The Integrated model - the essence of best practices CRM

The Integrated Model is a Gold Mine: it’s the essence of successful CRM.

In business-to-business marketing, the integrated direct marketing model is a gold mine for the marketing group that wants to build sustainable relationships with the right customers. The Integrated Direct model is the foundation of best practices Customer Relationship Management and Customer Experience Management. The economics of the Integrated Direct model come from two primary facts:

1. Marketers have come to realize that they cannot afford to invest in all customers and prospects equally. In fact, acquisition efforts should be segregated out from cultivation, retention, and “win-back” efforts. Integrated Direct Marketing – that is the integration of your “market coverage efforts (sales, marketing and service) - allows us to do that. This delivers the promise of CRM.

2. More expensive contact types, such as face-to-face or special events, can be leveraged with tremendous effectiveness by lower contact types, such as the Internet, social media, E-mail, print, snail-mail, and phone.

Here’s what the integrated direct marketing process can do for you:

1. Reduce the expense to revenue ratio by at least 15%

2. Increase the number and frequency of value-based contacts to the right prospect or customer

3. Increase the perceived service level at the point of contact

4. Increase product penetration

5. Increase customer loyalty

Additionally, in support of particular product lines, Integrated Direct Marketing ensures:

1. Faster Introduction

2. Higher amplitude of sales

3. Segmented and sustained market position

4. More control when migrating customers to newer models, products and services.

Quoting Bob Stone, long the venerable guru of American direct marketing, a definition of direct marketing must include three phrases: “interactive system,” “using one or more contact media,” and as must all direct marketing “effect a measurable response or transaction.”

Integrated Direct Marketing is not direct mail; it is not telemarketing; it is not transaction focused. The integrated direct marketing model is data-based and loyalty focused. Integrated Direct Marketing is highly targeted marketing that uses an integrated, organized, planned system of contacts by which we make offers to individuals using a variety of media. This system of building sustainable loyalty with our customers and prospects creates an on-going civil dialogue. It is accomplished by integrating communication across all contact media - print, the Internet, E-mail, mail, phone, field events and face-to-face visits from the field force. It’s defining characteristic is the delivery of relevant value. The value is defined for us by our customers and prospects. It provides for the delivery of relevant value-based information at the right time, in the desired delivery system, to the right individual that ensures interdependent relationships built over time.

This “Market Coverage” model makes use of the marketing database as the repository of corporate memory, storing the results of all interactions with customers and prospects.

In addition to simple facts such as demographics and product usage, today’s sophisticated marketers are building database systems that capture the complexity of buyers’ needs and purchasing behavior along with relevant complaint and/or satisfaction issues. The information then is available for product design groups, marketing, sales, research and other corporate functions. The database becomes the springboard for the organization’s need to be responsive, flexible, and dedicated to learning. Through the technology of our database, we are able to store response data by individual contact within an account. Moreover, we are able to measure our effectiveness relative to cost and to results. The measurability tracks profits, investments, expenses, account penetration (or, “share of wallet”), problems, issues, complaints and satisfaction.

Integrated Direct Marketing is a systematic method of getting close to our customers. Using this tool we can integrate our channel contacts and media efforts through a common database, which is focused on our target universe. Through testing we can validate results and expand our program and processes with great certainty.

The marketing database is mind of the IDM organization. It is serviced by a proactive outbound call center (or telemarketing unit), which becomes both a listening post to customers and the dealer channel as well as a way to leverage the field organization in building relationships and selling products. In the Integrated model the marketing database is shared with the field organization, your channel partners, and all internal departments.

The essence of a successful Integrated process is the ability to capture, centrally, information about our customers and prospects at all points of contact – and then to transform that information in actionable knowledge that is shared across and between those functional areas inside your firm that touch the customer or your channel partners. The key to success then is how well the marketer can segment within a given target audience. It is critical in the B2B arena to segment on similar sets of unfulfilled needs and purchasing behavior. This allows us to understand our customers’ need and how they buy and then to market our products and services to these identified niches.

Once the segments have been identified (keeping in mind that the entire target universe may emerge as one large segment), the next step to take is to grade accounts within segments to ensure that the investment made is the least amount of money to strengthen the relationship with the particular account.

The grading model is a valuation model. In the Business-to-Business world, the grading model no longer should be the simplistic A-B-C model. Instead, it should allow enough granularity to understand the profitability and penetration potential of each cohort or segment. I suggest 5 grades, although in certain cases, I believe 7 to be the optimal number of grades.

Grading (or, “valuation”) is the economic modeling of the Integrated Direct effort based upon an investment decision, which takes into, account the historical (actual) revenue and potential revenue from a particular segment of accounts. In other words, grading serves the marketer as an economic and analytical tool, which requires that we invest in the major segments we have created proportional to their economic history and potential.

Integrated direct marketing works both as a stealth defensive weapon, as well as a highly leverageable marketing tool. The competitive advantage it affords the skilled executioner is proprietary and affords increasing , not decreasing, economic returns. The fundamental concepts we use in loyalty-focused customer relationship management include:

1. Market to individuals … not to corporations

2. Address the unique set of needs of that buyer group (or application)

3. Individuals are clustered (i.e., segmented) around common sets of needs which define a market niche

4. All contacts with an individual, whether a customer or a prospect, must be of value as defined by them

5. The technology we use is transparent

6. Planning is critical

7. Testing is mandatory

8. Integration is the process used to ensure that the higher cost contacts are leveraged

9. Properly executed the integrated model creates a continuous improvement process that profitably drives business strategy by creating a sustainable atmosphere of cooperation and coordination across, and between, your company’s various functional areas.

10. The investment made is proportional to the level of commitment to us, to the expected return from this customer.