How to Lose Customers in Five Easy Steps

 
How to Lose Customers in Five Easy Steps
How to Lose Customers
in Five Easy Steps
What common practices are resulting in anemic customer profits?
How can the three I’s of marketing help to maximize customer value?

As most marketing executives already know, losing valuable customers is all too easy. After all, organizations engage
in a dizzying variety of customer interactions across a broad range of products and services. Combine that
complexity with product-centric organizational structures and measures, and you've got a recipe for unwittingly
engaging in practices that can drive away valuable customers.

But it doesn’t have to be that way! Take a stroll through this e-book to learn how smarter customer interactions and
more customer-centric measures can help you deepen and grow relationships with your most valuable customers.
How to Lose Customers in Five Easy Steps
HOW TO LOSE CUSTOMERS IN FIVE EASY STEPS

                            The five steps to failure

                            »      Here are five common practices that lead companies astray in the quest to maximize profitability.
                                   Click on the links below to get the story behind each one.

                            Don’t collaborate. Let each group worry about its own customer interactions.

                            Don’t find out what customers value. Just squeeze more value out of them.
    Why is it more
                            Don’t consider the customer experience. Just push price and product.
    important than
    ever to keep your
    customers happy?        Don’t measure anything. After all, marketing is more art than science.

                            Don’t worry about tomorrow. Just focus on making this period’s targets.

          view video clip
             (37 seconds)

Jeff Gilleland
Global Strategist, SAS

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HOW TO LOSE CUSTOMERS IN FIVE EASY STEPS

                                Time for a new approach:
                                The three I’s of marketing
                                Redefine how you build value – for your customers and your enterprise.

                                Since the beginning, most business models have been built around organizational structures, management
                                and incentive plans, financial systems and the four P’s of marketing: product, price, promotion and placement.

                                Many companies have professed to shifting their attitudes, claiming to be “customer-focused,” “customer-obsessed,”
                                “customer-driven” or whatever. But even to this day, the heart of most business models remains product-centric.
                                That means companies frequently fall into the Five Easy Steps, whether they realize it or not.
    What does product-
    centricity cause            If you’d like to get back on track, replace the traditional focus on the four P’s. Instead, coalesce your energies around the
    marketers to lose
                                three I’s: insight, interaction and improvement. Then exploit readily available technologies to excel in all three dimensions:
    sight of?
                                Gain deeper insight – Understand and predict customer value at a holistic, enterprisewide level.
                                Choreograph better interactions – Engage customers in a way that enhances mutual value.
         view video clip        Gain continuous improvements – Measure and report KPIs that matter, optimize investment of sales and marketing
        (1 minute 17 seconds)
                                resources, and continuously learn from every customer interaction.

Martha Rogers, Ph.D.
Founding Partner,
Peppers & Rogers Group

                                »      Let’s break it down further. What does it actually take
                                       in order to achieve these three objectives?

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HOW TO LOSE CUSTOMERS IN FIVE EASY STEPS

                                 Three I’s = One customer-centric,
                                 closed-loop business model
                                 In order to...                                                   You must be able to...

                                 Deepen customer insight                                          1. Manage quality customer data.

                                                                                                  2. Predict customer behavior.

                                                                                                  3. Profile and segment customers.

                                 Choreograph customer interactions                                4. Manage and optimize segment strategies.
    What exactly
    are the three I’s                                                                             5. Engage high-potential customers.
    of marketing?
                                 Gain continuous improvements                                     6. Measure and report results.
                                 in marketing performance
                                                                                                  7. Optimize marketing investment.

          view video clip                                                                         8. Apply lessons learned.
         (1 minute 20 seconds)

Jeff Gilleland
Global Strategist, SAS

                                 »      Let’s drill down into the opportunity, the challenges and the
                                        key steps associated with each of the three I’s.

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HOW TO LOSE CUSTOMERS IN FIVE EASY STEPS

                                            Insight                            Interaction                         Improvement

                                   Insight
                                   Deepen customer insight with superior data management and analytics.

                                   The opportunity
                                   Every interaction with a customer is a chance to get data that leads to deeper customer insight. Never before
                                   could you get so much information about customers and markets, transfer that information into usable
                                   knowledge, and guide the investment of resources with precision.

                                   The challenges
    How can analytics-
    driven insights help           Trouble is, data pours in from multiple channels, from incompatible computing platforms, in mismatched
    companies treat millions       data definitions and redundant customer entries. Transforming it all into a clean, analysis-ready format can
    of customers as                be a daunting challenge.
    individuals?

                                   The key steps
          view video clip
                                   Manage quality customer data. Establish a data management platform that integrates data from multiple
         (1 minute 20 seconds)     sources, then cleanses and prepares the data to create a comprehensive view of the customer.

