Chapter 4 Identifying Customers
It wasn’t raining when Noah built the Ark.
Before any relationship can start, both parties have to know each other’s identi- ties and be able to build a comprehensive view of the other. The goal of iden- tifying customers refers not so much to figuring out which customers we want (that comes later) but to recognizing each customer as that customer each time we come in contact with her and then linking those different data points to develop a full picture of each particular customer. This chapter addresses the issue of “identify” for consumers as well as for business customers and defines the different elements of this “identify” task. We also address frequency market- ing in the context of customer identification.
All enterprises use information about their customers to make smarter decisions. But for most traditional marketing decisions and actions, information is really
needed only at the aggregate, or market, level. That is, any marketer needs to know the average demand for a particular product feature within a population of prospec- tive customers, or the range of prices that this market population will find attractive. The enterprise then uses this information to plan its production and distribution as well as its marketing and sales activities.
But building relationships with customers necessarily involves making decisions and taking actions at the level of the individual customer, using customer-specific information in addition to information about the aggregate characteristics of the market population. This is because a “relationship” inherently implies some type of mutual interaction between two individual parties. We cannot have a “relationship” with a population or group but only with another individual. So the competitor trying to win with superior customer relationship strategies needs first to know the individual identities of the customers who make up the traditional marketer’s
Managing Customer Experience and Relationships: A Strategic Framework, Third Edition By Don Peppers and Martha Rogers Copyright © 2017 by Don Peppers and Martha Rogers, Ph.D.
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aggregate market population. Then the enterprise will make different marketing, sales, distribution, and production decisions, and take different actions, with respect to different customers, to create better experiences and increase customer value, even within the same market or niche population.
We can see this in action. Husband asks wife if she saw the additional stories about gun control suggested on the New York Times Web site they each read that morning on their own computers. Wife answers with a laugh that those were the extra stories offered to him; she had seen suggestions for stories about stock market prospects in China. The items advertised were different, too, of course.
Individual Information requires Customer recognition
The essence of managing customer relationships is treating different customers dif- ferently; therefore, the first requirement for any enterprise to engage in this type of competition is simply to “know” one customer from another. However, identifying individual customers is not an easy process, and too often not a perfect one. It was not that many years ago when a British utility launched a December promotion to acknowledge its very best customers by mailing each of them a holiday greeting card. To the astonishment of its management, nearly 25 percent of these cards were returned to the company unopened in January. Apparently, many of the firm’s “most valuable customers” were actually lampposts. Until that time, this company’s man- agement had equated electric meters with customers, comfortable in the knowledge that because they tracked meters, they also tracked customers. But lampposts don’t read mail or make decisions.
Most enterprises will find it difficult simply to compile a complete and accurate list of all the uniquely individual customers they serve, though some businesses and industries are more naturally able to identify their customers than others. Consider the differences among these businesses, and consider the advantage that would accrue to a company that’s able to identify individual customers and recognize each one at every contact:
■ Telecommunications companies sell many of their services directly to end-user consumers. After all, to bill a customer for her calls in any given sales period, a phone company’s computers must track that customer’s calling activities— numbers connected to, time spent in each connection, day of week, and time of day. But even a cell phone company will likely make some sales to prepaid customers whose identities it can’t actually learn, because they buy their top-up cards in convenience stores or through distributors, and often prepaid custom- ers want to maintain their anonymity. Such a firm may also serve a number of corporate clients whose end users are not specifically identified. And some service providers offer friends and family deals that mean one name stands for half a dozen human customers.
