Why Communicate with your Customers?

By Adam Ramshaw (Director)
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In a world where customers control the relationship, if you want to continue to have a relationship, you need to provide something of value to them and profitable to you. In other words, you communicate with your customers to provide information both relevant to their needs and profitable to you.

To achieve that aim you first need to cross four bridges: know each customer’s value, identify each customer, understand each customer’s needs and provide a feedback mechanism:

1. Know each customer’s value

Differentiating customers according to their value to your company will enable you to evaluate and prioritise your marketing communication strategy more effectively. This allows to you allocate scarce communications resources to the customers with the most profitable long term potential.

There are three broad categories of customers:

High value customers: These are your most valuable customers and they generate the major part of your profit. Your key goal for this segment is retention and delivering integrated communication to them.

However, maximizing the integrated communications plan required by these customers requires commitment from your company. It’s imperative that senior management are committed to implementing this strategy across the entire organization including: all sales channels, call centers, marketing, and operations. Oft times I have seen programmes of this type fail because of the inability of functional silos to work together. In convincing senior management of the need for this commitment remind them that your competitors are constantly targeting these customers so it’s critical that your communications are effective.

Medium value customers: These customers have some current value to your business and a lot of potential to move into the high value customer group. Unlocking the true value of these customers through the implementation of a communications strategy that draws these customers into doing more business with you will result in more valuable customers.

Low value customers: These customers are unprofitable and may never be profitable. So your strategy should be to utilize low cost communications channels and encourage them to either become profitable or to churn from your business.

2. Identify each customer

Okay so now you know who to target, how do you contact them? It sounds simple enough but it’s imperative that you know how to contact your customers including having the correct name and contact details. This may sound obvious, yet many companies do not have good processes for keeping customer records updated.

Time and money is often wasted on sending mail to the wrong customer address. Unfortunately, it is also common for the company to dump returned mail in the bin, even though this is vital information that should be used to update customer records.

The address problem is also rife in email communication. Many companies do not have a system to update email addresses in a timely manner, resulting in the loss of all contact with the customer when he changes his email address. Email address obsolescence can be as high as 30% per year meaning that you have to really work at keeping this data up to date.

Just as harmful to customer relationships are misspelled names, not just once but over and over again. In a customer’s mind, “if you can’t even spell my name correctly how can you have a relationship with me.” It may only be a few letters to you but it’s vital to your customer.

3. Understand each customer’s needs

Customers are bombarded with advertising and marketing information every day. In order to cut through all the advertising noise, you need to communicate value add information using an appropriate channel for the customer. This can be done by understanding your customer’s needs; then applying the communications tool and appropriate message that meets those needs. For example, a bank might target the take up of internet banking at customers using credit cards to pay for monthly internet access because they already have a propensity to use the internet.

Personalized messages that meet customer’s needs and are appropriate to a customer’s value can now be created to enhance your marketing communications. By communicating effectively with your customers, you start to build and nurture relationships with them.

4. Provide customers with a feedback mechanism

For effective implementation of integrated marketing communications, customers must be able to communicate easily with your company. This two way communication is a huge opportunity for the company to keep in touch with customers changing needs and expectations.

Finally, it’s interesting to note that in a discussion that commenced with customer control of the relationship, the first step is to understand their value, now and in the future, to you. Only then can you have a pragmatic customer relationship that will deliver value to both you and the customer.