Cont...“Acquiring a customer is not the end of the marketing process”?
— Ganesh Mandalam
Gulu Mirchandani, managing director of Mirc Electronics, spoke to Manoj Khatri about the changing competitive and technological dynamics of the brown and white goods industry, the forces that are likely to influence the future of the industry and how Onida is gearing up to meet the challenges.

What is analytical CRM? What are its benefits?
Can you explain this with the help of some examples where ACRM has been employed effectively?
A structured implementation of analytical marketing is known as Analytical CRM or ACRM. In the entire gamut of CRM activities, ACRM is the only aspect that addresses the marketing department. Ironic isn’t it, given that the single department that needs maximum support regarding customer information is marketing?

" any organisation, which is well versed in the fundamentals of marketing, both in theory and practice, will find it extremely easy to take that one more step in becoming a mature and more efficient marketer. "

There are various vendors who provide solutions for ACRM including Siebel, Unica Corporation and Peoplesoft. Over the last couple of years, numerous case studies of successes have been reported. One classic success was that of Scotiabank in Canada. In the first year of implementing ACRM (they went for the Affinium Suite) itself they saved over $3.5 million (Canadian) in marketing costs. The average campaign response rates increased to up to 25 per cent while overall brand preference went up by 22 per cent while preference for competition went down by 36 per cent.
Credit Union of Texas used data analytics to plan their branch expansion programme. They got an insight into the maximum possible driving time that their customers are willing to bear to reach the nearest branch. This insight was generated after analysing the various profiling and behavioural data available.

"The beauty of analytical marketing or ACRM is that it can encompass all the stages — from acquisition to cross sell — guiding the marketer with relevant strategies and tactics to execute"

In India too, many large consumer services companies have adopted analytical CRM or are in the process of evaluating it. There are still issues regarding awareness, learnings and skill sets required to extract the full value out of this solution. But any organisation which is well versed in the fundamentals of marketing both in theory and practice will find it extremely easy to take that one more step in becoming a mature and more efficient marketer.
And from a consumer point of view, there’s a huge benefit. It means only focused marketing communication - communication that is relevant. Consumers will be spared from the ordeal of facing a deluge of spam and large-scale ad bursts.
The focus of marketing is gradually moving from customer acquisition to building lifelong relationships with customers.

How do you explain this trend and what are its implications for strategic marketing?
The old marketing adage of “existing customers being more rewarding than acquiring new customers” cannot be more apt in this age of competition. With high scale commoditisation of products and services, it becomes very easy for consumers to switch across brands. In the mobile telecom sector, we have consistently experienced large-scale consumer shifts from one service provider to another, usually triggered by lower tariff plans and various freebies.
Acquiring a customer is no longer the end of the marketing process. Managing and milking a customer’s relationship with the service provider is as important. This is particularly critical in verticals where revenues and profits per customer are realised over a period of time - credit cards, post-paid mobile services, after sales automobile services, etc.
Thus marketing needs to focus on customer lifecycle management. The lifecycle of a customer can be broadly classified into four stages:

• Pre-purchase Decision: From a marketer’s perspective, this is the acquisition process where a prospect is serviced with relevant information and messages to influence a purchase decision in the favour of the service provider.
• Purchase Transaction: This is the actual transaction where the prospect buys or signs up for the product or the service. This transaction would involve integration of the front office resources with back office fulfillment infrastructure.
• Post purchase activation: For most products like post-paid mobile phones, credit cards, software services, etc., the first instance of usage indicates the activation of the consumer’s account. This phase can be critical for marketers in cases where free offers are made e.g. a free add-on SIM card or a complementary club membership. Marketer would need to present some kind of a reminder or an incentive to the consumer to use the product.
• Post purchase cross-sell: As the consumer starts using the product, his requirements may grow and this would trigger additional features or an upgrade to a higher product e.g. a college student who currently uses a pre-paid card may want to migrate to a post-paid plan or a pre-paid card with a higher denomination once she starts working.

The beauty of analytical marketing or ACRM is that it can encompass all these stages — from acquisition to cross sell — guiding the marketer with relevant strategies and tactics to execute. Post sales management of the customer today is usually put under a department called “Customer Service”. CRM today is usually associated with call centers. However, this is a huge injustice to the science of CRM. Every transaction or interaction between the service provider and the customer should be profitable to both. This requires a strong marketing focus. Hence, “Customer Service” or “Customer Support” should be owned by marketing and should be rechristened “Customer Growth”.

