Category: CMDM

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Taking customers by the hand

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The retail world has pivoted since the COVID-19 Pandemic in many parts of the world. Despite the fact that brick and mortar stores won’t entirely disappear, the nature of how businesses engage and transact with the public for the exchange of goods has transformed and will likely evolve further.

The impact has been palpable and pervasive; home delivery services for groceries, fast food and the like have mushroomed, accompanied by the proliferation of services and mobile apps and websites to support order capture. Vendors have had to either build or buy services to integrate and the impact on the back office has been varied.

Market analysts even say that the e-commerce industry itself will be one of the biggest beneficiaries of the coronavirus pandemic. Penetration rates, which are currently at around 15%, are expected to increase to 25% by 2025 (MarketWatch, 2020). A 67% increase in a short five years.

Product and service vendors have never before had this much opportunity for insight into customer behaviour and the same time the opportunity to influence what others will buy or use. The opportunity is extraordinary for those who are ready to seize it and who have the data and intent on gathering data.

It is important then, to consider the impact that all this has on the potential for customer retention and loyalty. Consumers have even more choices now, and their decision to buy is going to be influenced by product and service availability, price, past and anticipated quality and brand and business placement.

All indications in industry statistics suggest that existing customers may easily jump ship in response to finding your price higher than that of others for ostensibly generic goods and services or as a result of a bad purchase experience.

Conversely, if your business makes bold use of testimonials, has a high upvote or customer satisfaction rating on shared platforms and has good reviews, then the chances of you poaching customers from others is greater. You also have better potential in building a larger loyal customer base and being placed higher in search rankings

There is a lot of noise and interference to now contend with, as a consumer, so this makes attracting new customers increasingly difficult – will they hear your message? The choices are plentiful and unless you have a niche offering, quality is potentially less impactful. Where you are likely to really win, is on message, a customized and closer interaction experience with your customers and superior service and strong past customer recommendations and reviews. 

Brand becomes of heightened importance

Customer actions, a product or service or vendor rating, the use of referrals and referral concessions and coupons, social media sharing, viral brand-related content sharing and advocacy- they’re all super important under ordinary circumstances.

With at least 10% of any given workforce now potentially working from home or in a hybrid setting at least, there is much more of an opportunity to get their attention. Using these elements of how people express sentiment and their favour in relation to brands is essential to build and understand.

These same customers will be looking for personalization of every interaction that they have with your brand – In 2018 Bazaarvoice found that 50% of shoppers  felt a personalized online experience is important. Almost three-quarters of marketers around the same time, according to Evergage, also believe personalization has a “strong” or “extreme” impact on advancing customer relationships.

The demographic of your customers likely will also be different to what you might have had in conventional retail. For example, a 2020 Shopify survey found that two out of every three (67 percent) consumers aged 18 to 34 are spending more money purchasing items online now than before the pandemic; their behaviour has therefore changed.

There has been a change for older age groups too. Consumers from 35 to 54 years of age increased their online shopping expenditure by 57% and 41% for consumers aged 55 and above.

To achieve an understanding and develop a customer brand advocacy program your business needs data to help identify advocates and influencers and unpaid spokesmen and referrers. The best bet for building and managing this data is by using a centralized customer master data management system like that offered by Pretectum.

You’ll want to take the data that a customer provides you with and harness it for future communications, to extend offers, provide promotional messages and of course, hone, refine and customize the customer’s experience every time they visit your website, your storefront or a system that you have, that they might need access to. A solid execution plan will have this data held centrally in a hub that disseminates it to whoever and wherever it needs to be; webshop, support portal, billing system and even point of sales and mobile app.

With the Pretectum CMDM your business has the flexibility of deciding what you want to track and of course who you want to track and why.

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Customer data and business goodwill

brown wooden blocks on white surface

The accounting profession has long held a balance sheet item called “goodwill” but what is it exactly – it may even be something you have never heard of yourself?

In accounting, “goodwill” is classified on a balance sheet as an intangible asset.
 
This asset arises when an existing business is acquired and the market value of the inventory, plant and equipment and other assets is less than the value paid for the business.
 
So, “goodwill” on the balance sheet represents assets that are not separately identifiable.
 
Per a nice description in Wikipedia – technically, it is not “identifiable assets that are capable of being separated or divided from the entity and sold, transferred, licensed, rented, or exchanged, either individually or together with a related contract, identifiable asset, or liability”.
 
