PrintCustomers and prospects are not two different people, they are oneand the same. So why not merge them? David Reed asks how Two goals, one pot. That is increasingly the aim of companies when considering how to make their acquisition and customer retention strategies more effective. Divisions between those two areas of the business have historically been very strong. If you want a definition of siloed data, look no further than the prospect pool and the customer marketing database.
Things were little better on the supplier side. For the last decade, the provision of a prospect pool has been the key focus for data owners and data service providers alike. If they did manage to get the contract to host a customer database, it was as an entirely separate activity. Only very recently has it dawned on both parties that achieving a knowledge transfer between the insights gained into customers and the propensities of prospects could be valuable. The question now is, how do you actually deliver this and what impact does it have on thebusiness model of suppliers? Chris Mitchell has squared up to the challenge on both sides of the fence, recently at News International and now as insight development director at Huw Davis Partnership. "I would always combine the two, particularly as the customer database doesn't have much richness of information. You have name, address and transaction and very little understanding of the composition of a household and an individual's lifestyle," he says. This has long been a difficulty for companies - asking for more personal information from customers can interfere with transactions, however strong the relationship. Despite this, relatively few organisations have enhanced their customer data with third-party variables. "If you do merge lifestyle information with the customer database,you get a clearer picture. It helps you to understand why somebody bought from you," says Mitchell. The most obvious reason why a company might decide to merge the prospect and customer worlds is to understand market potential. Few businesses have a truly mass market. To understand exactly what their share is and the scale of opportunities, they need to compare their customer profile with a reference universe, whether of all adult consumers or of active businesses. A new pressure to do this is due to fast-changing behaviour in both B2B and B2C markets. While a company might see shifts in its transactional data, it will not necessarily know if a lapsed customer hasdefected to a rival or gone out of the market, for example. Paul Kennedy, head of consulting at Callcredit Marketing Solutions, provides a good example of such a shift. "Over the last six months, we have seen considerable changes to how consumers behave. For example, things they didn't previously consider to be a luxury now are," he says. In research his company carried out in February, 78 per cent of people said that a magazine subscription was a luxury and 25 per cent were considering reducing their spend in this category during the year. One impact these changes are having is on permission. "It is oneof the top three chief marketing officer concerns to get opt-in," notes Kennedy. He adds: "The old model for magazine subscriptions was to cold mail unti somebody bought. Now, it is a cycle of cold, cold, warm, convert, retain. It is a longer process to get somebody to be a customer. The change is from a drive-by to a journey." That view of the customer lifecycle radically challenges existing processes and delivery on both sides of the fence. For clients, theycan not simply acquire customers and drop them into the customer management cycle while hoping for the best. For suppliers, their data may have a role in both areas of activity or neither, depending on how proficient the client is at acquiring and managing information. Certainly the days of data owners looking to sell millions of cold records and caring little what the outcome of that marketing was are long gone. As they move deeper into customer marketing, they have to take more responsibility for how that data performs. "There is a change in thinking on the supplier side," acknowledges Colin Grieves, director of data strategy at Experian Integrated Marketing. "It is common sense because individuals don't see themselves as either a prospect or a customer." He believes that clients want to extract more value from their customers and have recognised that they need data to do so. Their first source will always be internal, transactional data. "We understandthat. But we also have a good view of the marketplace and of individuals. We can show them things they can not see on their own," says Grieves. In the past, clients have undoubtedly been inefficient in their use of third-party data as a result of keeping acquisition and retention separate. At a basic level, it has led to duplication of data rentals. "We don't want clients to buy our data twice, we want them to see a return on their investment," says Grieves. Current economic conditions are undoubtedly providing a spur for clients to look at how third party data might significantly enhance their customer information. It is also pushing suppliers and industry regulators alike to look at current boundaries and restrictions on data sharing. A prime example is in financial services where compliance issues have meant that prospect data sets can not be filtered against customer risk models until an application is made. Even though marketers know they have been hitting people who will be turned down, there hasbeen a legal barrier in the way. Equifax has been in discussion with APACS about using whole market credit data for screening. "A credit card company may have a customer who pays off their balance, so they want to offer them another product. But they could be at the limit of what's affordable and that may push them over the top," says head of consumer data intelligence, Karl- Magnus Wadsack. APACS has not been keen to allow shared credit data about customers to be applied in prospecting. To fill this gap, Equifax has launched a segmentation which brings together risk, lifestyle, lifestage and other insights into customers developed through its data sharing initiative, which is then mirrored in a fully-compliant way as a prospect segmentation. "It is the first time we have had an aligned view. It is copying insight from existing customers and applying it to prospect marketing," says Wadsack. In the opposite direction, insight into the products which prospects and markets are looking for can be used to direct cross and upsell activity towards customers. Blending knowledge in this way has been behind some service propositions which have been evolving over the last few years, rather than being rushed to market now. At Acquity, the Continuum service has grown out of conventional prospect pooling to be something more cross- functional. "What we focused on in the past was acquisition. What clients focused on was cross-sell. We evolved Continuum into that space," says data director Barry Leeson Earle. "We are now migrating customer databases into that environment where we can refresh any piece of data, prospect or customer." This is an important new concept and one with immense potential. Customer data has usually relied on direct contact to be verified and refreshed, or was only validated at the point of marketing usage. Now a client can have ongoing updates whenever a change occurs to anindividual's records. Agreeing licences with data owners for this to happen has been no easy task. Their protectiveness about records has meant they were unwilling in the past to allow data to be held in-house by clients. Acquity manages the process as a trusted agent with no data sitting on either its own or clients's systems. "We have clear auditing processes where we hold data offsite with a third party. The agreements we have with individual data suppliers mean they can audit their data when they want to. That puts their minds at rest," says Leeson Earle. Keith Jones, commercial director of Qbase, is critical of the way data owners have inhibited innovation until recently. "Clients wouldlove to have a referential universe of data that allows them to append greater depth to customers," he says. "The data industry has stood still. It needs to make it more economical for both sides." One model which his company has been pursuing is to create a neo-co- operative on behalf of clients where data licences are amortised across multiple users to reduce the price for each. By wrapping this up with a technology platform and supporting it through analytics, his company is positioning itself in the new prospect-customer lifecycle space. These are challenging times for data owners who used to run their businesses on high volume prospecting activity. They are working hard to adapt to a changed marketplace in which it is intelligence thatcommands a premium, rather than recency or volume. At Acxiom, managing director Nick Martin says: "One of the things we are seeing a lot of interest in is around a service we call 'Expediency'. It is a way of setting up a database environment so that changes in data can be identified as either a piece of hard data on an individual or as behavioural data." Clients' customer data is hosted by Acxiom and matched to its InfoBase universe using unique identifiers. When a new piece of data iscaptured, or an individual interacts with a channel that the companyis managing, triggers are set off for campaigns and contact. This finally eliminates the distinction between cold prospects and customers because it no longer matters how and where an interaction occurs. The important thing is that the company gets an opportunityto grab a potential sale when the person is in-market. Two sources,one outcome. Copyright: Centaur Communications Ltd. and licensors