Customer Science - ...building deeper, richer, more personalized customer experiences by applying customer insights to better understand what customers care about, how they think and act, how they make buying decisions, how they want suppliers to communicate with them, how they want to be treated, what they expect from their suppliers... and more. But does it work (is it working?) in Motor Retail? Is it being used successfully to turn 'sleepy customer data' into a dynamo for new reasons to speak to customers, turning clicks and visits into cash?
Since the 1980's I've watched with interest as the methods adopted by marketers to engage customers and prospects have adapted as new technologies and created approaches have come of age. More than in any era before, the noughties has required marketers to take on a cacophony of new techniques to engage customers that want the perfect mix of a personalized customer service experience and relevant, timely offers while not wanting to be barraged by suppliers with direct marketing and unwanted contact. The growing impact of the Internet, mobile communications, social networking and a more techno savvy customer communities is changing the rules for marketers on how to get the biggest impact from their marketing spend.
By now, the marketing industry has worked out that it's vital to gather information on customers 'as part of the day job' to build up a profile and persona on each and every customer so the customer enjoys a personalized 'shopping' experience. Companies like Tesco and Amazon have shown the way in exploiting customer data to sensitively give shoppers what they want rather than forcing them with a strong hand down paths they don't necessarily want to follow.
The type of relationship customers want - location-centric, timely, fine-grained, event-driven offers personalized to their particular wants and preferences - can only be achieved in my opinion by taking every opportunity to learn about customers through each and every interaction. Customers don't want to be contacted out of the blue, or left standing in service receptions JUST SO THAT DEALER CAN CAPTURE DATA TO SELL TO THEM. For Motor Dealerships that means not only investing time into collecting data 'as part of the day job' but also investing in the PROCESS of 'digital persona-lization'.
In an odd way, customers generally WANT suppliers to build and know their digital persona because they want that type of personalized experience (with the suppliers they want to buy from). What they definitely DON'T WANT however are relationships with suppliers that abuse their trust or over-bite on the level of relationship they want.
Marketers in most industries profile their customers these days, but 'Customer Sciences' are only now appearing in the Motor Retail sector. This is partly no doubt down to the fact that in certain countries and regions, dealerships with the right franchise have very little local competition for the brand they promote. While it's always silly to generalize, the feedback I get is that this is changing and levels of competition are growing in most geographies.
Understandably, dealer principles want to know:
- How does profiling help me to sell more?
- How do I build up profiles and personas from my data?
- How do I enrich my data when it's poor?
- How do I channel dialogue opportunities to encourage sales people to engage customers at the right time and for the right reasons?
- Where do I start?
So here I attempt to answer these questions:
How does profiling help me to sell more?
When dealers have a better idea of the sorts of customers they sell to they become more adept at appreciating the types of offers that work. Knowing the affluence of customers on your database for example means that you can find out (from third party agencies like www.improvemydata.com) the addressable market in your locality by mapping these target customers against your existing database. Marketers and dealer execs can use the profiles they hold about their customers to understand how to maximize their revenue potential per customer - to then work out which customers are not achieving their anticipated life-time value. Sometimes enriching data can seem like a 'painting the Fourth Bridge' experience where you need to start again every time you think you've finished. Focusing on the most important customers first and devising marketing strategies to grow value in the customer segments that matter most allow marketers to drive optimal value from the smallest efforts.
How do I build up profiles and personas from my data?
There are many ways you can profile customers - the most obvious being:
(A) Life-time value - It's quite easy to derive a value for each customer based on assumptions of what they should spend over their lifetime. Many motor manufacturers hold and share these insights for each model they sell. Comparing your revenue per model against the forecasted return helps to qualify 'where things are going wrong or could be improved. Seeing this data, dealerships can realize that some makes and models are more reliably generating the life-time revenues they should than others; perhaps because some makes and brands face more local aftersales competition than others.
(B Buyer behaviour - At NDMC we define the buyer behaviour of private vehicle buyers through fourn buying personas:
- Cherished Teddies > Loyal buyers that consistently reach within 20% of their future planned life-time value. Typically these customers will purchase service or loyalty plans (often with additional insurances or paint protection options) to make sure their dealership can look after their needs. For this group dealers should have a very complete picture of the customer profile. Cherished Teddies need looking after because they are the group most likely to recommend others buy their vehicles from your dealership!
- Loyal Dogs > Vehicle buyers that purchase after-sales products but don't achieve the future planned life-time value. Understanding why this group doesn't achieve their future life-time spend is helpful because it can point to weaknesses in your offerings or aspects of local competition that you're not aware of. At the same time, it pays to contrast buyer behaviour with affluence ratings given that it may well be that Loyal Dogs WANT to be Cherished Teddies - they just can't afford to be ;-)
- Cats > Buyers that have purchased a vehicle from you but only come back for aftersales services when it suits them. Just like cats you can't rely on their loyalty and you have to work harder to get their attention. Cats are harder to love because they're not around as much. The obvious thought is 'What does it take to turn a Cat into a Loyal Dog?'
