In identifying these three segments we have already crossed over the What and Why eras and now we’re definitely in the What If era because we are now going to have to do something to improve the profitability of these middle-tier people in particular because this is where we can grow revenue.
As we move into the ‘doing something’ mode we start to cross the bridge between what is becoming known as ‘CRM Analytics’ (the process we have just described) to CRM Operational – how we can set about trying to influence a person’s (customer or prospect) future behaviour, and here some examples might help.
- Ø If we predict that a profitable customer will close his business with us, we must persuade them not to.
- Ø If we predict that a person has the right profile to buy product ‘X’, we must offer the product to them to allow them the opportunity to purchase.
- Ø If we predict that opening a shop in a particular place is likely to attract profitable customers, we need to tell the local population about it and open the shop.
- Ø If we predict that an outbreak of flu is likely to happen in a specific part of the country, we must mobilise our field services AND warn the population what to do.
First, however, we must hypothesise what actions might alter specific predicted behaviours and we must remodel to see if we are correct. To do this we need to revert to our multidimensional and data mining environment to answer the following types of question:
- Ø Will removing the annual fees persuade this customer not to close his account, and if we do, will this customer remain a profitable customer to us?
- Ø Over what channel should I offer product ‘X’ to this customer? Direct mail is cheap but people like him often don’t respond – sending a rep is expensive but likely to succeed. Where is the balance?
- Ø How do I attract the right customer base to my new shop? A paper advert is broad and will get the numbers, but will it attract the ‘right’ customers? Maybe a fashion magazine advertisement will bring the right clients, but it’s much more expensive.
- Ø How do I warn the general public about an imminent epidemic? TV is easy but is expensive and really it’s only the ten- to fifteen-year-olds that are in any danger.
Answering these types of questions is necessary in order to be able to balance the cost of the operational CRM with its likely outcome in terms of revenue and margin. With no analytic capability it is always possible to advertise either to everyone or to no-one – the balance is to do something in between to justify cost with increased margin, but as I’ve said elsewhere, this is pretty difficult stuff.