Mike Parris, managing director of Magna Rewards Caribbean Ltd., believes not enough businesses in the Caribbean are thinking about the value of customer data. - File Jacqueline Jones, Guest Writer
With events such as the liberalisation of key industries within the Caricom market, competition has grown rather fierce, especially in the financial services, tourism and the telecommunications industries.
In Jamaica alone, there are more than 100 financial services providers and over 300 hotels and resorts.
Having a firm grasp on the needs of your customers and being able to deliver service efficiently to your most profitable segment is absolutely critical.
Today, developing and implementing an effective customer relationship management (CRM) programme offers one of the most impactful ways to significantly boost the bottom line.
The latest edition of 'Harvard Business Review on Customer Relationship Management', offers many examples of companies - such as Marriott International, 3M and Microsoft - that have used CRM to reinvent themselves and fend off competition.
One of the largest implementors of CRM solutions worldwide, salesforce.com, cites many case studies that show how customers have employed management and technology systems and have achieved results:
E-LOAN.com's CRM solution has led to more satisfied customers, allowing E-LOAN to enjoy 95 per cent customer satisfaction ratings;
International hotel chain, Hotel Nikko, increased sales opportunities by 150 per cent, achieved a 110 per cent increase in the win rate and shortened the sales cycle by five days (7 per cent);
Companies, such as Staples are using CRM systems such as 'Salesforce Gold Support' to provide around-the-clock access and quick response times for high-value Staples users - leading to the chain's phenomenal growth.
CUSTOMER INSIGHT
Essentially, CRM helps a business to gain an insight into the behaviour of their customers, and identify ways to capitalise on improved customer relations.
In the Caribbean, the emphasis on CRM has grown substantially over the past few years, especially in the financial services industry.
Many banks are beginning to upgrade systems and consolidate databases, to provide a useful 'master view' of the customer and associated products.
Several have also started to integrate sales and marketing campaigns, with links to the actual results that they generate.
"In the United States, the financial services industry was one of the leaders in the adoption of CRM because, for decades, it has been faced with market consolidation, increased competition, distribution channel changes and increasing customer expectations," says Margaret Young of MillSquare, a management consulting company based in the US.
"Thus, the financial services industry has been a pioneer in identifying and understanding the behaviours and needs of their customers."
Young, who consults regularly to Fortune 500 companies such as American Airlines and Bank of America, further highlights the fact that other industries, such as tourism, now face the same external challenges.
SUPERIOR UNDERSTANDING
These industries are now forced to embark upon CRM as a critical imperative to increase existing customer revenue and better acquire new customers by demonstrating a superior understanding of their needs.
In tourism, an example is a recent initiative launched by the governments of Trinidad & Tobago and Barbados, in association with Prism Services.
In this project, the travel and purchasing patterns of tourists were analysed. The result was the creation of new services and promotional offers - involving special promotions on airline, car rental, hotel, retailers and shipping services.
Analysing customer information is the key to determining the answers to the following key questions:
What are our customers' purchasing habits, opinions and preferences?
How can the profiling of individuals and groups help our company increase sales?
How can changing the way we operate help us improve customer service and marketing?
"Not enough businesses in the Caribbean are thinking about the value of customer data in growing their business," says Mike Parris, managing director of Magna Rewards Caribbean Limited. "To drive sales, many retail businesses are using a very non-strategic approach of discounting heavily, rather than mining the customer data and analysing spending patterns."
Parris recommends that businesses should be looking at three levels of reporting on customers - acquisition, retention and optimisation.
Interestingly enough, he has observed that, in the Caribbean, some retailers focus on the classic four Ps of marketing - promotions, price, place, and product management - without a thorough analysis of customer behaviour and spending patterns.
The results are short term decisions, such as discounting, that erode the company's profit margins and long-term viability.
However, there some retailers who have started to approach the problem in a more strategic way.
A leading supermarket chain in Barbados recently launched a project to further analyse the customer 'basket', and implemented recommendations, such as targeted direct mail campaigns, which are based on the findings.
The results have been higher revenue and profits. Not only has the chain increased sales by targeting specific segments of customers with promotional offers, it has also increased its operational efficiency by grouping seemingly unrelated items in the supermarket.
The store is now structured on how its customers make purchases. "If you are willing to analyse the data to develop customer insights, and be creative, there are hundreds of ways that you can produce value," Parris said.
Jacqueline Jones is managing director of Knowledge Works Consulting, official distributors for Harvard Business School Publishing in the Caribbean. Email: jjones@kworksconsulting.com
