Disconnected Customer Channels - Pitney Bowes...Inbound Marketing ... state of customer communications channels. Research consultancy Opinion Matters conducted a survey of 250 CMOs

Disconnected Customer Channels

RESEARCH REPORT

January 2012Pitney Bowes Software

2

Table of Contents

Executive Summary .......................................................................................3

Customer Communications and Channels ....................................................4

Approaches to Customer Segmentation ........................................................5

Incorporating Social Media ............................................................................6

The Move to Integration .................................................................................7

Channel Marketing Sophistication .................................................................8

The Challenges of Multi-Channel Marketing .................................................9

Inbound Marketing .......................................................................................10

Benefits of Multi-Channel Marketing ..........................................................11

Becoming Location Intelligent .....................................................................12

The Lost Customers ......................................................................... 13 and 14

Conclusion and Recommendations ..............................................................15

Methodology

Pitney Bowes Software has undertaken a major piece of research into the current

state of customer communications channels. Research consultancy Opinion Matters

conducted a survey of 250 CMOs and Marketing Directors in B2C companies with

1000+ employees across the UK, France and Germany; within Financial Services,

Telecoms and Utilities.

The aim of the survey was to discover how well integrated marketing strategies and

market channels are and how relevant and consistent customer communications

are across these channels.

RESEARCH REPORT: JANUARY 2012


3

Executive Summary

Technology has provided a dizzying array of new communication channels that mean

that we can receive information continually – “Always On Marketing”. This increase

in channels is no less pronounced in the corporate world where the research tells

us almost all the organisations we surveyed are engaging to some extent with social

networks to reach consumers, where more are starting to use Facebook, Twitter or

LinkedIn for marketing in conjunction with traditional channels.

With this ever growing number of channels being used, the survey overwhelmingly

shows that the corporate preference is to have these channels integrated. However,

it also shows that while this is an active goal the majority are still some way short

of reaching integration. Barriers to achieving this include a lack of strategy,

concern over channel security, inability to be consistent across channels and fear

of confusing customers.

As a result customers are being lost though fragmented and inconsistent

communications. For example, during on-boarding large numbers of customers are

lost for many and varied reasons including fragmented ownership, no pertinent

follow-up, and perceived lack of customer understanding.

The survey also looked at the sorts of practices that will drive greater customer

engagement. For example the survey found that only a small minority of call centres

are using predictive analytics and on screen prompts when talking to their customers,

therefore missing the opportunity to engage more relevantly. Furthermore less

than a quarter of organisations use location intelligent systems to provide specific

location-based offers and services to their customers. Operationally the majority of

organisations do not use sophisticated segmentation techniques, such as randomised

control groups, to measure campaign effectiveness.

In this information age customers expect to be understood by their suppliers.

They have preferences not only in what they want but in how and when they wish to

engage. In order to achieve this, companies must ensure co-ordinated and integrated

communications to place themselves in a position of advantage in terms of driving

customer satisfaction, loyalty and therefore revenue. The research, however, suggests

that for the majority of companies this standard of engagement is still some way off.

Key Stats Summary

The Challenge of Integration: 90% of respondents want their communication

channels integrated. However, less than a third, 31% have integrated channels.

Compounded by the Growth of Channels: Over half, 53% are using social networks

to engage with customers. Only 8% provide integrated cross-channel communication

based on choice.

Resulting in the Loss of Customers: 32% are losing customers during on-boarding

because of fragmented ownership between departments. While more than one-

quarter, 26% are losing customers because of mass targeting.

While Failing to Maximise Opportunities: Only 9% of organisations have sophisticated

systems that model customer behaviour to make appropriate prompts available

during calls allowing staff to maximise the opportunity. While 27% say they are not

capitalising at all on inbound marketing opportunities.



4

Snapshot: Customer Communications and Channels

Business is well on its way to adopting a multi-channel approach to marketing.

But these are early days and the integration of so many new, dynamic and interactive

routes to market pose major challenges for delivering a consistent approach across

every channel.

Email is now the most used channel for marketing, 53% closely followed by Social

Networks, 51%. At the other end of the spectrum, use of Direct Mail (just 13%) has

fallen away as more communications move online.

The use of company websites is comparatively lower at 45%, suggesting that the

majority are used for corporate communications as opposed to commerce.

Overall the data shows that more channels are being used (on average 1.8 more)

by companies which have the most sophisticated predictive call centre technology

and marketing segmentation processes.

Looking to the future, we would expect all of these percentages to rise as companies

develop a comprehensive marketing strategy that leverages all available channels.