Many readers might be familiar with the concept of asset-strippers or corporate-raiders. These are typically investors that buy companies for their assets and not for the goodwill. They’ll then systematically liquid parts or assets within the company they acquire because the sum of the market value of the assets is greater than the balance sheet value. You could argue that there is negative goodwill in such organizations because the value of the business is greater when liquidated than running it as a unified going concern. 
 
Goodwill also does not include contractual or other legal rights regardless of whether those are transferable or separable from the entity or other rights and obligations. Per accounting standards, goodwill is evaluated periodically for any possible impairment in value.

 

Private companies in the US for example, may elect to expense a portion of the goodwill periodically on a straight-line basis over a ten-year period or less, reducing the asset’s recorded value. This charge is called an amortization expense.[1]

Goodwill is the only asset that competition cannot undersell or destroy.” – Marshall Field, Founder Marshal Field and Company

So why, do we care about goodwill? Well, just like branding , goodwill represents the reputation and the respect that your company or organization has within its audience. Similarly, your customer master represents a piece of your goodwill whether you explicitly account for that or not.

In the textbook “Introduction to Business” – authors Gitman, Daniel and Shah et al describe an aspect of business related to using Public Relations to build Goodwill.

“Like sales promotion, public relations can be a vital part of the promotional mix. Public relations is any communication or activity designed to win goodwill or prestige for a company or person.”

Let’s unpack that concept of “publicity”. In this context, this is any information about the company or product that appears in the news or is not directly paid for by the company.

They say, that “there’s no such thing as ‘bad’ publicity”. So that means that publicity can can be good or bad but ultimately it is all about building awareness.

But Public Relations (PR) also includes many other kinds of activities, such as lobbying, event planning, press agency, corporate or internal communication, crisis management for communications, creating product awareness and dealing with investor communication.

At the center of all of this communication has to be an understanding of the brand itself but also an understanding of the different channels of communication. Who you want to communicate with and what you want to communicate and why.

So why does all of this matter?

Unlike PR, advertising distinguishes itself by being purchased or paid media.  They’re commonly confused for one another particularly when you see or hear “paid promotions”. Advertising also tends to be a monologue whereas PR is ideally a dialog – two way communication, wherein the company listens and responds to the questions or comments or challenges pose by the public at large.

Advertising is done principally to promote products or services, with the objective of inducement to buy.

Part of the challenge with building goodwill is understanding who decides what your business goodwill looks like. Often the decision to establish goodwill on the balance sheet only happens when the business is sold but it can also happen when you acquire another entity and combine it with yours. If you considered selling your business, you would likely struggle to be able to argue that the customer master database has a value with an accountant, though an investor might see it otherwise.

Per a piece in the CPA Journal, by  Virginia Collins, CPA/CITP, CFE and Joel Lanz, CPA/CGMA/CITP/CFF, CISM, CISSP, CFE – CPAs have a special appreciation for the strategic use of data.

Accountants after all, use data to do their work. Without data their work is less useful and potentially unreliable. Master Data in particular, holds characteristics akin to those of financially reportable assets because it likely yields some future economic benefit to the business. Similarly, bad or wrong data or data that shouldn’t be held, represents some sort of risk to the business if it is used inappropriately or results in negative outcomes when decisions are based on it.

Most businesses have processes and procedures in place to manage physical assets or any other assets that appear on their current financial statements.

However, because data is an intangible asset that is not recognized as an asset by modern accounting standards, it is often not managed as an asset, it isn’t even managed the way perceived value of the brand (goodwill) is managed.

Accountants in general agree, that there is no good reason not to measure and manage data as the asset it is, particularly customer master data, even if you’re not accounting for it on the balance sheet.

Whether you use it to improve communications, either through public relations or advertising or whether you use it at the point in time when you transact with the customer or start a new customer outreach campaign or even just a conversation. The consensus seems to be that organizations should begin managing data, and customer master data in particular, as well as any information derived from it, just as if it were a real set of business assets as if it were shown on the financial statements.

Pretectum believes that the best way to manage your customer master data assets is with a centralized master data management platform like the Pretectum cloud-based C-MDM.

