Winning the war for customers

Posted on February 14, 2005 
Filed Under Julian, The Edge

By Lim Beng Choon

Keeping customers delighted in any business today requires fresh thinking and approaches.

To me, Suria KLCC is a world class, high-performance example. Aside from the customary festive decorations, Suria rigorously gets tenants to renew their storefronts regularly and rotates store locations to give the mall a fresh look all year round. Even the fstalls in the food courts stalls are constantly monitored and upgraded.

The same thing goes for high-performance businesses: they need to find new and innovative ways to keep customers coming back.

Two different Accenture studies show that there are strong links between innovation and sustained business performance. We found that companies such as Nokia, Samsung, Southwest Airlines, Wal-Mart, Dell and IKEA, which continued to innovate even through downturns in the 1990s, were best positioned for success in the upturns that followed.

These companies were obsessed with winning the battle for the customer.

They embraced technology and collaborated with other companies to improve operations. To stimulate demand, they marshalled effective marketing campaigns, and were constantly finding ways to bring costs down, and introduce new products and services to market.

TURNING CUSTOMER DATA INTO PROFIT

As customers these days are less loyal and far more demanding, it is imperative for companies to understand them extremely well.

Without effective tools and processes in place to make informed, real-time decisions, companies can lose touch with customers.

Recent innovations in customer relationship management (CRM) offer the ability to have a single, integrated view of the customer across the entire organisation.

In-built analytical tools can now accurately predict customer responses. With this data one can develop and adapt cross-selling and up-selling campaigns to offer the right product to the right customer at the right time.

Take the cellular industry in France. The industry has experienced explosive growth during the last few years, with new customers coming on board in droves. Growth, however, has not come cheaply. The costs to acquire new users in France are among the highest in Europe, due to carriers’ heavy subsidising of handset and retailer costs.

As a result, many carriers faced a pressing need to maximise their Average Return Per User (ARPU) by retaining their best customers for as long as possible. This challenge was particularly acute in the face of slowing growth, market saturation and the impending expiration of service plans.

One company that has successfully turned customer data into profit is cellular provider Bouygues Telecom.

The Paris-based company knew it could not count on customer acquisition to remain profitable. With five million customers, it wanted to retain its 18 percent share of the French mobile market. Bouygues came up with a three-prong plan:

The project team began by identifying several hundred customer “clusters”—smaller groups of customers with similar needs— then obtained the data needed to predict their behaviour and developed marketing plans to address each cluster.

Bouygues developed a real-time marketing automation system and employed various channels to reach customers, including mobile phones, monthly bill inserts, corporate magazine, letters, e-mails and personalised websites.

As a result of the project—which took just 10 months to complete—Bouygues bolstered the number of customer contacts by up to 450 percent, and reduced the time needed to create and execute a marketing campaign by 75 percent. More importantly, Bouygues’ ARPU went from last to first among telcos in France.

REINVENTING THE ECONOMICS

Most companies acknowledge that not all customers are created equal. Some are more profitable while others cost them money.

So how do you make your most loyal customers also your most profitable? And how can you spend less to manage your most valuable customers without alienating them?

In the financial industry, an influx of automated services has enabled banks to migrate customers to self-service channels. This has reduced the costs of serving those customers who don’t need, want or merit personal service. These resources can be re-directed to the high-yielding customers who want such service.

In some cases, companies have turned to outsourcing to speed up and reduce costs in their sales and service operations. Many companies simply don’t have the time or resources to build the capabilities to re-engineer this part of their business operations.

The right automation and outsourcing arrangements enable companies to maintain predictable operating costs while having access to additional capacity if needed.

TRANSFORMING MARKETING INTO A SCIENCE

Oddly, for some companies, marketing is still stuck in a bygone era. It remains untouched by the rapid changes seen in manufacturing, sales, customer service and human resources.

Marketing campaigns can now be quantified and optimised. They must be if a company wants to stimulate demand and reach existing and new customers. Various new methods and tools, such as econometrics, return on investment measurement and budget allocation software, now make a more scientific approach to marketing possible.

For example, a leading Asian insurer recently maximised the effectiveness of its large sales force by providing them with actionable customer insights.

These insights included deducing policy holders’ needs through customer behaviour and life stage analysis and their inclination to purchase additional products. As a result, its marketing campaigns have improved customer purchases by up to 150 percent.

Seoul-based Samsung, one of the world’s most successful consumer electronics companies, has also adopted this type of scientific approach to marketing.

For decades, Samsung executives believed sales lagged behind rivals because of a branding problem.

The company decided to look more closely at how it invested its marketing resources in 14 major product categories across more than 30 countries.

The findings determined which category/country combinations offered the greatest growth potential — and also uncovered three critical flaws:

The bottom line: These funding imbalances were threatening future profit growth for Samsung globally and seriously impairing its ability to compete.

Samsung rectified the imbalances and has since enjoyed market share growth in key countries and categories and improved its brand equity. In mobile phone handset sales, for example, it has significantly made headway against the big three of Nokia, Motorola and Ericsson.

Innovation plays a critical role in a company’s quest to achieve high performance. The ability to devise new ways of interacting with and managing one’s customers clearly separates the highly successful companies from the also-rans.

As in any war, fortune favours the bold. In the war to win customers, the more innovative companies are in strengthening their relationship with customers, the more likely they will become even more successful in the years to come.
Lim Beng Choon is the country managing director of Accenture Malaysia.

(Editorial services by Trinetizen Media for Accenture)

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