By Andy Wood, Managing Director, GI Insight.
‘Know your customers’ is a mantra that just about every company understands and embraces – or at least pays lip service to.
But, how well are firms actually putting the processes and systems in place to really get to know their customers, and then using that information to drive their marketing communications?
Our latest report found that, while some organisations collect a lot of customer data and use it establish a lasting, personal connection, there is still a long way to go before this becomes the norm.
Respondents rated their service providers, the shops they frequent & the brands they regularly purchase on a scale that went from ‘knows me like a close friend’ to ‘treats me like a total stranger’.
Overall, the findings revealed that sectors with frequent transactions, regular customer contact and strong loyalty programmes among key players fared the best. Respondents recognised that supermarkets, internet service providers, banks and entertainment providers were the ones that seemed to ‘know me like a close friend’.
In contrast, sectors that were seen to treat their customers as strangers were often those selling big ticket items such as cars, computers and houses. Also performing poorly were consumer food and drink brands, whose direct contact with consumers is largely controlled through third parties such as retailers and dealers.
The results for these firms indicate that they have to step up efforts to create dialogue and build a relationship with their consumers.
But what steps should firms be taking to get to know their customers better? They should be looking for ways of taking a more tailored and personal approach to their customer communications and offers while creating opportunities to gather the sort of data that would feed such activities.
Clearly, the gathering and dissemination of customers’ data is central to getting to know customers: just collecting information and putting it on a database isn’t enough. Too many companies fail to properly analyse their customer data and use it to gain insight into which customers they should be focusing on.
One of the most effective ways to collect the necessary data from customers and then develop a dialogue with them that will grow into a long and fruitful commercial relationship is to build a loyalty programme.
An efficiently run loyalty programme is, for most companies, the shortest route to customer knowledge that can then be used as a basis for greater satisfaction, more interaction and, ultimately, increased profitability.
By collecting and managing customer data through loyalty schemes, companies are able to gain a better understanding of their customer’s habits, tastes and more generally what makes them tick. This enables them to use well-chosen messages and incentives to make sure clients stay with them while getting them to spend more or more often – or both.
For those companies that don’t have the same frequent contact with consumers – those that sell big ticket items – and firms whose contact with the end customer is through retailers and dealers, there are ways develop dialogue with buyers and gather data on them.
That can be achieved through customer clubs or innovative loyalty programmes that provide regular communications such as newsletters, announcements of promotions and events, servicing reminders, upgrade offers and other brand and product information.
There are businesses that have regular contact with customers and ample opportunities to collect data that are not doing enough to exploit those and to develop loyalty schemes that help them to better cement relationships with customers.
Such organisations must learn the value of customer data and its vital importance for retention, cross-selling and up-selling. The key for companies that want to get closer to their customers and be welcomed by them is to set up a mechanism that allows them to do that.
With this in mind, basing all dealings with a customer on a full profile of that person’s preferences and behaviour is essential. Only then can a company or brand be viewed as trusted by its customers and its communications welcomed as those of a good friend.
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