CDI:  The CRM Dance and Steps Every Marketer Must Learn

By Michael Lowenstein

Michael Lowenstein, CPCM, is managing director of Customer Retention Associates, a customer and staff loyalty program development, research, and consulting firm located in Collingswood, New Jersey (www.customerloyalty.org).

With over thirty years’ management and consulting experience in customer and staff loyalty research, CRM, loyalty program development and refinement, customer win-back, service quality, customer-driven corporate culture, and strategic marketing and planning to draw on, he is an active speaker, workshop facilitator, and trainer, and he is a regular featured contributor to three customer loyalty newsletters.  His keynote, general session speaking, and workshop facilitation assignments have been in the United States and Canada, Europe, South America, and Africa.  He also provides expert customer loyalty commentary and articles for several professional CRM sites on the Internet.  

Michael is the author of two widely-regarded books:  Customer Retention: Keeping Your Best Customers (1995), and The Customer Loyalty Pyramid (1997).  He is also co-author of Customer WinBack: How to Recapture Lost Customers – and Keep Them Loyal (2001).   Additionally, he is a contributing author to Redefining Consumer Affairs (Society of Consumer Affairs Professionals, 1995), The Answer Book for Customer Service Managers (Bureau of Business Practice/International Customer Service Association, 2000), and Customer.Community: Unleashing the Power of Your Customer Base (Jossey-Bass, 2002)

He has been a customer loyalty instructor for Pennsylvania State University and the American Management Association; and he holds an M.B.A. degree in marketing from the University of Pittsburgh, and a B.S. degree in economics and marketing from Villanova University.  He is listed in several international, national, and professional Who’s Who directories.  His clients include First Union, Toyota, Prudential, Westvaco, Cigna, Charles Schwab, Borg-Warner, Sygma, Comcast, Baptist Health Care, Metropolitan Life, Microsoft, Alliance of Community Health Plans (ACHP), Daimler-Chrysler, and Georgia-Pacific.  

Customer Retention Associates specializes in helping clients optimize customer loyalty and value through customer and staff loyalty research, loyalty program development and refinement, loyalty action training for front-line staff and management, and customer save and win-back protocol development.  The company is a founding member of the CRM International Consortium (CRMIC), an affiliation of independent CRM and customer loyalty practitioners from around the world, which is based in Europe.  The mission of CRMIC is to offer leading-edge customer loyalty and value solutions.

Over the last two years, marketers have been wondering what CRM is really all about; and they have invested billions of dollars trying to find out, and trying to make the ‘holy grail’ promise of CRM work for them.  Essentially, though, CRM whittles down to this:  Creating customer-centric discipline, on a company-wide level, and a set of processes and methods which enables marketers to enhance communication and relations with customers.  The objective:  Hopefully building and sustaining sufficient value that they get most, if not all, of the customers attention, commitment and expenditures for the product or service offered.

Succeeding at CRM is sort of like learning, and then using, all the dances the customer knows, when and how the customer wants them to be used.  When the music starts, the customer leads, and then constantly creates new steps as the dance proceeds.  In relationships with customers, it’s true what the philosopher Heraclitus said:  “There is nothing permanent except change.”   The customer calls the dance.

If you’re a supplier, you’ll quickly discover that the customer doesn’t really care what dances you know and steps you’ve perfected.  The only thing that counts is having sufficient awareness of every dance and step the customer knows, and then responding to (and anticipating, if possible) the customer’s step patterns for each.  This is equivalent to customer database and database application.

Having looked at the customer’s arsenal of dance steps and gotten some sense of how the customer actually uses them, this naturally brings us to an often ignored element of the dance:  CDI, or customer data integration.   CDI isn’t just another set of letters consultants dredge up to confuse everybody.   This is where information from the data sources – all the steps from all the dance styles – are brought together to create a single, integrated view of the customer.  In surveys, Forrester Research has found that, while 92% of companies say having an integrated customer view is critical or very important, only 2% have fully achieved this and only 10% have even partially met this goal.

The problem is that, even with faster computers and better processing methods, CDI technology hasn’t really evolved much in the past 15-30 years.  Most companies, large and small, are still using traditional merge/purge technology for customer segmentation.  Related problems are data quality and completeness, the accuracy of both content and grouping (customers and activities), and the speed of data access.  After all, if a company makes the effort to obtain high quality customer data, but it takes weeks or months to pull it out of the system to formulate programs, how effective can the efforts be?

Some companies, however, have solved – or, at least, are solving – the complexities of managing CDI.  Here’s an example.  It’s Royal Bank of Scotland.  They were profiled
briefly in our latest book, Customer WinBack, but they’ve gone well beyond their early value-centric relationship programs with good customer data and good data management integration methods. 

Royal Bank has 3.3 million customers, so there are definite scale challenges.  Through advanced customer research techniques and integration methods, they’ve found that their customer base doesn’t break out into neat segments.  As a consequence, they’ve modified one-to-one approaches to build customer groups from an individual basis.  Their head of marketing operations, Ian Wilson, has said:  “We think customers fall into groups for certain things but can be in more than one group at any one time.”

They’ve used a software solution that enables Royal Bank’s marketers to execute personalized, multi-channel offers to individual customers.  First, they test creative material on representative customer groups.  When trigger criteria have been met, they can send out a print campaign to relevant customers within 48 hours.  Three or four years ago, most of their mailings were to 300,000+ customers per program.  Now, the average print run is 20,000.  For event-driven promotions, as few as four or five people can be included in a mailing.

Wilson has found that their most relevant and timely campaigns can elicit previously unheard of response rates of 75%, or more.  He’s concluded:  “We are trying very hard to move from a traditional product push to a customer requirement approach.”  Their success depends, absolutely, on effective CDI.  Royal Bank knows customers’ dances and steps, and they’re making the most of this insight.  Other marketers would profit by following their lead.