Personalise customer communication and reap the rewards

By Kathryn Muratore – May 2007

Increasing competition within the tourism and hospitality sector has persuaded businesses to consider more sophisticated marketing strategies. An expensive consideration for small to medium business enterprise and often an unfeasible long term plan. Nevertheless, a marketing budget does not exclusively determine a business' competitive edge within the marketplace, but rather:

  • How well the business understands the needs, wants and expectations of its customers
  • How the business uses this data to maximise its marketing value
  • The delivery systems the business chooses to communicate key messages

The following article will outline how businesses can avoid paying hefty fees for fancy advertising campaigns by implementing affordable Customer Relationship Management (CRM) strategies. Using hypothetical scenarios, Spair Corporation will demonstrate how businesses can slash professional marketing expenses, strategically diversify customer bases and compensate for seasonal sales slumps all via a calculated CRM strategy integrating Short Messaging Service (SMS) technology.

The Problem: Arbitrary marketing techniques

As fierce competition for promotional space increases, our society becomes media-cluttered and consumers are ultimately overwhelmed with information they do not need. Arbitrary marketing techniques such as direct mail, telemarketing campaigns and automated online popup ads not only irritate customers, but also portray the business communicating as one that fails to understand its stakeholders.

Considering this, how often does your direct mail head straight for the recycling bin? Similarly, how persistent are you in explaining to a telemarketer that you are not interested in the special offer they have for you today? This may sound familiar.

Fundamentally, customers respond this way because the information given fails to resonate with a particular need. Unaware by most businesses, customer reactions like these are the product of poorly targeted and ill-timed communication techniques.

Consequently, the lack of personalisation in communication strategies leaves consumers feeling misunderstood, undervalued, thus ultimately diluting potential brand loyalty. Important for a number of reasons, brand loyalty helps businesses gain an edge over competitors, is vital to retain customers and helps maintain an excellent reputation to generate new business.

However, many businesses struggle to develop cost-effective solutions when promoting a product or service, attracting new customers or compensating for seasonal sales slumps. Competitor movements, advertising expenses, professional consulting fees and small marketing budgets impede today's modern business to effectively address the problems outlined above.

Nevertheless, accurately collated, well-managed and strategically used customer data can help produce personalised communications to conquer such obstacles. These components are fundamental to effective CRM practice. Businesses should not feel threatened by the work involved in practicing effective CRM, as numerous CRM software tools are available on the market to assist.

Business Problem 1: Promoting a new product or service

Effective CRM is not just about providing your customers with what they want, but also at the time they want. To demonstrate, take a newly opened hotel restaurant. As part of a promotional strategy, the proprietor may decide to produce expensive restaurant brochures to distribute in hotel rooms and at the concierge desk. Although a conventional advertising tool, the execution generates a key problem. The communication is not delivered at the precise time when it is sought. Arbitrary marketing techniques of this kind will alter how the targeted audience responds to the communication. That is:

  • The audience may not encounter the brochure
  • The opportunity to engage with customers and respond to their needs is reduced
  • The proprietor may have difficulty in evaluating who responds to the business' key messages and why

The Solution

This time around, the owner of the hotel considers a more affordable approach to market the new restaurant. With customer details already on file, the proprietor decides to strategically use this data to personalise a communications campaign. With the aid of a good CRM software tool, the hotel owner collates customer mobile phone numbers and automates an SMS promotion to advertise the restaurant. However, timing is everything. The proprietor is aware that the business should not overload customer mobile inboxes. Considering this, the hotel decides to distribute one SMS per day. A typical SMS may read something like this:

"Why not join us for dinner tonight in XYZ Restaurant? Show this SMS & receive 25% off your total bill."

But to strengthen the impact of the message, the proprietor sets the CRM software to distribute the SMS between 4pm and 5pm - an appropriate estimation of when people are likely deciding where to dine for the evening. If implemented this way, the SMS better resonates with customers as it reminds them to fulfil a particular need - hunger. Considering this, well-timed communications execution is critical for any business to successfully engage stakeholders.

Business Problem 2: Diversifying customer base

Let's examine personalised communication from another perspective. Securing different corners of the market is a common problem amongst the most resourceful business. Breaking into foreign areas requires research, strategy, capital and professional consultation. However, businesses can penetrate unexplored markets for a fraction of the cost by personalising communication strategies, thus reducing the expenses associated with diversifying consumer bases.