                                   Create customer insight. Most comapnies have simple analytics that tell you what was and what is, but few have
Rich Martino
Sr. VP of Market Information and   an accurate view of what will be, why and what to do about it. Exploit predictive analytics to truly understand
Research, U.S. Bank                customers—not just past behaviors, but likely future preferences and purchase patterns. Then you can antici-
                                   pate their needs, improve customer retention and find smart ways to cross-sell and up-sell.

                                   Profile and segment customers. Develop effective customer profiles and segments based on customers’
                                   historical behavior, profitability and future potential. Don’t just use segments to support product-push
                                   campaigns, but to predict customer needs and respond accordingly.

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                                       Insight                             Interaction                           Improvement

                              Interaction
                              Choreograph interactions to improve the customer experience at every touchpoint.

                              The opportunity
                              Customers expect to receive a consistent experience across every channel and the sense that the company knows
                              them, whether they’re interacting via direct mail, the Web, customer call center or in person at a branch office.

                              The challenges
                              With thousands of campaigns to manage, spanning hundreds of customer segments and dozens of media chan-
    Why are “treatment
                              nels and markets, many institutions settle for scattershot marketing. When customer interaction data is scattered
    tracks” an important
                              around in data silos, it can be difficult or impossible to get a complete view of activities across the spectrum. It’s
    basis for customer
    interaction strategies?   even difficult to know when not to communicate—when to pull back to avoid potentially alienating the customer.

                              The key steps
          view video clip
                              Develop and optimize segment strategies. What unique treatments should each customer receive? What’s the best
            (31 seconds)      bundling of price and promotion? What is the best strategy for up-selling, cross-selling and retention efforts?
                              Armed with richer customer insight and targeted customer segments, marketers are becoming more selective
Jeff Gilleland                and scientific about where they invest resources—and, in some cases, which customers they will even accept.
Global Strategist, SAS
                              Engage effectively with customers. Naturally, marketing success stems from targeting the right customers
                              with the right offers at the right time—even in real time—while prudently avoiding spending on unprofitable
                              prospects. With deep customer insight, you can effectively manage the customer dialogue across multiple prod-
                              ucts and channels, balancing the realities of budgets, sales capacity and other constraints.

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                                     Insight                            Interaction                          Improvement

                            Improvement
                            Don’t just defend marketing performance; actively and continuously improve it.

                            The opportunity
                            The results of every campaign can be captured to help refine customer segments and marketing activities the next time
                            around, for a continuous cycle of improvement. Furthermore, spend that shows proven results gets budgeted again, gets
                            applied wisely where it will deliver optimum returns, and then is more likely to be increased.

                            The challenges
    How does the ability    Measurement and accountability are hard sells in creative organizations. But the only way to be sure you’re on track
    to measure, learn
                            is to prove it. Even when marketing appreciates the need for measurement, it isn’t easy. Marketers are often forced
    and improve translate
    into competitive        to cobble together data from sales, marketing research, syndicated databases and other fragmented sources just to create
    advantage?              a composite view of what (you thought) was happening. And it is usually a rear-view effort to support the annual plan,
                            not a tool to guide real-time course improvements or to show credible ROI.

          view video clip   The key steps
            (56 seconds)
                            Meaningful and ongoing improvement requires excellence on three fronts:
                            Measure and report on all aspects of the marketing organization to align activities to strategies and goals, and to
Jeff Gilleland
Global Strategist, SAS
                            improve performance and accountability.

                            Optimize investment across direct and indirect marketing. Analyze and optimize marketing mix elements, such as advertising,
                            promotion and pricing…media plans by medium and market…and customer segmentation and treatment strategies.

                            Continuously learn and improve through a closed-loop system—leading to a knowledge-based relationship with your
                            customers that will differentiate you from the rest.

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                                   How do you get there?
                                   Start small. Assemble an integrated technology platform.
                                   Evolve in stages. You don’t have to do a flash cutover to a new business model. You can implement technologies
                                   in low-risk stages. Each investment builds on the previous one. You can test pilot programs within a single depart-
                                   ment or customer segment—and then roll them out more broadly as they prove their value.

                                   Integrate technology into a whole. You’ve gathered by now that the Holy Grail of customer value depends on
                                   big-picture perspective. If you want customers to place more faith (and dollars) in your company, you have to
                                   understand and manage the total relationship—spanning contact channels, products, related entities and time.

    How did U.S. Bank              So the last thing you want is niche software components that don’t play well with others.
    evolve from silos
    of product-centricity          With today’s technologies, function-specific components can be integrated into a single, synergistic system.
    to enterprisewide              Information flow then transcends functional silos, organizational boundaries, computing platforms and specialized
    customer-centricity?
                                   tools. Decisions can be made rapidly with full knowledge of underlying context and hidden interdependencies.

          view video clip
         (2 minutes 4 seconds)

Rich Martino
Sr. VP of Market Information and
Research, U.S. Bank
                                   »     Let’s take a closer look at the integrated technologies
                                         needed to realize the full potential of the three I’s.

