklists, bullet points and case studies that effectively illustrate the chapter topics.
To my knowledge, this is the first book to bring together the two primary forms of customer insight generation that can be enabled by technology and optimized by effective communications, management and measurement. I trust it will be the cornerstone and generative seed of a continuing output of the MRS in Practice series published by Kogan (the Market Research Society [MRS] is a premiere professional organization in the UK).
Practical Counsel From Analytic Experts
This book is infused with practical guidance, illuminated by case studies. As an example, Stone, Bond and Foss offer this diagnostic to ensure a holistic insight process is supported:
- Map out your rational measures:
- Cost per contact and response rates
- Conversion rates and cross/up sell ratios
- Campaign ROI and customer lifetime value
- Define and measure "short of sales" value:
- Perceptions of the company
- Emotional effect of communications and messaging
- Customer satisfaction and relationship drivers
- Brand resonance
The authors call these "head and halo" measures. Defining, up front, both the rational and emotional elements of what, why, and where customers respond forms the framework that drives the next step of identifying and bringing the proper data together. It also creates a clear, unambiguous destination for an entire organization.
This has definite implications concerning the value of consumer insight. With the proper customer-centric framework in place, organizations improve not only their alignment at contact points with the consumer but also the incremental payoff of one activity over another.
Although there are a number of ways to achieve this, measurement techniques and methods that link the functional and emotional aspects of the customer produce insights that can then inform:
- More effective media, communications and messaging
- More efficient use of marketing funds
- Higher quality interactions with consumers at the point of sale, marketing contact and customer service experience
The point stressed throughout the book is that there is no better mousetrap, but organizations can work better to transform the elements they do possess, or combine and align elements that they did not consider before. In many instances, that is because technology is now available to enable this transformation.
An example the authors cite is e-enablement, in which consumers control the process (Web-based purchasing, such as Amazon), deciding what and when they want to buy.
Rather than the naive and misguided "personalization" efforts of the early Internet days (which relied on statistical models or scant consumer information on which to build a "relationship"), the authors point out that the proper amalgamation of consumer data can be analyzed to provide insight and guidance to improve service quality, enable up-sell/cross-sell or simply satisfy customers. But this is best achieved with an integrated measure of the consumer and insights driven by analysis at both the rational and emotional levels.
The concluding chapter is a tour de force about organizing and managing insight. While a full explication is out of the scope of this review, the authors build upon this framework:
- Define who is involved in managing and using consumer insight
- Define the skills needed to manage consumer insight
- Create a process to get insight into the hands of those who need it
- Determine when to use external suppliers and how to evaluate them
A case description of a Customer Management Lifecycle model done in partnership with an outsourced specialist agency consisted of the following:
- Defining the model, from acquisition to win-back
- Assigning the appropriate insight techniques, such as propensity modeling, at the proper points in the model
- Streaming the appropriate insights to the correct contact point (as example, call center strategy was based on potential customer value that was continually updated by gathering attitudinal and needs behavior via each service contact)
- Setting in motion the evolution of an enhanced database that did not exclude intangible measures, but embraced and accommodated them
These and many other examples form the bulk of the book, offering practical guidance and know-how to readers.
Conclusion
We marketers are responsible for bringing the customer inside the organization. We know how to use marketing science and customer measurement to inform the organization about who the customer is, what they are looking for, whether they are satisfied and what would make them a loyal consumer.
The biggest disconnects have been in these:
- The link between attitude and behavior and understanding why the customer is doing something. This information, data and learning are not integrated with ERP, CRM and other customer data collection points for analysis.
- The link between creative and operational marketing activities, tracked to a financial metric of value to the organization (valuating intangibles).
- Robust delivery systems (desktop portals, marketing intelligence metrics or ROI measures) directly streamed to the desktop of decision makers, planners, strategists, analysts, etc.—all knowledge workers who can benefit and use this important collection of information generated as a result of the integrative framework of this book.
Given more freedom and visibility, market science can reach deeper levels of customer understanding not touched by CRM systems. For example, market research unearths attitudinal, psychological and emotional reasons for customers' actions. When combined with the behavioral measures of greatest importance to the organization, market science helps trace the important linkages between customers' attitudes and behaviors with financial outcomes. Trending and tracking of customer satisfaction, brand loyalty, and other vital intangibles of business success are now possible when embedded in the framework promoted by Stone, Bond qne Foss.
As organizations continue to work on the major problems they currently face, it is clear that "alignment" of key business facets must occur. In general, technology, business/communication processes and customer/business measurements are poorly aligned and certainly not optimized for efficient and effective application. Software-only solutions can improve efficiencies, but only so far. In addition, they very quickly become commodity solutions that all competitors can harness. Competitive differentiation comes from the creative application of more sophisticated techniques, processes, and methods—such as those found in this book—and from a concerted strategic alignment program that maximizes the value of customer data across the organization.
It is important to note that to fully realize the alignment as presented here requires an up-front planning and assessment step performed by experienced professionals applying their knowledge and expertise to the situation. Without it, success is jeopardized. It is telling that most CRM implementation problems exist because no such strategy or alignment assessment was included in the overall process of moving toward customer-centricity.
So, how do we reach a state of customer-centric nirvana? As a starting point, hard decisions have to be made from the top down to drive the creation of integrative solutions. Marketing science applications built from this foundation drive intelligence, support or cause changes to strategies, and guide tactics.
Smart companies, or smart leaders within companies, are those that can mobilize the interest and attention of the CIO and CMO (and potentially the CFO) to contribute together to this integrated foundation. Experienced resources are needed to create and build the "big picture."
It is safe to say that all the pieces of the puzzle are within reach. What is needed now, however, is a concerted business effort to put the puzzle pieces together into a clear, understandable and meaningful picture.
Consumer Insight: How to Use Data and Market Research to Get Closer to Your Customer is a resource and handbook for learning how to achieve that goal.
Notes:
- Technology Issues for Financial Executives. Computer Sciences Corporation & Financial Executives International (2004). Florham Park, NJ.