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■ Retail banks must know individual customer identities to keep track of each customer’s banking activities and balances. Historically, banks have been orga- nized along lines of business, with credit cards, checking accounts, and home equity loans processed in completely different divisions. As a result, informa- tion about whether a branch banking customer is also a credit card customer often has not always been readily available to either separate division. More and more banks are recognizing the need to coordinate and integrate informa- tion across product divisions, to produce a complete relationship profile of the customer accessible to all divisions in real time.1 Westpac New Zealand Bank is using Bluetooth beacon connections and biometrics such as fingerprints along with traditional account numbers, ATM cards, and caller ID to identify customers in a way that delivers the most complete real-time picture of cus- tomer interaction with the bank. In addition, all banking products used by the customer (such as mortgages, retirement, checking accounts, investments, etc.) are tracked in one customer profile. While this capability is available at more and more financial services institutions, the goal for Westpac goes a step further; they want employees to use that data to anticipate individual customer needs.2
■ Consumer packaged goods companies sell their grocery and personal care prod- ucts in supermarkets, drugstores, and other retail outlets. Although their true end customers are those who walk into the stores and buy these products, there is no technically simple way for the packaged goods companies to find out who these retail consumers are or to link their individual identities with their buying histories, except in some cases by using a “loyalty card” or other information- collection program. However, EdgeVerve offers a suite of services called Con- sumer Connect, a sensor-based way for retailers and consumer packaged goods
1 Bernhard Warner, “How One Retail Bank Is Using Digital Tools and Real-Time Data to Strengthen Customer Relationships [Photos],” Forbes, September 24, 2015, available at http:// www.forbes.com/sites/ibm/2015/09/24/how-one-retail-bank-is-using-digital-tools-and-real- time-data-to-strengthen-customer-relationships-photos/, accessed February 4, 2016; Tibco Software, Inc., “Achieving Customer Centricity in Retail Banking,” 2006, available at www .tibco.com/multimedia/solution-brief-achieving-customer-centricity-in-retail-banking_tcm8– 2434.pdf, accessed September 1, 2010. 2 Warner, “How One Retail Bank Is Using Digital Tools and Real-Time Data to Strengthen Cus- tomer Relationships [Photos]”; IBM.com/wild ducks podcast with Bernhard Warner and West- pac New Zealand’s Simon Pomeroy, “Digital Tools and Real-Time Data Are Turning Banking Upside Down in New Zealand,” September 22, 2015, available at https://soundcloud.com/ ibmwildducks/09-how-one-retail-bank-is-using-digital-tools-and-real-time-data-to-strengthen- customer-relationships, accessed February 4, 2016; and Tony Danova, “Beacons: What They Are, How They Work and Why Apple’s iBeacon Technology Is Ahead of the Pack,” Business Insider, October 23, 2014, available at http://www.businessinsider.com/beacons-and-ibeacons- create-a-new-market-2013–12, accessed February 4, 2016.
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companies all to monitor and share information about customer movement and what is bought off store display shelves by whom, in real time, if customers have given their individual permission.3 SK Telecom has also recently released Smart Shopper, an omnichannel marketing platform that allows “cartless shopping.” Upon entering the store, customers can use a special barcode scan- ner to add items to their virtual shopping cart. To check out, they confirm and pay for their purchases at a self-checkout counter, and the items will be deliv- ered to their homes at a designated date and time.4
■ Insurance companies can nearly always tell you how many policies they have written, but many still cannot tell you how many customers they have or even how many households or businesses they serve. This is changing, of course, as more and more insurance companies recognize the need to base the organiza- tion and the reward structure for policy sales on customers.5
■ A computer equipment company selling systems to other companies in a busi- ness-to-business environment may be able to identify the businesses it is selling to, but it is much more difficult for the firm to identify the individual players who actually participate in each organization’s decision to buy, and then to repurchase. Yet within any business customer it is these players—decision makers, influ- encers, specifiers, approvers, contract authorities, purchasing agents, reviewers, end users—with whom the selling company should be developing relationships. Thus, some Web-based selling and contact-management tools are now able to help keep this information in a way that’s useful to the selling company.6
3 For more about Consumer Connect and its TradeEdge technology, see EdgeVerve’s com- pany Web site at https://www.edgeverve.com/tradeedge/offerings/pages/merchandising- audit-tools.aspx, accessed February 4, 2016. Consumer Connect was originally released by Infosys as Shopping 360: see Infosys press release, “Infosys Technologies Launches Break- through Services for Retailers and Consumer Packaged Goods Companies,” Bangalore, India ( July 31, 2008), available at: www.infosys.com/newsroom/press-releases/Pages/launches- breakthrough-services-retailers.aspx, accessed September 1, 2010. 4 “SK Telecom Unveils the Future of Shopping at Mobile World Congress 2015,” press release, February 25, 2015, available at http://www.sktelecom.com/en/press/detail.do?idx=1103, accessed February 4, 2016. 5 “Playing for Keeps: How Insurers Can Win Customers One at a Time,” PricewaterhouseCoopers, FS Viewpoint, July 2014, available at https://www.pwc.com/us/en/financial-services/publications/ viewpoints/assets/fs-viewpoint-insurance-customer-service.pdf, accessed February 4, 2016; “Reimagining Customer Relationships: Key Findings from the EY Global Consumer Insurance Survey 2014,” Ernst and Young Global Limited, available at http://www.ey.com/Publication/ vwLUAssets/ey-2014-global-customer-insurance-survey/$FILE/ey-global-customer-insurance- survey.pdf, accessed February 4, 2016; and Nadine Gatzert, Ines Holzmuller, and Hato Schmeiser, “Creating Customer Value in Participating Life Insurance,” working papers on Risk Management and Insurance, no. 64, Institute of Insurance Economics, University of St. Gallen (January 2009). 6 Marco Nink and John H. Fleming, “B2B Companies: Do You Know Who Your Customer Is?” online Gallup Business Journal, November 22, 2014, available at http://www.gallup.com/ businessjournal/179309/b2b-companies-know-customer.aspx, accessed February 4, 2016.