- Neighbours' Cats > Buyers that haven't bought from your dealership but have bought services or parts. Perhaps these customers are 'sampling your dealership' to understand how well they get treated. If you pay them more attention, perhaps they will become your Cat in time.
(C) Affluence - How much money people earn is a good indication of how much disposable income they have to spend on a vehicle and indeed the sort of vehicle they might want to purchase. Consumer data can tell you a great deal about who your current customers are and the target people in your area most likely to be willing and able to purchase a vehicle from you.
(D) Contact activity and preferences - It helps to understand these days 'HOW' customers want to communicate. There is a significant shift to social media and mobile methods. Assumptions that 'mobile and Internet' tools are for the young are usually baseless. Many 'people that want to be young' are avid smartphone and Facebook users (My mum twitters all the time!).
(E) Location - Location awareness is a powerful market tool. These days it's quite possible to focus events and campaigns to target specific geographies that have a proven bias towards your brand based on affluence or locality. Consumers can also be targeted 'on the hoof' if you have the means to engage them when mobile.
(F) Arbitrary Banding - Even when all of the above fail, marketers can start their entry into Customer Sciences by thinking about their own arbitrary bands based on a selection of customer metrics and see what falls out. Dealer execs have a very good feel normally about their customers and what works and doesn't work. Exploring these perceptions and seeing if the 'data' backs up the assumptions can be a good place to start for organizations that have never experimented with Customer Sciences before.
One other thought - unsurprisingly, when you compare these different aspects of profiling together it helps to build up a visual image of the 'persona' of the buyer and this can help to further develop the rapport with the customer through a 'deep support' understanding of their wants and needs.
Building up profiles is a question of understanding key data metrics and then validating where the data needs to be sourced from. Sometimes data is already held in admin systems (like Dealer Management, Showroom or Service Management systems), while other times it will need to be captured by installing new systems or methods. Not all methods require manual data entry. These days, customers are often prepared to enter their own data provided there are rewards for doing so (such as gaining free access to an online portal that provides details on their vehicle valuation and the impact of their driving behaviour).
The life-cycle for Customer Science (i.e. creating and leveraging profiles) goes something like:
- Gather and cleanse data from its various latent sources
(2) Make Connections
- Build new connections between data items to produce new metrics
- Apply the learning lessons to personalize the dialogue with customers and create new reasons to interaction with more relevant and timely offers
- Measure the effectiveness of personalized interactions and learn from them to source new ways of bringing value
Like most processes in business, the first job is to recognize that the process needs to exist and, having formalized it, it becomes something that can be measured and improved to become progressively more effective.
How do I enrich my data when it's poor?
In the motor dealership arena, the most frequent response I encounter is 'Sounds great but my customer data quality is so poor it wouldn't work for us." Wrong, wrong, wrong. It's not that difficult to improve the quality of data these days. The weapons marketers can use to enrich data include:
(1) Paying external agencies to manually enrich data (very expensive)
(2) Progressively improving the quality of data over time by becoming more robust in making sure members of staff complete records more consistently; some of which can be enforced with changes to software
(3) Exploiting 'big data' to cleanse your data by straining it through a source of 'good data' such as an industry database, consumer insights database or postcode database.
How do I channel dialogue opportunities to encourage sales people to engage customers at the right time and for the right reasons?
Systems like NDMC's LeadGenerator360 enable dealers to upload/mine their existing data from administrative systems and build up a pipeline of reasons to speak to customers when they want you to (I'm sure there are other systems that work in a similar way out there ;-). Such systems generate a pipeline of reasons to engage customers 'one customer at a time' based on key events like vehicle birthdays, service plan expiries, warranty expiries, MOT reminders etc. that ensure every single worthwhile opportunity to engage customers is not overlooked. At the same time, leads are allocated and load-balanced in a way that avoids sales people from becoming overburdened. Linking lead pipeline to customer profiling builds a virtuous circle of 'using insights to capture insights' that reduce the need for contact 'expressly to capture data we should already know about our customers' or spurious sales calls that customers hate because they feel they're being sold to.
Where do I start?
The best way to start the journey towards Customer Science based marketing methods like profile and persona building is to perform an audit of the 'net present state' of your customer insights and the extent to which your dealership is exploiting its dealer insights.
NDMC (and again, I'm sure there are other supplier companies out there) offer a 'CRM Diagnostic' service and system. This is a one-time reporting cycle where key data is extracted from existing DMS and administrative systems to a secure space, where it is cleansed, normalized, analyzed, and then - from the connections made in the Customer Science Engine - out pops a series of online (still secure) 'drill-downable' reports and views. This type of diagnostic service will qualify how complete and consistent the customer data is, and the number of 'meaningful reasons to engage customers' against what the dealership should be capable of based on the size and characteristics of their customer database.
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