Do you remember when everyone had to put in a CRM system, because that was the way to target your customers based on recent transactions with the company? Sadly many companies found it did not work for them. Its much easier to understand the needs of a distinct market sector, rather than peoples often unpredictable behaviour. After all, no-one goes round with a label saying which segment they belong to. CRM is not a bad idea, its just not easy to do.
When companies are trying to keep costs under control they need to know who needs less attention and who needs more. To send a rep when your customer only wants to phone up a call centre, not only wastes money but it can annoy them by wasting their time. Some customers, especially if they are inexperienced purchasers of your products or service may need more support, whichever sector they come from. They may not actually be the ones who spend the most. If they get good customer care then, when they are more experienced users, they should be loyal but without needing to cost you a lot to service them.
But, when you have lots of customers and they want to be treated differently how can you do it? An effective way to do this is to research a sample group of your customers. Ask them what they want from you as a supplier and how important each of these things is to them. The questions need to identify motivations, behaviours and needs of your customers.
Then you can run the results through a clustering package to identify groups with behaviours and needs in common. However, the most challenging stage is to then allocate the rest of your customers to one of these segments.
Another challenge comes because they may not remain in the same segment throughout your dealings with them. This needs buy-in from staff as well to make it work. And this needs to be handled particularly carefully.
Leading Edge has a specific analysis methodology called SCAN (Segmenting Customers According to their Needs). With sophisticated clustering analysis we can help you to re-define your markets into new segments of customers that can be targeted according to their specific needs. The research will identify the type and form of service mix that each segment will want which can transform the way you look at the market. It is based on rigorous statistical sampling and an analysis of the target market. A well defined CRM system will help you to maximise revenue and optimise your cost base.
Case Study Plant hire customers don't all want the same service levels
The plant hire market is a notoriously tough market. The major player in the specialist equipment hire market had reorganised its sales operation to put its best salespeople in front of customers who want advice and generate the best margins. The company had then set up a new call centre to handle others who like dealing by telephone, and are more price focused.
This change came about because this plant hire company had speculated that not all its customers wanted to be treated the same. It realised that if this was so, it could develop its customer service offering to remain ahead of the competition. Having this centrally controlled team would save the company money, while increasing its effectiveness. It asked Leading Ege to put forward a segmentation based on customers motivations, behaviours and needs.
To do this, we conducted 310 interviews across their base of current and lapsed customers. The data was run through SPSS clustering software, which revealed five groups with common behaviours and needs. These were given descriptions, so that new accounts and existing customers on the company's database could be classified. The research showed that one group needed a lot of support into the choice of equipment for different uses, and extra help when choosing the most cost effective bit of equipment for the job.
However another cluster of customers was more at home choosing their own equipment and needed little support, just low prices. It made sense to reduce the cost of servicing this group by using a call centre, and to put the extra resources into the first group. These could then be while charged more for the service.
The analysis showed the company how it could classify the remainder of the contacts on the companys database. To ensure that each contact was correctly allocated to the most appropriate segment, the reps then asked what service level each customer wanted at the next point of contact.
The research has not only led to a re-organisation of the sales activity, but will form the basis of a new marketing-driven Customer Relationship Management system.
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