It is official, 2005 is the Year of the Customer. And as far as I'm concerned, it's about time. I cannot remember a year when so many high-profile brands committed their TV spend to customer marketing. There has been a step change in strategy and it is clear that customers and their value have never had such a high priority.
Customer marketing may be new to our advertising cousins, but we would be short-sighted not to realise that it is new to a great many people in direct marketing. While building our agency, we have interviewed and met many people who have spent their entire careers in direct marketing but have only been involved in prospecting and acquisition. This seemed strange at first but, on reflection, there has been such an appetite for volume over the past ten years that prospecting for new customers has taken precedence over value and, more importantly, realising and retaining that value.
But hang on, I hear you cry. Surely in the past ten to 15 years we have taken greater strides forward in customer relationship management than at any other time since the days when the butcher, the baker and the candlestick-maker knew all their customers' names and needs by heart? Well, yes and no. There is no doubt that we have sophisticated software that makes the management and segmentation of customer data an art form. And some organisations are embracing this opportunity, re-engineering or building their businesses accordingly and reaping the benefits.
However, we as an industry must ask ourselves whether we have been quick enough to see the potential of the tools at our disposal. Yes, agencies have invested heavily in data planning and analysis. We have advised our clients on the best ways to collect customers' data - what to ask and when, how to store it and how to keep it clean and usable. But, having proved we know how to collect it and hold it, have we shown that we know what to do with it?
In truth, we know we haven't used this data well. Customers also know we haven't used it well. Over the past decade, we have asked our customers to tell us more about their lives, their loves, their needs and what they want from us. They expect us to do this and they are happy to provide the information if they see a value in doing so.
We live in an era of exchange-based relationships: if I tell you this, what will I receive in return? Customers know that we will use the information they give us to communicate with and market to them. What irks them is when we ignore this information and continue to communicate as if we have no idea who they are or what they bought.
To break it down, all too often we are guilty of treating our customers like prospects - or of not recognising the difference between the two.
Of course, some sectors are guiltier of this than others and, indeed, in each of those sectors we will all be able to cite examples of organisations that get it right. Sadly, though, I fear a significantly higher number of organisations do not make the grade.
So, what do we do? And, more importantly, what role should DM agencies play? I applaud the brands that move their spend away from high-profile brand-building advertising and choose instead to reach out to their customer base. But I can't help thinking that this decision throws up an interesting challenge.
If brands "lead with their chin" - if they are prepared to commit large portions of their marketing budget to highly visible customer-based stories in mass-target media, such as TV, press and outdoor - then we must make damned sure the direct communications that follow meet expectations.
We know already that having been seduced by a brand's promises, customers often feel disappointed by the direct communications that follow. If the promises that seduce them are specifically about customer service, then the potential to disappoint can only increase. In this situation, there is a real danger of high churn levels.
We have all talked at length to our clients about the importance of the customer and the difference between a short-term volume strategy and a long-term value strategy. Now let's get more specific.
The barriers that prevented relevant, segmented customer communications are now easier to overcome. Digital print and electronic media are bringing down the cost of producing truly personal customer communications. And CRM software, which was once exorbitant, is now available in off-the-shelf packages.
Direct marketers have long waxed lyrical about the concepts of "loyalty", the "customer journey" and "moments of truth". That said, the rules of direct marketing were largely built on prospecting. It is time to use intellectual rigour to answer the toughest questions in customer marketing.
How do we migrate customers to the right products for them and for the business? Do we really know why people are loyal? Who are my valuable and vulnerable customers? How and when should I talk to them? Who are my next most valuable and vulnerable customers? Which moments of truth in the customer journey have the biggest impact on customer profitability and defection? And what can DM do about them?
Only when we can answer each of these questions should we look to creativity to help us execute our thinking in the most compelling way. And here, too, we may find that we need to rethink our approach if we are to create brands that sell. I mean, whatever happened to copywriting? Perhaps that's a discussion for another day.
- Chris Whitson is the planning partner at Stephens Francis Whitson.