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Marketers missing the boat on customer data

Marketers say they're leveraging customer data, but few have the right tools or strategies in place to do it, a new report suggests.

"It's cheaper to retain existing customers than to acquire new ones" has been a core principle in CRM for years, but according to recent research, marketers aren't getting the message.

A recent survey from the CMO Council found that just over 50% of global marketers have a strategy for further penetrating or monetizing key account relationships and that 67% say they have no system for reactivating dormant or lost customers.

"It never ceases to amaze me how little marketers are drilling into customer data and extracting value from that customer data," said Donovan Neale-May, executive director of the CMO Council. "Even the campaign spend is questionable if you haven't done a deep dive into your customer base and profitability profiles. At the same time, you might be losing customers as fast as you're acquiring them."

The survey was conducted in late 2007 and early 2008 and was funded by Computer Sciences Corp., IBM and D&B. It surveyed more than 450 marketers across the globe.

Among the other findings of the survey:


  • Forty-five percent of respondents rate the effectiveness of customer relationship management systems as deficient or needing work.
  • Just 15% rate themselves as extremely good or effective at integrating disparate customer data sources and repositories.
  • Only 6% say they have excellent knowledge of their customers when it comes to demographic, behavioral, psychographic and transactional data.
  • More than 31% have churn rates above 10%, and 32% report having customer turnover of 5% to 10%.
  • Thirty-one percent say they don't do data mining at all, and 63% say they are doing only moderate levels of data mining for intelligence and insight.

The figures, according to Neale-May, reflect the fact that marketers are lagging behind other departments in their focus on data and metrics.

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"There is now a growing sensitivity to the need to be database driven and to look at the impact and reach of your programs," he said. "Before, marketers were heavily media, campaign driven and largely influenced by agency models. Data has lived outside of marketing."

That needs to change, he suggests. Despite CRM's capability to acquire customer information at multiple touch points, it is often siloed and inaccessible. Marketers, Neale-May said, need to be proactive in pushing for initiatives like customer data integration (CDI) and master data management (MDM). That also means taking an active role in working with customer service and listening to the voice of the customer, either through internal customer feedback systems or social networks.

"I am absolutely incredulous that they're not using their CRM systems or don't rate [CRM's] effectiveness that high and that only 50% say they're good at reconciling different data services," Neale-May said. "We've got to move away from being campaign-centered and [be] much more focused on customer data acquisition, customer data mining, and harvesting customer data from multiple data sources"

While marketers say they are doing this, the report suggests there's a disconnect between what they want to do and how well they're equipped to do it. For example, close to 50% of respondents said they are improving customer retention by enhancing frontline customer service, while at the same time only 55% report that their customer service and support teams have access to real-time customer data.

"The bottom line for us is there are many ways to grow your business, and in an economically constrained environment, you've got to become a lot smarter," Neale-May said. "You need to keep customers and monetize customers. To do that, it's not about spending money on media, it's about spending money on customer engagement, customer loyalty, customer affinity and customer word of mouth."

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