We are part of the way through an exciting and revolutionary process in direct marketing, which began with the computerisation of data and the digitalisation of the telephone networks. Now, technology, in its various combinations, is leading to fundamental changes in the core relationship between businesses and their customers.
It is now 8,000 times less expensive to run a computer than it was 30 years ago. Affordable and powerful IT is playing an increasingly significant creative role in allowing marketers to maintain a competitive edge through building individual customer relationships and two-way dialogue on an unprecedented scale.
Customers are beginning to realise that they are at one end of the umbilical cord of the technology being applied to direct marketing. As television and computer technologies merge into one box, and cable, satellite and Internet penetration reach a larger proportion of households, specific individualised strategies and tailored product or service offers are being offered through a myriad of new media.
Consumers now have access to many competitive products and services, and they want enough information to feel that they can be in control of the decisions about which products or services they will buy. They are only interested in sophisticated techniques when they can see a definite benefit that makes the product more convenient and accessible. As they become more aware of the possibilities and options made available to them through technology, they expect higher standards of service and accuracy from companies, because they know it is possible.
So wise companies are using technology to research, satisfy and deliver their customers’ needs with the “best” product or service at the “best” time, as well as developing a relationship with them. As the power base in the customer/supplier relationship shifts in favour of the consumer, there is a growing recognition among marketers of the importance of data acquisition and analysis in the quest for a customer-focused competitive edge. Hence, through the combination of technology and an appreciation of the power of behavioural communications, the process of marketing and, in particular direct marketing, is undergoing an unprecedented change.
With more and more companies recognising the importance of data in developing a one-to-one relationship with customers, and using technology as the enabler, direct marketing is well placed to lead a true information revolution. By recruiting, training and empowering the people within the organisation to manage the revolution, the reward will be a significant competitive edge. The fact that there will be opportunities to exploit this advantage in the future is already clearly signposted by the emergence in the past decade of direct-led commercial success/customer satisfaction stories.
With the development and understanding of a two-way customers/company dialogue, not only does the customer benefit by getting access to what is relevant and timely information about products and services, but the company benefits by spotting any problems in its product and service offerings. This allows it to develop new products and services to fulfil the needs of an already identified set of waiting, responsive customers. This means the barriers to entry that existed in the past between different industry sectors are disappearing, making it far easier for companies to diversify when they spot a real opportunity (which is identified by careful use and monitoring of customer data). Tesco stores’ move into financial services is a good example of this diversification.
Brands, such as Direct Line and First Direct, have launched and swiftly won significant market share. We are witnessing the phenomena of companies like Amstrad and Heinz forging direct relationships with their customers, and circumventing the retailer stranglehold on their brands. As more and more companies look for customer insight to drive their communications, and to gain more predictability and accountability in their marketing strategies, it is data that emerges as the force driving the future of marketing.
The equation is: technology plus data equals profit, and what’s more, with simple predictive analysis it can be predictable profit. By identifying what customers’ needs are and the timing of those needs, a company can actually look into the future and control and identify future profitability.
Invest now in the asset of data-based knowledge, linked to the exploitation of advances in IT, and you will be at the forefront of competitive success. This is a business issue, not just IT or marketing. To embrace fully the profit opportunities that data and IT provide requires a culture change within the organisation. Everyone in the organisation must recognise what the tools are (IT and information) and use them to understand and service customers and prospects.
From a technology standpoint, it is essential that systems are developed using a phased approach. In the first instance, a detailed business specification is required, which includes interviewing key personnel about their requirements. A comprehensive data audit is also needed to identify what data is available, from where, and what it is used for.
This exercise not only starts the process of cultural change, it also enables personnel to buy into the project at its earliest stages and provide valuable information and comment. If the whole process is ultimately about generating more profit, a phased approach also allows control of the costs and a very early ability to demonstrate the return on investment. This will secure future investment to complete the project and avoids cutting the product part way through because of cold feet, or a misunderstanding of the need for a system to facilitate relationship marketing from senior management.
Probably the most important first-stage requirement for successful use of technology in the marketing environment is to allow the business decision makers and marketers immediate and direct access to the data. This means not going through the IT department, but providing real desk-top ability to interrogate the data using Windows-type, icon-driven PC tools from the first day. Then the company, customers and shareholders will begin to see immediate pay-back from their investment, giving them the ability, however limited, to get real facts about real customers who have real needs, and identifying real profit-generating opportunities.v