For example, take a spa business within a hotel or resort. With a sustainable level of female clientele, the owner decides to target the male market. This may prove a tough endeavour, as males may need more incentive to visit a spa. Nevertheless, the spa can develop a multitude of marketing techniques to connect with this niche. The owner may decide to promote the spa via its female clients by offering exclusive discounts to refer male customers. Alternatively, the spa owner may produce advertisements to place in men's bathrooms or in the hotel's gym facilities. Although marketing techniques of this kind may be relatively affordable, they fail to personally communicate with the target audience.

Let's identify the reputational problems associated with the above tactics. The female client referral strategy requires no effort at all from the spa. Consequently, customers may perceive the spa business as one that doesn't want to honestly understand and connect with the male market. The advertisement idea, (although more direct), fails to entice males to make a spa booking. All in all, both techniques lack strategic direction and fail to connect with male customer needs.

The Solution

Although our restaurant promotion seemed relatively straight forward, attracting a male market to a spa may require more strategic problem solving. This time, the spa owner decides to join forces with another area of the hotel business that may appeal to the male market – the hotel's recreation facility. Again, if customer details are managed correctly in a CRM software application, the spa owner has access to who is attending the hotel's recreation facility and for what purpose. To demonstrate, let's say two male hotel patrons book the hotel tennis court. According to the hotel's booking system, the court is booked from 1pm to 3pm. Based on this information, the spa owner decides to devise a promotional SMS message surrounding this activity. The message may read something like this:

"Aching muscles from a tough tennis match? Show this SMS message & receive 15% off body massage at XYZ Spa."

For customers to sit up and take notice, a business must offer its clients something they need and deliver it at the time it is sought by the consumer. Considering this, as the two male patrons just completed a lengthy tennis match, the offer of a discounted massage has a better chance to trigger a psychological response than at any other time.

Business Problem 3: Compensating for seasonal sales slumps

Seasonal changes often affect business sales. Concerning the service industry, the weather can draw or deter customers from visiting a hotel, bed and breakfast or restaurant. However, personalised communication techniques can give businesses the power to attract customers all year round.

To demonstrate, let's take an example of a ski resort operating in the warmer periods of the year. During this time, its owner can expect lower sales figures. To address the slump in trade, the owner develops a summer marketing campaign to highlight the beauty of the region. This comprises of a contemporary web site campaign, and a regional brochure distributed to ski clubs and associations. Sending the brochure and web site link to existing customers will increase the chances of this audience to stay at the resort during a non-peak period right? Well, that depends.

Although the brochure and web site may promote the region during the summer months, these communications tools fail to engage customers as they again, are not personalised. Businesses must remember - it takes initial, accurate targeting to influence your customers to execute certain behaviours.

The Solution

Devising solutions to compensate for seasonal sales slumps is difficult regardless how much you invest in advertising campaigns. However, businesses can harness the power of CRM and develop communications campaigns to counteract slow trade periods. Following on from our ski resort example, let's say this time around, the ski resort decides to monitor all customer activities during peak periods in preparation for a forthcoming summer campaign. By engaging with customers, the resort notices that several patrons visited the local winery during their stay. The resort decides to strategically use this data to develop and negotiate a possible cross-promotional agreement with the local winery store. Upon consultation with the resort, the winery agrees to give all summer hotel patrons $20.00 off a case of wine. In return for their business, the resort agrees to exclusively sell the winery's signature red wine in its main restaurant. Finally, to lure summer patrons, the resort decides to SMS all customers who visited the winery during the peak period with a special one weekend only promotion. The SMS may read something like this:

"This week only– book a night with us and receive $20 off your next case of wine from XYZ winery."

A number of factors work in this example. Firstly, the resort's knowledge of which customers visited the local winery demonstrates its understanding of customer preferences – an imperative component of good CRM. Secondly, the resort's creative use of this data to develop business partnerships is an effective way of promoting its business, other small local businesses and delivering upon customer needs, wants and expectations. Thirdly, the implementation of a SMS wine promotion targeting "wine loving customers" increases the resorts chance to engage with this group and strengthen its key messages during non-peak business.

Conclusion

In a world of increased costs yet reduced marketing spend, a strategic CRM plan is paramount to promote a new product, source new business or compensate for seasonal sales slumps. Considering SMS CRM strategy, the familiar saying "less is more" really can work wonders for small budget marketing campaigns. So, the next time your marketing team asks for an increase in budget, remember the following alternative cost-effective strategies:

  • Segment your customer database to establish target markets
  • Personalise business' communications to resonate with customer needs
  • Deliver the communication at the time it is sought
  • Do not overload customers with unnecessary communications