The emphasis on email marketing is much stronger in France and Germany than

in the UK, with only 26% of UK respondents adopting it to engage with customers.

This compares to 69% in France and 65% in Germany. The research shows that UK

respondents have been quicker to embrace social networks for marketing purposes,

57%, compared to 49% in France and 46% in Germany.



Use of channels for marketing

Direct Mail

Email

Telemarketing

SMS

Social networks

Point of Sale

Call Centre

Website

0% 10% 30% 40% 60%

45%

46%

42%

51%

49%

48%

53%

13%

20% 50%

Overall (Base 255)

5

Approaches to Customer Segmentation

Despite businesses embracing a wide range of channels for customer marketing,

the practice of customer segmentation for marketing campaigns remains limited.

Just one in three of respondents is creating new segmentation models for each

campaign and 18% are looking at incremental responses to dynamically inform

and revise the segmentation model.

At the top end of the scale only 23% are using randomised control groups to

measure campaign effectiveness. This is most common in telecoms where for some

time now providers have been offering consumers highly differentiated product

packages to drive long term loyalty i.e. bundling packages together. It is least

popular in the utilities sector, indicating the industry is still struggling to shake

off its pre-privatisation mentality. Those companies using randomised control

groups are more likely to show other progressive behaviours, for example only

13% of those using randomised control groups feel they are not capitalising on

inbound marketing opportunities compared to 31% of the others surveyed.

French marketers are much more likely to use less sophisticated segmentation

techniques compared to their UK and German counterparts where more

sophisticated approaches such as using randomised control groups are much

more common.

As companies realise the need and value of developing meaningful and relevant

communications to their customers so the need for greater personalisation and a

more dynamic and sophisticated methodology for modelling customer segments

will become mainstream.

How do you model customer segments for marketing campaigns?



Business led based on intuition

0% 5% 15% 20%

28%

Data led based on using the samesegmentaion model for all campaigns

Creating new segmentation models for each campaign

Using customer value orcustomer responsedta to create segmentaion models

Looking at incremental responses to dynamicallyinform and revise the segmentaion model

Using randomised control groups to measure campaign effectiveness

10% 25%

19%21%

17%16%

20%

27%21%

23%

36%41%

24%

12%16%

14%16%

18%

22%

30% 35% 40%

Financial Services (Base 80)Utilities (Base 84)Telcos (Base 81)

0% 5% 15% 20% 30%

16%

17%

33%

24%

18%

23%

10% 25% 35%

Using randomised control groupsto measure campaign effectiveness

Looking at incremental responses to dynamicallyinform and revise the segmentaion model

Using customer value or customer response dta to create segmentaion models

Creating new segmentation models for each campaign

Data led based on using the same segmentaion model for all campaigns

Business led based on intuition

Overall (Base 255)

6

Incorporating Social Media

The emergence of social media channels such as Facebook, Twitter and LinkedIn

present opportunities for businesses to personalise their offerings and gain a deeper

level of insight into individual customers.

The results show organisations are keen to engage with customers through these

channels with just 1% professing not to have a social media strategy in place.

Whilst the majority of businesses are still at an early stage in their implementation,

at the other end of the scale 15% of respondents have set up a nominated team to

deal with social media channels. A further 18% have assigned a team of astroturfers*

to increase outreach through social media.

The most popular activity is to set up a Facebook fan page (25%) closely followed by

monitoring blogs for customer feedback (24%) and setting up LinkedIn groups (20%).

Companies cannot afford to ignore social media as a means to improving customer

engagement. However, these new channels must be properly integrated into their

existing approach to customers and markets to deliver a satisfactory multi-channel

experience for customers.

French businesses are making the greatest strides in engaging with customers

through social media, being the most likely to have assigned a team of astroturfers

(32% compared to 13% in the UK and 11% in Germany), created a Facebook fan page,

set up a group on LinkedIn or monitored blogs for customer comments and feedback.

* Astroturfers - individuals who orchestrate actions and opinions within forums, both overtly and covertly

What social media do you have in place to engage with customers?



0% 5% 10% 15% 20%

12%

20%

24%

13%

17%

1%

25%

We do not have a social media strategy

Dedicated microsites

We have personalised URLs for campaigns and products

We monitor blogs for customer feedback and comments

We have a Group set up on LinkedIn

We have a dedicated YouTube Channel

15%

18%

25%

18%We have a company Twitter account

We have created a Facebook fan page

We have assigned a team of Astroturfers to increase outreach through social media

We have set up a nominated team to deal with social media channels

Overall (Base 255)

7

The Move to Integration

The advent of new customer communication channels presents greater opportunity

for customer engagement but at the same time raises challenges of ensuring

consistent and timely messages to customers.

