Your CRM: a cost-effective way to enhance your research
Guest blogger: Jonathan Solomon
Read the fourth in our series of posts from guest blogger Jonathan Solomon who is an experienced Head of CRM and Insights. Having worked for almost 15 years within the marketing and research teams of Vision Express, Citi Bank and E.ON, Jonathan has a good understanding of how market research can guide business strategy. Here, Jonathan explains how using your existing customer relationship management strategy can be a cost-effective way to enhance your research.
Customer Relationship Management (CRM) is traditionally a ‘below the line’ affair from the company to the customer. It takes the form of mail, email, SMS, outbound phone calls and more recently social media (social media and web do blur the lines of what classes as below or above the line, but that’s a discussion for another day).
CRM is the company’s way of directing customers (and prospective customers) along the journey from initial purchase to repeat and additional purchases. For example, the reminder for your next dental appointment or the special customer early sale. It’s not just about bringing in sales today; where there is a natural gap between purchases (e.g. buying cars, getting your eyes tested) it’s a way to keep the relationship alive, create more of an emotional connection to the brand, and enhance the customer’s experience. And importantly, it can help to defend against competitor marketing activity.
By its very nature, CRM is mass marketing and tangible, with campaigns going directly to thousands (and sometimes millions) of people. This makes it perfect for enhancing research in a number of ways:
- Plenty of volume to test different creative, timing, offers, channels
- It can be cheap, with emails and SMS both less than 10p/unit and high volume DM campaigns (direct mail – letters, postcards etc..) less than 30p/unit
- Targeted at individuals – including the ability to target existing and prospective customers selectively
- You can define the window of measurement accurately – land date through to ‘valid until’ date
- Easy to measure – specific offers and codes enable you to track the volume of responses versus volume mailed (response rate, RR%). If you are fortunate enough to hold customer specific records (one of the benefits of a loyalty card scheme), then this measurement can be at the individual level, adding a further depth of insight i.e. I sent customer A offer Z, they responded within the offer window, but actually purchased using in-store promotion X
- Easy to measure (email) – the richness of email from an analytical point of view is worth pulling out as a separate comment. Beyond the usual response rate measures, you can also see email open rates, link click through rates (and if there are multiple links which ones are clicked more often), followed naturally by web analytics, such as drop-out rates and where people dropped out between email land and purchase/voucher download
- You can hold out controls – groups of people whose only difference from the campaign population are that they did not receive the campaign. Controls give you the base level of activity and are a measure of the natural flow of customers into your business. Your campaign should be measured taking the Control into account i.e. if the campaign response rate is 10% and the Control is 3%, then the true uplift from the campaign is a 7% response rate (incremental response rate). For Controls to work you need some way of tracking the interactivity of the Control population with your business
Your CRM cycle can also be used to test results gleaned from other sources of traditional research, such as trackers and segmentation studies. If, for example, your segmentation study has identified segments of people who have different needs from your business, or are triggered by different factors within the experience of interacting with your brand, you can use this information to test different messages and offers. All customers are not the same, both in terms of value to the company and the messages that they find most attractive – convenience, price, quality, experience, offers etc.
Research may also identify the strength of different messages/offers with regards to propensity for people to frequent and recommend your brand. Again, you can use this insight to manage the order and weight of messages within your customer communication strategy, leading with the big hitters.
To get the best out of CRM as a research tool, there are a number of things to remember:
- You need to set up tests to ensure that you are able to identify what makes the biggest difference. Either test just one thing at a time, or if you do wish to test multiple changes (for example channel and offer), ensure you have enough cells to cover all combinations
- Cell 1 – email & £50 off
- Cell 2 – letter & £50 off
- Cell 3 – email & £30 off
- Cell 4 – letter & £30 off
- Use a Control, normally 10% of the volume of the campaign and removed from those selected for the campaign. Uplift in response rate above Control is the true measure of success for any campaign
- If you are testing in an existing campaign, then any tests should be against the current material (the champion), The tests (the challengers) should also only be a fraction of the campaign volume (10-20%), just in case they totally fail, especially if this is a critical campaign for business performance
- You need to make the campaign as easy as possible to measure. Not all companies have the benefit of customer records and the subsequent ability to tie a campaign sent to a specific customer with a purchase made against said record. Other options to aid with measuring effectiveness are campaign specific barcodes, offers and promotions that are only available via that campaign, specific landing pages or promotional codes (web), getting people to submit data prior to getting the offer etc.
- Clash management (air traffic control)…or not sending multiple campaigns to the same customer at the same time (good general business practice). Multiple campaigns will muddy the waters as to which campaign actually convinced the customer to interact.
In summary, with CRM you are communicating to lots of people at the same time and providing you put the proper checks in place, you can test all sorts of different things without breaking the bank or business targets, either confirming the results of traditional research or just testing a new hypothesis or two.
Read more posts from Jonathan Solomon by visiting our main blog page.