The struggle with customer intimacy
Trends in marketing & sales
Whole libraries have been filled with marketing and sales advice from scientists and gurus. You’d think that organisations would know by now what works and what doesn’t. So, is there still any scope left for research in this area? “Despite all the research that’s been carried out over the years, many organisations still struggle with customer intimacy or customer centricity,” says Professor Marion Debruyne. Why is this? And what are the other challenges in marketing and sales? Professors Marion Debruyne, Frank Goedertier, Steve Muylle, Deva Rangarajan, Bert Weijters and Gino Van Ossel share their views.
From left to right: Gino Van Ossel, Frank Goedertier, Bert Weijters, Deva Rangarajan, Marion Debruyne and Steve Muylle. Sitting down: Philippe Baecke
Customer centricity has been at the top of most companies’ agendas for quite some time now. Why is it still an issue? Marion explains: “In a nutshell, customer centricity isn’t only about marketing or sales; it involves the entire organisation and all business processes. It’s just not easy to get everyone singing from the same hymn sheet. Also, companies operate in a rapidly changing environment with new technologies constantly emerging. Through the internet and social media, consumers have become empowered and are therefore more demanding. It may be difficult for some companies to keep up with the pace of change.”
Marketing has become multi-channel
Steve picks up on this point: “Digital technology has changed the face of marketing and sales in both B2B and B2C environments. A multi-channel approach has become the norm. Most banks, for example, offer a combination of e-banking, phone banking, ATMs and branches. They advertise using a mix of media including print, e-mail, internet, radio and television. But with marketing and sales budgets increasingly under pressure, companies are having to do more with less. That’s also why we’re seeing a shift from offline to online channels.”
Deva nods in agreement. “Personal sales is probably the most expensive channel if you factor in the overhead costs of every individual sales agent. Companies are looking for ways to make their sales force more effective - to be close to their customers yet remain profitable. For that, they have to find the right salespeople. In Europe we don’t have a tradition of sales education as they do in the US, so we want to fill this gap in the market. As companies reach out to their customers through different channels, they face another challenge, which is to coordinate these channels and to ensure that the message is consistent right across the board.”
The question is why?
“I’d like to come back to the point Steve made earlier about digital technology,” says Bert. “The key question a company should ask before rushing headlong into a new technology is what they want to achieve with it. Why provide online banking? To reduce costs, to enhance customer satisfaction or both? If you don’t take time to reflect on the purpose of a new technology, it may well turn out to have the opposite effect. Also, digital technologies have made it possible to generate and store huge amounts of data. So much so that at one point it was thought that market research was on its way out. Why bother if you have the data? But it’s one thing to know that consumers are using your online sales channel; it’s even better to know why they use it. For companies to be able to make the right choices, it’s important that they know why people do what they do. So, there’s still plenty of scope for research. Recently Deva and I investigated the use of self-scanners in supermarkets. Why do people use them, why do they try to avoid them? Who uses them? Supermarkets have introduced this technology mainly to reduce costs. But we also found that some customers quite like self-scanning because they have the impression that it makes their shopping experience more efficient – even if the time gained is minimal.” Bert also sees the growing importance of segmentation in data analysis according to characteristics such as age, gender, income, etc. “Our research for the BNP Paribas Fortis Chair in technology banking is a good example.”
Think before you tweet
Marion: “That’s a very important point you made there about companies jumping on the technology bandwagon without a clear vision. It’s a risk we also identified in our research for the Swift Chair. We investigated how companies use crowdsourcing and co-creation to involve their customers in the development of new products and services. These are ways to enhance the focus on the customer and to improve customer intimacy. Anyway, there are all sorts of tools and technologies companies can use nowadays to support co-creation with customers – or suppliers for that matter. But for crowdsourcing to really add value, it’s important that it’s embedded in a company’s innovation strategy and development process.”
“Exactly,” agrees Steve. “Any technology should be embedded into the culture and processes of an organisation. If it’s just an add-on, then it’s pointless. If your communication policy is such that each tweet has to go through seven levels of approval before it’s published, then don’t bother. And if just a few people in the back-office who have no contact with the rest of the marketing and sales organisation are allowed to tweet, than Twitter won’t add much value to your marketing mix.”