It is clear that the vast majority of organisations recognise the need to address

these challenges through adopting an integrated approach to multi-channel

communications. In fact the survey shows that only one-in-ten organisations have

no plans to move from an independent channels communication approach.

Many of the 90% of companies who recognise the need to integrate channels still

have some way to go as only a third who aspire to a fully integrated cross-channel

approach are actually at that point. The other 59% of those in the survey are in the

process of integrating their various channels.

While all three sectors show approximately the same levels of motivation to achieve

cross channel communications, Financial Services is furthest ahead in achieved

integration with 36% of companies offering a cross channel approach.

UK businesses show a significantly lower level of sophistication with channel

integration. 23 out of the 25 individual companies who do not plan to integrate

their various communication channels can be found in the UK, compared to only

two in Germany and none in France.

How have you integrated your customer communication channels?



We have a cross channel approach to our customer communications which incorporate new channels such as social media, SMS, etc

We have independent communication channels which we are planning to integrate

We have independent communication channels which we have no plans to integrate

We have a cross channel approach to our customer communications which

10%

31%59%

Overall (Base 255)

8

Channel Marketing Sophistication

Despite the preference for integrated multi-channel communications the research

shows that current company strategies fall far short of this.

Overall only one-in-twelve companies (8%) are able to say they provide cross-channel

marketing based upon the preferences of the customer. Contrasting that with 61%

who say they provide simple single channel communications, meaning the chances

of capturing the attention of the customer through his or her preferred medium are

vastly reduced and the potential for ‘opt-outs’ is higher.

There is little difference in approach between each of the three industry sectors.

When comparing the countries, however, we see marked differences. France is the

least sophisticated with a staggering 74% still using single channel marketing,

compared to 49% in the UK and 60% in Germany. The UK is leading the way in

the adoption of cross-channel marketing but it is still only 15% of companies.

Strategies to interact with customers over different channels



0% 10% 30% 40% 80%

4%

Single channel marketing

Multi-channel marketing (marketing one piece of content through all available channels)

Cross-channel marketing (basedon customer channel preference)

20% 50%

5%15%

52%66%

38%

60%74%

49%

60% 70%

UK (Base 85)France (Base 85)Germany (Base 85)

9

The Challenges of Multi-channel Marketing

When asked an open-ended question about the barriers to multi-channel marketing

the majority of respondents in the survey concentrated on internal issues.

To a small number the primary challenge is creating the will within the organisation

to engage with multi-channel communications. To a much larger number the issues

centre upon the capability of their organisation to deliver safely and appropriately.

For example a number of survey participants expressed their concern about security,

specifically exposing both their customer and themselves to possible data breaches

when engaging with previously unused channels.

Others are more concerned about the logistical difficulties they already face or

will confront. By engaging with their customers through more channels the belief

is that disconnects in communication are more likely to occur leading to greater

dissatisfaction. Although of course if customer preferences are used this ceases to

be a threat and becomes an opportunity.

Other respondents feel that the issue is one of demand, that their customers do not

want multiple channels, instead preferring a predictable and prescribed relationship.



“Communicating the same message clearly via a multi-channel approach

creates confusion and opt-out”

“Ensuring that each approach is beneficial

both for the prospect and for the company”

“Incorporating new media and channels

while maintaining a high level of security”

“To propose the right product to the right

prospect at the right time”

“Managing interactions through a customer

portal”

“To match the offers that the customers will receive

from our competitors”

10

Inbound Marketing

It is clear that, in a substantial number of cases, opportunities to market effectively

to customers through the inbound channel are not being supported by available

systems and data. 36% of companies say their call centre staff work from a pre-

determined script with no adaptive capabilities. A further 32% say historical data

is made available but again without any prompts or other support from the system.

Very few, less than one-in-ten organisations (9%), have a sophisticated system that

models customer behaviour to make appropriate prompts available during calls.

Looking at the industry sectors, at the most sophisticated level Financial Services

has more companies working from predictive analytics (14%) than either Utilities

(8%) or Telecoms/Communications (4%).

French companies are lagging behind both UK and German counterparts. Almost half

of French companies (49%) are simply working from scripts, compared to one-quarter

of UK and one-third of German. Germany has the highest level of call centres with

predictive systems that provide personalised recommendations (14%). The UK has

11% and France only 2%.

Overall 27% of organisations do not use the inbound channel for marketing purposes

(a lost opportunity) which is mirrored in all three vertical sectors but is most

pronounced in France (42%) compared to 19% in both the UK and Germany.

