The real change required in many companies is an altered marketing mindset, sensing and responding to customers. Why? TML explores the issues.

I used to wonder sometimes whether I was a voice in a wilderness when bemoaning the tendency of companies not only to ignore customer feedback, but actually to minimise the channels through which feedback could take place. Over the last few years, I’ve seen so much evidence that cold calling, like badly targeted direct mail or email, is ineffective, brand-damaging and no answer to failed customer retention.

Sometimes I feel that if I see another study on the subject, I’ll scream. Many customers have also reached these conclusions and signed up to the relevant preference service, and vent their spleen (or their satisfaction) by posting indictment or praise on one of the many customer-controlled websites.

However, the problem is not a technical one - to do with databases, or even direct marketing. It’s because marketing is lagging behind customers, Today, I believe it’s possible to have a more even balance between supplier and customer, in which each engages in a useful dialogue about their future plans. I call this “sense & respond marketing”. It sounds futuristic, because it’s so rare today, but you can see it emerging in companies whose websites allow customers to tell them what they want, and which communications they’d like to receive, like Amazon, ebookers and lastminute.

Marketers believe they can do better than customers

Some banks gather intentions data too, often from their financial advice divisions, and move it to their routine banking operations where it is used to manage customers. However, this is still early stage. That’s because most marketers believe they can do better than customers. Their credo is: “We, the clever marketers, gather data from you, the customers. We analyse it, profile you, and tell you want you want next.” In its most advanced form, it’s trigger marketing, but the triggers are based on data about what the customer has just done (enquired, transacted, bought), not what they plan to do. But this doesn’t work for many customers, who could be excused for thinking that what drives marketers is:

“We surprise you with our incompetence at guessing what you want next, because we don’t ask you what you want, or use this information to manage you in every channel, in every interaction”. Many customers won’t give intentions data to large organisations because they know the latter will now use it well – failing to store it, or using it as an excuse to sell the wrong product, now.

In sense & respond marketing, businesses sense customers – who they are, their actions, thoughts and intentions. The business translates information from sensing into a statement of targeting – which customers to deal with, a statement of customer requirements – what customers need, when they need it etc. They respond by giving customers what they want, and will want, when they want it, at the right value – now and for the future, through the right channels – now and future, customised where appropriate, while making profit:

• They keep sensing to identify whether they have really achieved what they want with customers. How might customers behave in this world?

• They sense businesses, to find which business or organisations are likely (now and in the future) to offer goods and services which meet their needs, which businesses can use information about their needs properly, so as to meet their needs, the details about the propositions they offer, the channels through which they are available, their value, the pre- and post-sale service etc.

• They use the information derived from this sensing to enquire, buy, give information, develop relationships – where they want them and obtain service. This contrasts with current practice, where most businesses use data about past customer behaviour and needs to predict the future.

• They are often responding to past needs, or poorly predicted future needs, based upon simplistic generalisations. So, customers talk about big companies in disparaging terms - they know nothing, can’t be trusted with anything, and visibly talk down to us.

As most businesses are so poor at sense & respond, so professional users of predictive analytics based on past behaviour of individual customers (time series) and of similar customers (cross-section) do better than those that use predictive analytics poorly or not at all. They look like best practice in sense & respond, even if their absolute standards are low, as measured by targeting success. And customers rate these businesses well, though this is a relative rating, because the relevance offered by most businesses is so weak.

Faster, smarter use of customer information

Sense & respond marketing requires faster, smarter use of customer information – “on demand” style, much faster, smarter response to customers, not just in day to day interaction, but also in attunement of marketing budgets (marketing resource management) and adjustment of total proposition (enterprise marketing management). In businesses where customer events (business, professional or personal/family life cycle) determine value (e.g. banking, telecoms), customers will tell suppliers what they are planning next and will supply this data routinely, while suppliers will routinely sense & respond to customers, and will add this customer data to existing customer data to plan what to offer next.

The offer will be alerted to the customer, and the customer will be allowed to influence way the offer is presented, timing etc. Customer benefits include taking less time/energy/user cost to get what they want, more often getting relevant stuff. Supplier benefits include more cost-effective marketing, higher market share, and more profit.

Is this all feasible? Funnily enough, it’s not as hard as it looks, because sense & respond marketing is based mainly on what companies do already – in terms of systems, and processes, but with a much enhanced data set (past facts, preferences, intentions), working at much greater depth, faster, more comprehensively (blending intentions and facts) and with better integration.

Today, so many technologies (e,.g Netreflector, ViewsCast) are focused on allowing customers to tell companies what they thought about everything from their last call to their latest product. Even if that were not so, companies only have to browse the blogs and postings on customer-managed sites to find out.

By Prof. Merlin Stone
Director, Nowell Stone and The Database Group
Professor of Marketing, BristolBusinessSchool

Email: merlin@merlin-stone.com
Web: http://www.merlin-stone.com/
Mobile: +44(0)7968+271937