By Felix Velarde , managing director of specialist eCRM agency Underwired.
Everyone wants to get eCRM right. But with 40 different definitions of what eCRM is, just knowing where to start can put the kybosh on the grandest of ambitions.
In my view eCRM is simply the science of creating lasting digital-channel relationships that can be measured commercially. In other words, our ability to measure the results of tactical campaigns is all very well, but we need to attach results to our engagement with a specific customer over the course of the life of that engagement.
So, how do the best practitioners go about it? Here are a few of the critical steps in creating an eCRM programme.
Understand what data you hold?
Most marketers have a wide variety of different pots of data – transactional, email marketing, website traffic, in-store, loyalty club, competition entries, addresses with forgotten provenance.
The first thing that has to be done is to find a way to make the data consistent (for example making sure “Forename” is matched up to “First name”).
Next it needs to be centralised. This might be as straightforward as giving it to an agency who will give back a rationalised database containing everything they were given.
You’ll almost certainly find that much of the data is out of date, or plain wrong. You’ll also see that you probably have an awful lot of it.
Now you’ll need to look at the data and start looking for patterns. You can do this in-house, or an eCRM or data agency can do this for you. Essentially they are looking for a way to segment the data into reasonable groups. For example, these groups might include customers who:
· Spend more than £10, £20, £30, £40
· Buy on particular days of the week
· Respond to discounts versus those who respond to added extras
· Have visited the website once before purchase versus those who visited four times.
From this basic data we can probably derive a few insights which might be useful. For example, the above might show us that there is a correlation between the number of visits to the website and the value of purchases.
And there may be a correlation between the transaction value and how many times a customer has been contacted with what kind of call to action. Ideally the data will show relationships between a customer’s average transaction value (ATV) and the length of time they’ve been a customer.
The data you already hold will probably show you some surprising things. One retail client had data that showed an ATV that was higher than expected – and almost every customer we looked at had a transaction value well below the average.
Eventually we found a tiny segment of a few people who, every time there was a 50% discount offered on a DVD, would buy a thousand and eBay them for a profit.
It gave us an unexpected marketing angle – we could promote specific titles to this specific segment without broadcasting it to everyone and wasting one of our (limited) contact opportunities – meaning we could send everyone else an offer that would be perfect for them instead.
So understanding what data you hold is critical. The holy grail of eCRM is a ‘“single customer view’”, where there’s just one database that all sales, marketing, web and long-term data is fed into. For many that’s nigh-on impossible, and you can still have a hugely successful eCRM programme generating massive revenues without it.
Turn the insights into a strategy
Another benefit of understanding the data is that often it tells you what you need to do.
For example, if four visits to the site makes for higher ATVs, then marketing activity should concentrate on driving four visits - a bit simplistic perhaps, but you get the idea.
So we identify the different segments, and what each delivers commercially over time, say a year, and eventually a lifetime (this is called the ‘Customer Lifetime Value’, or CLTV).
Then we prioritise. There’s little point in spending 10% of the eCRM budget targeting 10% of the base if it only contributes 2% revenue. Segmentation tells us what to do. If we have limited resources, then broadly speaking spend the money on the segment with the highest CLTV!
Email is the cheapest way of reaching lots of different segments with relevant tailored messages at precisely the best time.
It’s easy to allocate different creative executions based on the segmentation rules, and it’s straightforward to transfer data to email suppliers. It’s also – critically – easy to see the results in real time.
Opens and click-throughs are OK as indicators, but properly integrated analysis is central to any serious eCRM programme, and there are specialists in providing this kind of straight-through tracking.
Ideally you’re tracking from email to sale and repeat purchase, and adding this information to the central database so you can see long-term trends and adjust your eCRM programme accordingly. This achieves by-segment ROI, and CLTV, and informs refinements to the segmentation and comms strategies.
Great eCRM incorporates email, community hub sites, tactical campaigns (to grow specific segments or to fulfil business needs), sometimes even mobile. It’s tested constantly, and honed until it produces reliable results time after time.
It actually removes uncertainty and takes the guesswork out of marketing. Great eCRM can have a fantastic effect – like McCain Foods who changed engagement rates amongst brand resistors from 14% to 63% in under a year. Done well, eCRM revolutionises marketing.
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