Number Crunch not Credit Crunch!

As the old adage goes, it costs five times more to recruit a new customer than it does to keep an existing one. As a result, now seems like as good a time as any for us all to look inwards at how effectively we manage our existing customer relationships.

The need to do this will vary by sector and business. Supermarkets, Travel Companies, Mobile Networks, Car Dealerships and so on, each have an incentive to maintain a relationship with their clients; by understanding them better, they can drive increased revenues from their lifetime value.

Businesses offering a one-off product or service have the unfortunate disposition of having to constantly recruit new customers and so understanding their customers is less important – I wonder if their pockets are 5-times deeper?!

Once you have an understanding of your customer it’s easier to customise relevant offers to fertilise their loyalty and, as a first step, this should be the short-term objective of the number crunch exercise – understanding your customers.

To do this you need to centralise all the information you have for your customers across every touch-point. If they transact via the web, a call centre or in-store, this information is a must have. If you’ve communicated offers to them historically, this too is a must have. If they’re involved in a dispute or have historically lodged a complaint against the service they received, this too is a must have.

Once all this data is stored centrally, it’s important to decide what you want to achieve from the data; set some objectives and mine the data accordingly. If you were to set a number of campaign objectives to drive uplift in sales, you can ask questions of the data to extract the relevant customers. When do they enquire or purchase, what’s the lead-time between the 2, how much do they spend, what products do they buy, at what time of the year, at what time of day and how often.

Once you have all this data you can build loyalty by re-engaging customers on their level. This is where the true value of an existing customer comes to light and, if properly managed, this could add significant value to the bottom line of a business during times when opportunities may be thinner on the ground.

There’s more to consider such as profiling customers, comparing each of the subsets, deciding the mix of communication, the offers, the creative, they each play an important role but, as a first step on the road to engendering customer loyalty, crunching the numbers should be objective number 1.