What are the challenges that an organisation needs to overcome before successfully realising a return on investment?
A number of them: Skill sets: First and foremost, marketers would have to upgrade their analytic skills from the present day Microsoft Excel pivot tables to more intricate and complex modeling applications which require knowledge of statistics and databases. This is not an overnight exercise but is acquired over time with a mix of both theoretical inputs and experiential learning.Databases: Availability of quality databases is another big issue. In the case of customer acquisition, third party prospect databases usually have scarce demographic and other types of data that can provide insights into the profile of prospects. Another problem with databases is that they are not properly organised. Different departments within an organisation may collect transactional data independently. Thus, a big task for implementing ACRM is to integrate all customer databases and process them into form that can be used. Process management: While most ACRM vendors build systems that fit into existing processes in place, there is still some amount of work that needs to be done by the marketer. Number one is to chart and document the current processes being followed. This is something that is missing with most organisations. Processes and activities are taken for granted. Forget ACRM, try training a new recruit without having your workflow documented and you will understand the pain. Having documented your processes, a lot of things will become clear to you. The bottlenecks, the pain points and key resources get identified. Knowledge of these issues help in building an ACRM infrastructure that negates the inefficiencies of the existing process. Information loops: Related to the problem of databases is the flow of information. It is critical to have a centralised customer database system. This therefore requires a complete information loop where all data captured at various points get routed back into the common storage point. For example, after a particular campaign, the responses and feedback captured through various channels like a call center, website or branch offices should be routed back to the central marketing campaign management team and the database updated. In future, one does not have to reinvent the wheel by calling for reports from every station.Management will: Finally and most importantly, the entire management should be completely focused and oriented towards a successful implementation. A lot of different departments like sales, marketing, IT, logistics, fulfillment, etc. would be involved in this and their complete support is essential. Down the hierarchy, the line managers who would be actually using these systems and thereby benefiting from it should be involved in the planning and implementation phase so that they get to own the solution and ensure its complete acceptance.

Does technology play a role in reaching out to the customers, especially in the Indian context?

Today’s dynamic business environment calls for flexible strategies and decisions for organisations. The same is true for individuals and consumers. The changing personal, societal and economic landscape influences consumer requirements. A newly promoted executive would move up the lifestyle strata and this would be reflected in his need to upgrade various aspects of his life - his car, his banking accounts, his savings and investment portfolio, etc. Thus consumers need access to products and services anytime. With the development of new interactive media like IVRS, email, web, SMS, ATM kiosks and now even Interactive television, it is possible for consumers to react to marketing communication immediately and short cut their way through the actual transaction process. Thus, one does not have to seek appointments with the PSU bank’s branch manager for a loan but simply log on to the website and fill up an application form. The question that arises is whether the PSU bank is setting up a web-based loan application system or still expects the customer to bunk office and come to the bank. One point that many marketers keep raising is “Arrey Internet kaun use karta hai!” Well, the other day, I just got an offer from an estate agent for our new office on e-mail. Nothing fancy, a simple Rediffmail account but saved the cost of having to courier the document. And what can be a more clinching argument than the figures quoted by IRCTC for their online railway ticket reservation system. Visa Asia rates it as their second most profitable e-commerce site in Asia. And we are talking of booking train tickets, something usually associated with touts and long queues in smelly stations. In Bombay, even the auto drivers use a mobile phone and download the latest ring tones. Personally speaking, downloading ring tones is a far more complex task than sending a request for a new cheque-book. True, it would take an eternity for all the billion Indians to get tech savvy. But for the marketer, if the business end of the population is tech savvy, then there’s no point waiting for Christmas. A quick look at some very interesting statistics

• End of March 2004, there were 33.7 million mobile phone subscribers compared to 43 million fixed line subscribers. In the last calendar year, the number of mobile subscribers has increased by 20 million while fixed line subscribers have grown by just 1 million (Source: TRAI)
• The number of Internet subscribers (ISP accounts) is 4.55 million with about 0.2 million broadband subscribers. Include people who browse from offices, colleges and cyber cafes and you easily get 5 times that number (Source: TRAI)
• World wide the mobile ring tone market is worth $13 billion. In India, while no figures are available, there are a dime a dozen ring tone providers including music channels like Channel V.
• A leading bank in India offers a special bank account product that can be operated only via ATM or over the Net or phone. You cannot operate it through branches, Launched five years ago in one city, today across four cities, it has an account base of more than five lakhs.
• In a nutshell, let’s not take the Indian consumer for granted. She will work out what’s best for her and if it means being tech-savvy, so be it!
• It’s high-time we get the guesswork out of marketing and take advantage of modern sophisticated analytics and customised marketing to figure it out.