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                                  Technologies that enable
                                  a best-practice approach

                                  »      C lick on the text in blue to learn more about the specific technologies that support
                                          the three interdependent parts of a customer intelligence marketing platform.

                                  Customer insight is about deepening your understanding of individual customers and treating customers
                                  as individuals. It requires technologies to integrate and analyze data across products and channels. To maximize
                                  success, you need tight integration between your customer insight and customer interaction technologies.

    Why do recent                 Customer interaction is about managing customer dialogue. Interaction technologies include marketing mix
    advances in
                                  optimization, behavioral triggers, digital marketing and real-time decision making (to name a few). These
    technology make
    this an exciting time         interaction technologies are only as good as the customer insight that fuels them—which leads us back to the
    to be a marketer?             integration imperative.

                                  Improving marketing performance is about measuring and reporting what matters. It’s about aligning
                                  organizational activity around actions that create value with the customers that matter most. It’s about
           view video clip
         (2 minutes 43 seconds)   integrating the learning that occurs with every customer interaction—which again leads us back to the
                                  integration imperative.
Jeff Gilleland
Global Strategist, SAS

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     Summary:
     Better approach... better outcomes
     What to do:                                    What you’ll gain:
     Deepen customer insight.                       • A 360-degree view of customers spanning all contact channels, products
                                                      and services.
                                                    • A ccurate customer segments (the basis for “treatment tracks”) and fore-
                                                      knowledge of customer behaviors.
                                                    • A ccurate assessments (and scoring) of present and lifetime
                                                      customer value.

     Choreograph better interactions.               • Steadily improved returns from marketing campaigns with each iteration.
                                                    • Marketing programs synchronized across units, product lines and channels.
                                                    • Triggered in real time by various customer milestones or behaviors.
                                                    • Profitable interactions.

     Measure to gain continuous improvements. • Campaign results automatically plowed back into ongoing improvements.
                                                    • Quantifiable proof of the results from marketing spend.
                                                    • O
                                                       ptimized ROI, given available budget, channel capacities and other
                                                      constraints.

     Integrate technologies and processes.          • A cohesive, enterprisewide marketing platform that spans customer
                                                      groups, products and channels.
                                                    • A foundation for customer-centricity even in the most product-centric
                                                      organizations.

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     Learn more!
     Customer-centricity is a journey. The following white papers and Webcasts will give you ideas on how to get going,
     how to avoid obstacles and how to keep detours to a minimum.

     White papers:

     Competing on Customer Intelligence
     Building Competitive Advantage Based on the Three I’s of Marketing

     integrating technology to achieve competitive advantage.

     Customer Experience Maturity Monitor
     The State of Customer Experience Capabilities and Competencies
     This research report from SAS, Peppers & Rogers and Jubelirer Research provides insights into building authentic
     and profitable long-term customer relationships.

     The Total Economic Impact of SAS Marketing Automation
     This study illustrates the financial impact of implementing SAS Marketing Automation in the credit/debit cards
     business, in one European country, for a global retail and commercial bank.

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     Learn more!
     Webcasts

     Tips from the Trade - How to Execute Campaigns That Deliver ROI
     In this Webcast, we explore how successful companies are enhancing their approach to campaign management to
     operate more effectively, including segmentation techniques, contact policy management, and using predictive
     analytics to drive decision making.

     Tips from the Trade – Competing on Web Analytics
     This Webcast features a panel of thought leaders who will discuss best practices in online analytics.
     It explores how a successful online analytics strategy is built upon specific key performance indicators,
     integration of online and offline data and appropriate use of social networking sites.

     Stop Guessing - Start Knowing: Strategies to Optimize Your Marketing Campaigns
     Our expert guests will tell you how integrating customer value into your business model can improve both
     short- and long-term profitability – and why customer value management is so critical to your organization’s
     long-term success.

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                                 About SAS

                                        SAS is the leader in business analytics software and services, and the largest independent
    Why partner
                                        vendor in the business intelligence market. With innovative business applications supported by
    with SAS?
                                        an enterprise intelligence platform, SAS helps customers at 44,000 sites improve performance
                                        and deliver value by making better decisions faster. Since 1976 SAS has been giving customers
                                        around the world THE POWER TO KNOW ®. www.sas.com

           view video clip
       (2 minutes 43 seconds)

                                SAS and all other SAS Institute Inc. product or service names are registered trademarks or trademarks of SAS Institute Inc. in the USA and other countries. ® indicates USA registration. Other brand and

Jim Goodnight
                                product names are trademarks of their respective companies. Copyright © 2008, SAS Institute Inc. All rights reserved. 493057.0808

CEO, SAS

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