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Why you may want to obsess about customer data management today

brown leather lace up shoes

Over the years, many businesses have successfully held onto a loyal customer base while generating new relationships with new customers and retaining them through optimized and appropriate customer relationship management.

Oftentimes, this formation and retention of customer relations have been heavily tied not just to the brand and the products and services but also through how that business has managed customer data.

Interestingly, even businesses that have adopted customer data management are not necessarily household names and brands that you might recognize but they’ve still been able to stay in business sometimes in a multi-generational way because they work hard on building and maintaining the customer relationship and are leveraging data to do it.

Times have changed and often it may seem really hard to do business with customers in the way it used to be. At face value that means that only the strongest brands might survive. This doesn’t have to be true though, what this does mean though, is that now more than ever, businesses need to not only adapt the way that they think about the customer but in particular how they consider customer data management. They need to obsess about it because the competitive game of business around them has changed from something that perhaps seemed easy, to a more advanced level. Businesses that still want to play easy would be at risk of facing an imminent game over.

“Old habits die hard” – the bad ones need to be killed off with persistence.

Fewer than 200,000 businesses in the United States may have failed during the first year of the COVID-19 but the final tally may be higher than thought given the subsequent waves of the Delta and Omicron variants.

Business failures often stem from misalignment between the unique resources and capabilities of the organization and the demands of the new business environment and data can be one of the greatest resources that help inform your business.

COVID-19 certainly introduced a number of aspects to the way businesses work, that changed a lot of the face-to-face personal experience for retailers but it also changed things for the bespoke and custom apparel sector. The pandemic did a pretty good job at slowly killing consumer purchasing habits and behavioral patterns in particular until there is barely anything left to even be cremated!

The global pandemic has greatly impacted businesses in all industry segments in all geographies and has forced us to rethink how we work, travel, communicate and shop. This change in old habits has affected businesses, both big and small. Very few escaped unscathed in some way.

Before the covid-19 pandemic, local businesses had regular operating hours, the notion of walk-ups into a physical store to purchase items would have been considered commonplace.

When the pandemic hit, our physical movement became restricted, safety became a priority, walk-ups instead became queue ups. Consumers started accelerating their migration to the virtual world, increasing their digital adoption, instead of going to the store physically, they would go to the store online.

E-commerce continued to experience strong growth, rising to about 30% year on year. Shopping for more basic needs like food, sanitary, nose masks, and other products related to the pandemic went on the rise, and purchasing less and less from travel sites and agencies, car insurance, and outdoor entertainment. The automobile industry remained strong, perhaps in part because of changes in disposable income and a refocus on the personal asset base.

Surveys found that consumers in several regions shifted more to value-based purchasing, which prioritizes obtaining maximum value for the consumer for the money spent.  eCommerce facilitated shopping around too.

In short, consumers started settling for new patterns of behavior in response to the multiple waves of the pandemic, something we can likely expect to persist. As a result of these rapid, yet continuous and unpredictable changes, customer data that businesses held in their various systems became less accurate and potentially more inconsistent as customers’ behavior continued to change. The result? Ultimately if your business is using data to make decisions the customer experience may be poorer if the understanding of the customer hasn’t changed with the changed context.

Fear and risk of infection will fade over time, but when exactly that will be, we cannot be sure. In the meantime, as consumers potentially ease back into their old ways, habits, behavior, purchasing patterns, your business should remain aggressively resolved to support the current and present environment, the old and the new. All of that is going require you to have the best possible customer data in order to successfully satisfy your customer’s needs in a sustained way. You could continue to just play easy if you have been resting on your laurels waiting for better days, but that’s a risky proposition in the longer term.

It’s been a long rough ride for business in general but some have weathered the storm because they have adapted or already had a robust customer data profile in place ahead of the pandemic. You’d agree, that now more than ever, your business needs to obsess about their customer data management because your business is planning to stick around. Surviving in the game depends on that data.

So far, businesses that have adopted customer data management, have been able to meet customers’ expectations to the maximum extent possible and they’re in a better position to retain such ones even during the post-pandemic era.

Now, is the time to secure your customer’s confidence and loyalty, and what better way to achieve that if not by your customer data management. Pretectum believes it has the perfect customer data management solution to support your business in the journey. Using a hub and spoke approach to data management means that your existing systems can remain intact but leverage a central source of truth to drive improved insights and decisions. Contact us today to learn more.