Capitalising on inbound marketing opportunities



0% 5% 15% 20%

14%

We do not capitalise on our inboundmarketing opportunities

Call centre staff have set directives using basic criteria acquired from the call

Call centre staff have historicalcustomer information available to use

Based on historical customer data, call centre staff receive on screen prompts

recommending the best course of action

Based on historical customer information and predictive analytics, call centre staff receive on screen

prompts recommending the best course of action

10% 25%

2%11%

24%33%

39%

28%35%

33%

33%49%

25%

42%19%

19%

35% 40%30% 45%


11

Benefits of Multi-Channel Marketing

Respondents were asked to rank (1, 2 and 3) the various benefits from adopting a

multi-channel approach to marketing. The most important perceived benefit overall

is that multi-channel marketing saves time and money (48%) followed by reduction

in churn (21%). This pattern is true for all three countries however 62% of German

companies ranked this as the main reason compared to only 46% in France and

34% in the UK.

Interestingly improving cross-sell and up-sell is seen as the main benefit by only

7% of respondents which suggests that opportunities for providing a personalised,

relevant and multi-channel approach are not being capitalised on (lack of use of the

inbound channel) or simply the fact that 61% of organisations still only use a single

channel for their marketing. However, a further 30% of respondents have ranked this

a the second most important benefit, slightly ahead of creating greater customer

loyalty (28%).

Whilst not being ranked highly as the first or second key benefit, reducing opt-out

is clearly identified by 51% of overall respondents.

Only 6% of respondents perceive that there are no benefits at all – mainly UK

companies across all sectors.

Benefits from a multi-channel approach to marketing



Saves time & Money

Reduces churn

Greater Customer loyalty

Improves cross-sell/up-sell

No benefits

Reduces Opt out

0% 10% 30% 40% 70%20% 50% 60%

48%

21%

12%

7%

6%

4%

11% 19%

10% 4%

28% 24%

30% 13%

0%

14% 33%

RANK 3RANK 2RANK 1Overall (Base 255)

12

Becoming Location Intelligent

The vast majority of organisations use geodata to make more informed business

decisions. The survey found that the only country with organisations which do not

use geographic data is the UK, 1 in 10 companies.

Overall, it is primarily used to identify regions for sales growth (41%) and this

applies to all industry sectors, especially communications and telecoms providers

(46%), compared to 42% in Financial Services and 36% in Utilities. However in

telecom organisations geographic data is also important for determining location

specific offers, whilst for Financial Services and Utilities directing customers to

their closest branch or support network is more important. Only 22% of total

respondents use location data for making decisions on risk – yet geographic location

provides fundamental information for Financial Services and in particular insurance

companies. The likely reason for this anomaly is that in many companies marketing

and risk management are two clearly separate functions.

At a country level we see distinctly different trends in how geographic data is used.

French companies are considerably more likely to use it operationally, with 43% using

it to identify the location of their highest value customers and 57% to determine

the best performing areas. German companies use geodata primarily as a corporate

risk assessment tool (47% compared to 4% in France). UK companies fall somewhere

in the middle but with a greater propensity to use geographic data to identify well

performing regions (39%) and to determine specific location based offers (33%).

Using geographic data to make more informed decisions



It helps us identify the location of the most profitable customers to inform business growth

0% 10% 30% 40% 60%

0%

It helps us identify regions which are performing well in order to replicate success in different regions

It enables us to provide location-specific offers or services to our customers

It enables us to direct our customers to their closest available support network/branch/store

It enables us to make decisions on risk within the business

We do not use geographic location data

20% 50%

0%10%

47%4%

20%

23%44%

24%

17%33%33%

57%39%

18%43%

16%

34%


13

The Lost Customers

Customer on-boarding is when companies leverage that critical honeymoon

period, the first 90 days from when customers come on-board, to build trust

and increase profit.

With the vast growth in utilisation of available channels the challenges of providing

consistent customer interactions will increase. Yet all of the quoted reasons for

losing customers during the on-boarding process are internal and at least

theoretically within the control of the organisation.

The survey reveals that the single biggest reason for losing new customers is

fragmented ownership by different functions within the business (cited by 32%).

This holds true for all industry sectors; Telecoms (35%), Financial Services (30%)

and Utilities (32%). The adoption of new channels is set to increase. However, with

the majority of organisations failing to integrate multiple channels or develop

cross-functional co-ordination of customer communication, we are likely to see

increasing numbers of customers lost at the point of acquisition.

The next most prevalent causes of loss of customer, mass targeting (mentioned

by 26%), no follow-up to customer (24%) and perceived lack of understanding

of customer (23%) all underline the need for more skilled, timely and relevant

communications.

