Rebuilding the customer relationship
With customer loyalty at an all time low, organisations are asking themselves what they’re doing wrong. Can data be used to improve customer experience and loyalty? S4B talks to Lastminute.com founder, Brent Hoberman and Clive Humby founder of data analysis company dunnhumby, to find out.
Clive Humby
Prior to forming dunnhumby in 1989, Clive was Chief Executive of a major market analysis company. He has over 25 year’s
experience of applying mathematical modelling methods to marketing, retail location and retail decision support. He has
published numerous papers on valuing brands and customers, segmentation strategy and location planning.
Brent Hoberman
Brent co-founded lastminute.com in April 1998 and was the CEO until 2005. He is now a non-executive chairman of wayn.com
– a leisure and social network with over 7 million members. Previously Brent was a Senior Associate at Spectrum Strategy
Consultants and held the business development responsibilities at Line One, an internet service provider.
Organisations are collecting more and more data on their customers. This data comes from an increasing variety of sources such as transactional data, loyalty card data and website visits. With all this information about customers, surely they should be seeing benefits – in terms of added value, better service or more appropriate offers?
Clive Humby comments, “Some organisations are really making their data pay – the work we do with Tesco has generated huge benefits for both Tesco and its customers. Since Clubcard was launched, Tesco has given back over £1 billion to cardholders, so the data has a clear cost. This means they’re dedicated to using this data to better understand customers, how they behave and how they can sell them more. Other organisations collect just as much data (banks for example) but they don’t see the cost of the data, so they don’t see it as an asset.” Companies that understand this are clearly benefiting. Tesco used its data insight to launch Tesco Metro and Tesco Finest. It also uses customer shopping data to test new products – helping them launch in typically 50% less time than most supermarket retailers.
It’s all about relevance
Brent Hoberman has also successfully used customer data to improve the customer experience. “At Lastminute.com we do a lot of email marketing and segment our customer base by using customer data, ensuring we send relevant offers. Relevance is critical to our relationship with our customers. We’re using tools on our site to see how customers interact with us, and offer a dialogue so they can rate pages. This means we can look at what we’re offering and how we’re offering it – and then improve it.”
Clive Humby agrees, “Data has been abused by many companies’ direct marketing. Customers get fed up with the stuff they get through the door as most of it’s not relevant to them. This is because the metrics currently used are flawed.
“Companies look at the 2% who do respond, not the 98% who don’t just disregard it, but actively turn away from the organisation. This helps to explain why so many customers get irrelevant promotions. At Tesco, we measure right down to individual customer segments – a mailing of 13 million will typically have 7.8 million variants, with response rates in the 20–40% range.”
THE FUJITSU VIEW
Using customer data to help transform the customer experience is certainly no easy task, but Fujitsu believes there a number
of practical guiding principles that make the task more realistic.
Work out what’s really important
Define what customer experience you’re looking to deliver – it’ll be different for every organisation. Once you’ve establish
this you can see more clearly how data will be used to positively affect the customer experience.
Put a value on your data
Tesco knows exactly how much its data costs them. Do you? Customer data is never ‘free’, and if you know the cost of your
data, the organisation will be more incentivised to make it work harder.
Make sure the organisation sees the same customer
Getting a consistent ‘single view’ of the customer is essential. Customers hate having to repeat details – so make sure
the right employees have access to the right information, at the right time.
Measure the right things
Knowing what the customer experience you’re looking to deliver will help you define what to measure. When you have the
right metrics, you can continuously refine and improve the experience that customers receive. This process never stops.
The single customer view
Customer data links most obviously to a customer’s experience when organisations have a clear, consolidated picture of the individual they are interacting with. One of the most basic ways this single customer view can help the customer experience is through the removal of frustrating processes. Customers hate having to re-supply data about themselves to different parts of the same organisation, but customer data can be used to remove this annoyance. Financial services organisations are well known as poor exponents of this, where as newer web companies are setting the standards in customer understanding.
Brent Hoberman comments, “Getting a single customer view is certainly where we’re going, but it’s actually much harder for online organisations to do this. We know for example that people buy from different email addresses, and currently the email address is the unique identifier we use.”
The future of the customer experience
So how will data use evolve in the future? Brent Hoberman says, “It’s becoming cheaper and easier to store and analyse large amounts of complex data – so I think you’ll see customer data and customer service becoming more intrinsically linked. It will be far easier to get the insights from customer data to feedback in real time into customer offers and site content.
“Customers want more control. RSS will be increasingly used for this as it allows customers to choose exactly what they want. They can set up alerts around specific products and control the information flow between them and the organisation.”
For certain customer segments, self-service will be increasingly important – new technologies, combined with a single customer view can help companies deliver a superior experience in this regard. This approach is not just limited to the private sector. Governments can learn from this approach by using the data they have on citizens to understand them and improve the efficiency and effectiveness of their interactions with public sector services.
Forward thinking organisations like Tesco and Lastminute.com are clearly using customer data to improve the customer experience and this is helping the success of their businesses. The key to success is to use the data to learn more about customers, understand what they are looking for and use this insight to improve the relevance of your offer to them.