Everyone is famous
But the march of technology is unstoppable. Social media and online communications have a huge impact. Arguably one of the most exciting projects that we’re involved in is PARIS. Steve again: “PARIS is short for Personalised AdveRtisements buIlt from web Sources. Whenever you browse the internet or use social networking sites such as Facebook you leave a trace – by posting messages, uploading images and videos, or by indicating you like something. Together with University College Ghent and the universities of Antwerp, Ghent and Leuven, we’ll be investigating how companies might use this data to personalise their ads. One of the objectives of this project is to develop a demonstrator to show how it might work.” Enthusiastically he adds: “You can imagine there’s a lot more to it than meets the eye. The interpretation of user-generated content is not as straightforward as it might seem. Blogs, forum postings and tweets are full of spelling errors and grammatical mistakes, abbreviations and phonetic writing. Standard linguistic algorithms are trained to analyse well-formed texts. There’s a similar problem with images. The existing methods for people or object recognition aren’t sophisticated enough to be applied to images that aren’t of professional quality. And we’re also concerned about compliance with privacy legislation and intellectual property rights, of course.”
Will people like this? Frank: “That’s a question worth asking. We’ll be investigating what people accept, what they object to, and why. Several companies support the project and together we’ll be developing test campaigns to determine where people draw the line and on what terms. People might be willing to give up their privacy in exchange for a discount, for example.”
Help! I can’t choose
“It’s walking a tightrope,” Marion adds thoughtfully. “Personalised advertising may deepen customer intimacy, but companies must take care not to cross the line. Also, customisation contributes to customer satisfaction, provided it doesn’t complicate things to the point where you don’t know what to choose any more. I really don’t want to have to make 35 decisions before I’d get my customised coffee at Starbucks.”
Frank smiles. “Overchoice, or choice overload, is another of our research topics. Overchoice occurs when the complexity of a buyer’s decision-making outweighs the advantages of diversity and customisation. For non-experts, too much information and choice can be confusing and may cause stress. Just try buying a digital camera these days! There are several ways in which companies can make choosing easier, such as decision trees for online shopping or clear, self-explanatory product names and labels such as basic, family, professional. We’ve found that these ‘choice aids’ improve customer satisfaction and we’ll be investigating whether they’re also useful for experts. They may find them patronising.”
Somewhat related to the issue of information overload is multi-sensory marketing, or multi-sensory stimulation. Frank again: “A great deal of thought has gone into the visual impact of packaging and ads. Now the focus of research is shifting towards the impact of certain choices on the other senses: touch, taste, smell and hearing. Some brands, for example, add small, unnecessary weights to their audio system’s remote controls so that they ‘feel’ more expensive. And in future we’ll go even further. The next step is neuromarketing. That is, you measure the emotional rather than the reported impact by studying the brain’s response to ads, products and environments.”
Talking about the future. What are the key challenges ahead?
Deva: “New technologies are emerging to interact and deal with the customer. iPad applications, high-definition video, all sorts of sophisticated tracking and analysis tools. A company’s success will largely depend on whether its salespeople know how to use this technology. Coming back to the topic of co-creation and crowdsourcing, I see a role for salespeople in identifying those customers with whom the company might actually co-create something.”
For Bert a big challenge is… big data. “From all parts of their organisation, companies are accumulating increasing volumes of raw, unstructured data that’s not being processed. There’s a strong demand for tools, models and new ways of thinking to cope with this data overload. And marketers will have to be able to manage big data. It looks like we have our work cut out for us, as teachers and as researchers.”
“Absolutely,” agrees Marion. “Marketers and salespeople will need new skills and competencies to be the bridge between their function and the rest of the organisation. That’s why we constantly evaluate our programmes to make sure our participants are well-prepared for the job - and we’ll continue to do so.”
Customer centricity at work
“The retail industry can serve as a great case in point,” explains Gino. “With the advent of e-commerce, many retailers were so focused on their existing business models that they simply misjudged its added value for the customer. Many feared that launching a web shop of their own would cannibalise store sales.
“But today’s winners are the smart retailers, such as John Lewis and Sephora, whose customer-centric approach allows them to grow in spite of the adverse economic climate and steep competition from pure online players such as Amazon or Asos. They are optimising the path-to-purchase in line with the needs of the shopper by creating a connected store. Or as Jamie Nordstrom, head of Nordstrom Direct, put it: ‘If we focus on the customer, the outcome will be right.’
“At Nordstrom, customers can decide whether they want to buy online or in-store. The full range, including specs, reviews and ratings can be consulted and ordered in-store. Sales associates carry a tablet computer to assist shoppers at their discretion. Goods ordered online can be returned in-store. A dress that’s out of stock in-store can be shipped to the customer’s home at no extra charge.
“Such customer-centric retailers also aim for a single view of the customer across all channels, by integrating loyalty card data, online page views, behaviour inside the store’s app as well as logins on the store’s free WiFi network. These insights are enriched with ‘big data’ analysis, including insights from the Facebook profile of the store’s fans.”
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