Incompatible legacy systems for products and channels is cited as a problem by

over a fifth of organisations but this is most prevalent in the Utilities sector (24%)

compared to Telecoms (22%) and Financial Services (20%). This shows that Utility

companies are lagging behind with the integration of technology.

Reasons customers are lost during the on-boarding process



0% 5% 10% 15% 20%

26%

23%

22%

32%

22%

11%

25%

No on-boarding strategy

Incompatible legacy systems for each product and channel

Fragmented customer ownership

Inappropriate offers or promotions

Perceived lack of customer understanding/value

Mass targeting

24%No follow-up to a new customer

30% 35%

Overall (Base 255)

14

The Lost Customers

Whilst fragmented customer ownership is a key reason for losing new customers

in each of the countries, French companies also report far greater issues around

the hygiene task of simply following up on a customer, with 38% of respondents

mentioning both of these.

UK organisations, while having less of an issue actually speaking to their customers,

are having more problems speaking about the right thing, where inappropriate

offers or promotions (31%) and perceived lack of understanding (29%) are ranked

equally highly.

The survey suggests that the issues of appropriate customer engagement is less

prevalent in Germany where 26% of companies feel fragmented customer ownership

is the main problem during customer on-boarding with mass targeting mentioned

by only 19% of companies compared to 33% in France and 27% in the UK. One

area where more German companies mention a problem is having no on-boarding

strategy. This was mentioned by more than one-in-six (18%), compared to 11% in

the UK and only 2% in France.

Regional differences impacting the on-boarding process



Mass targeting

0% 5% 15% 20%

18%

Perceived lack of customer understanding/value

Inappropriate offers or promotions

Fragmented customer ownership

Incompatible legacy systems for each product and channel

No on-boarding strategy

10% 25%

2%12%

17%26%

24%

26%38%

33%

18%18%

31%

24%29%

19%33%

27%

17%

30% 35% 40%

No follow-up to a new customer15%

38%20%


15

Conclusion and Recommendations

With customers utilising an increasingly differentiated suite of communication

channels available to them, while expecting ever greater standards of service

relationship from their providers, a coherent voice is required from those suppliers.

The survey has shown that while the majority of organisations are striving to fully

integrate their communication channels and recognise this as best practice, only a

minority has achieved it. The research has also shown a strong correlation between

adoption of various best practices. Those companies who are using sophisticated

marketing segmentation techniques, based on deep customer insights, are also more

likely to be using predictive analytic tools and to be delivering communications to

their customers through their preferred channel. The research suggests, however,

that only around 2% of companies have arrived at this level.

Integration: Businesses should take appropriate actions to ensure that all

communications are fully aligned, avoiding a business silo approach and embracing

technology to achieve cross-channel marketing capabilities. Customers who sense

that suppliers do not understand them will be both insulted and skeptical about

that organisation’s capabilities.

Companies need to integrate social media channels further to develop a two way

dialogue with their customers and to be able to act on channel preferences.

Key benefits include saving time and money, reducing churn and increasing

customer loyalty.

Channel exploitation: The research shows that customers are being lost because

of inappropriate communication during the on-boarding phase of their relationship

with suppliers. To avoid this and then to move to the point where these interactions

become opportunities, companies must have systems and processes in place to

provide consistent, relevant and timely customer communications across all channels.

Clearly the inbound channel is not being exploited for marketing purposes. Ironically

this is one of the few opportunities that companies have to cross-sell and up-sell to

customers who have ‘opted out’ of other marketing communications.

Insights: Customer insights need to be gathered wherever possible, using whatever

tools are available to the organisation. Each interaction provides an opportunity to

build knowledge and understanding, and with that, loyalty and customer value.

There is opportunity for companies to use more advanced segmentation modelling

for outbound marketing and analytically driven prompting to optimise inbound

interactions – therefore providing more relevant communications at every touch point.

Unless companies have a consistent approach across every channel in the way they communicate and market to their customers their ability to develop profitable, long-term relationships will be seriously impacted.



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[email protected]/software

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GERMANY

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+49 (0)89 4623870

[email protected] www.pitneybowes.de/software

Any feedback? Contact Kieran Kilmartin, Marketing Director, EMEA. [email protected]

Every connection is a new opportunityTM

© 2012 Pitney Bowes Inc. All rights reserved. Pitney Bowes Software is a division of Pitney Bowes Inc.

Documents

Disconnected Customer Channels - Pitney Bowes...Inbound Marketing ... state of customer communications channels. Research consultancy Opinion Matters conducted a survey of 250 CMOs