Crm and Direct Mail

CRM White Paper

David Mastervich

Sales Strategies and Deployment

Overview

Rich customer relationships that generate loyalty and revenue are critical to sustained business performance. Now more than ever, organizations must be able to flexibly adapt to the unique needs of individual customers. To meet this challenge, companies of all sizes are deploying Customer Relationship Management (CRM) applications and strategies across their organizations. They are coordinating multiple channels: including the web, email, call centers, direct mail and face to face - to interact with customers and meet their needs.

Profitable customer relationships begin with sound planning. Actionable strategies for collecting customer data, mining it for valuable insight and cost effectively building these relationships are required to drive results. Firms must identify their Most Valuable Customers, interact with them across all channels and meet their needs.

The ability of the organization to interact effectively with stakeholders depends on the quality and nature of the data, how the company derives insights from the data, and how it makes the data or the analysis available to the appropriate interface. Over time, customer loyalty, satisfaction and share-of-customer revenue increase, while costs decrease.

The term CRM has become an over used and often misunderstood term in recent Marketing Strategies. It is mostly equated to IT solutions that build electronic interfaces between a business and their customers. It is much more than that. CRM is all about the Total Customer Experience that a person has with a business that through multiple interactions across channels. Before CRM, there was database marketing. There always existed benefits in understanding customers and targeting them based on better information. When used properly this makes the customer experience more relevant and acceptable for the customer.

This paper is divided into 7 sections which describe critical aspects of Customer Relationship Management. We will investigate best practices that successful companies have developed with their CRM Marketing Strategies, and we will develop several Sales Strategies they we can use to position Direct Mail as a marketing tactic to enhance any CRM strategy.

Customer Segmentation

Any discussion surrounding CRM should include discussion around customer segmentation and customer needs differentiation. The goal of customer needs differentiation is to identify clusters of customers with similar needs around which companies can build customized strategies and relevant treatments. The ultimate objective is one-to-one customer relationships with these customers.

"Customer Needs" refer to WHY the customer buys, not WHAT the customer buys. Customer needs are the internal conditions or motivating desires behind a customer's purchase or usage of a product or service. Customer needs are complex and involve many dimensions and nuances including beliefs, motivations, preferences, life stages, decision making styles and more. A good CRM strategy will employ customer segmentation at its root, and build off the understandings of customer behaviors within the different segments.

A CRM strategy should analyze customer segments and make the appropriate determinations on whether each segment is profitable for their business and how to affect the purchase patterns of the segment so the business can experience the profitable attributes of CRM; loyalty purchasing, cross selling, up selling, etc. Direct Mail fits perfectly into the customer communication strategy for customer segmentation. With variable printing and data rich files a company can use their intelligence and print relevant Direct Mail that will move customers toward the purchase decision. Additionally customer communications should also enable the company to learn more about the customer over time so that it acts upon that information to better meet customer needs in the future. This is building "learning relationships" with customers, a fundamental CRM concept. A feedback loop must be built into the process so that the company can continually learn more about customers and their needs in order to improve the relevancy of its communications and offering in the future. Mail can provide the channel for this feedback, both in direct correspondence and by sending customers to web site, 800 #s or whatever channel they prefer.

When discussing CRM you should begin with the thought that all businesses need to analyze their customer data, and break their customers into as distinct as possible differentiated segments. Customer segmentation is not new, and you can understand the company better if you understand the method they use to segment their customers. Are they segmented by geography; economics; Recency, frequency, monetary purchasing behaviors, etc. Once you have that understanding of their segmentation then you can demonstrate the value that Direct Mail can bring to each segmentation philosophy.

Since customer segmentation is at the root of CRM, each business that performs CRM is ready to address the bigger question of deploying unique messages to the right customer at the right time. Again mail is the perfect and preferred media to carry those messages.

CRM and Technology

Historically, CRM initiatives evolved out of the IT department and were technology driven. These initiatives resulted in cutting costs with IVR systems (Integrated Voice Response) and email communications. Though cost efficient, there are inherent dangers to relying on technology to build customer relationships. . Effectively leveraging technology to enable the CRM strategy and process is important, but one must keep in mind that the technology is a tool to support the strategy, and not CRM itself. CRM is a business strategy that is enabled by technology. The Peppers & Rogers Group refers to CRM simply as the ability to "treat different customers differently." CRM can be defined using Peppers & Rogers Group "IDIC" methodology, which serves to:

* Identify customers individually and addressably

* Differentiate customers or customers groups based on their needs and value

* Interact