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■ Carmakers, as well as state and local governments, have for decades recorded the current owner of each registered automobile by the vehicle identification number (VIN), visible through the front window of any car. However, even though the owner of each car can be determined this way, the cars belonging to each owner cannot. More recently, carmakers have created smartphone apps that allow customers to digitally access their owner’s manual, dealership service options, and appointment reminders, and control remotely certain aspects of their car, in exchange for their contact information, car make and model, and permission to collect data from their device.7
■ Cable and media entertainment companies often have unknown customer prospects use their website. How does the company actively reengage a cus- tomer after she leaves the site if it doesn’t know who she is? Some companies are implementing customer data technology to identify that Web site visitor, determine whether she is a hot prospect, and send a follow-up e-mail specific to the interest of that individual customer.8
Identifying customers, therefore, is not usually very easy, and the degree of dif- ficulty any company faces in identifying its own customers is largely a function of its business model and its channel structure. But to engage any of its customers in rela- tionships, an enterprise needs to know these customers’ identities. Thus, it must first understand the limitations, make choices, and set priorities with respect to its need to identify individual customers. How many end-customer identities are actually known to the enterprise today? How accurate are these identities? How much duplication and overlap is there in the data? What proportion of all customer identities is known? Are there ways the enterprise could uncover a larger number of customer identities? If so, which customer identities does the enterprise want to access first?
7 Examples include the MyChevrolet app, Nissan Leaf app, and the BMW i Remote app. See Eric Holtzclaw, “How to Collect Personal Data without Angering Your Customers,” Inc., August 22, 2013, available at http://www.inc.com/eric-v-holtzclaw/how-to-collect-personal-data-with- out-angering-your-customers.html, accessed February 4, 2016; “BMW ConnectedDrive and BMW i Remote App World Premiere: Apple Watch Controls Functions of BMW i Models,” April 24, 2014, available at https://www.press.bmwgroup.com/global/pressDetail.html?title=bmw- connecteddrive-and-bmw-i-remote-app-world-premiere-apple-watch-controls-functions- of-bmw-i-models&outputChannelId=6&id=T0214583EN&left_menu_item=node_5238, accessed April 22, 2016; Farzad Henareh, “What Can Car Manufacturers Learn from Retailers?” MyCustomer Blog post, December 15, 2014, available at http://www.mycustomer.com/blogs- post/what-can-vehicle-manufacturers-learn-retailers/168766, accessed February 4, 2016; and Richard Barrington, “Hard Lessons from CRM Experience: Six Mistakes to Avoid,” VendorGuru white paper; available at www.vendorguru.com, p. 4, accessed February 2, 2010. 8 Martha Rogers, Ph.D., Rashmi Vittal, and Tom Hoffman, “Omnichannel Identities: Connecting Marketers with Real People,” webinar by 1to1 Media and Neustar, September 24, 2015, avail- able at https://www.neustar.biz/blog/webinar-omnichannel-identities-connecting-marketers- with-real-people, accessed February 4, 2016.
124 IDIC process: a Framework for Managing Customer relationships and experiences
With the explosion in customer touch points, slight variations in a customer’s profi le can easily result in fragmented data about that customer. Furthermore, the data is constantly in fl ux. According to Neustar, each year,
■ 75 million Americans change phone carriers. ■ 45 million change phone numbers. ■ 40 million relocate. ■ 2.1 million legally change their names.
Meanwhile, with rising privacy rules, publicly available information on individu- als is declining, and therefore it’s harder to use public data to create and maintain a customer’s information fi le. 9
Step 1: how Much Customer Identifi cation Does a Company already have?
To assess more accurately how much customer-identifying information it already has, an enterprise should:
■ Take an inventory of all of the customer data already available in any kind of electronic format. Customer identifi cation information might be stored in sev- eral electronic places, such as the Web server, the contact center database, or the cloud storage of the mobile app program.
■ Find customer-identifying information that is “on fi le” but not electronically compiled. Data about customers that has been written down but not electronically recorded should be transferred to a computer database, if it is valuable, so that it will be accessible internally and protected from loss or unnecessary duplication.
Only after it assesses its current inventory of customer-identifying information should a company launch its own programs for gathering more. Programs designed to collect customer-identifying information might include, for instance, the purchase of the data, if it is available, from various third-pa
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