Using customer trackers as a commercial tool

 

Over the past 25 years or so, the use of customer tracking research has become ubiquitous.

Today, the need for continuous, comparable and competitive metrics on ‘how we’re doing’ in the eyes of customers is as accepted as motherhood and apple pie; and tracking – as CSI, CEX, brand, NPS, whatever – is now the biggest category of £-spend on research.

Despite this ubiquity, I am convinced of two things: that the value clients get from trackers continues to decline; and that the opportunity for marketers to use trackers commercially as a tool to build customer value and profitability continues to grow.

To explain why, I don’t want to look at trackers, but at the context for their use: this has changed profoundly in parallel with their rise to ubiquity.

From a marketers’ perspective, the past 25 years are defined by two meta-trends which, together, have redefined every corner of marketing practice:

1. The explosion of all things digital: the first phase of digital – think the web, email and ‘a computer on every desk’ – transformed the supply side and fundamentally changed how we work. The second phase – think home broadband, mobile devices and connectivity, and social media – is still working through, empowering the demand side and re-shaping consumer behaviours and expectations across the board.

This second phase has created new ways of getting feedback from consumers and exponentially increased the quantum and breadth of data available to marketers. Rather than driving a rethink about tracking, though, this has fuelled the emergence of ‘real-time data collection platform’ software and a fall in the unit cost of research.

2. A greater focus on customers: there are two strong arguments for focusing more on customers. The first is based in the reality that, in the developed world, most markets are now saturated. Penetration growth has slowed or stopped and, as a result, the competitive battleground has shifted from winning new to keeping existing customers.

The second argument boils down to one basic truth: that, for most businesses most of the time, it’s a damn sight more profitable to keep an existing customer than to win a new one.

The multiple dimensions of this – cost of acquisition, cost to serve, customer retention, advocacy, lifetime value etc. – all point up the profound commercial logic of keeping the customers you’ve got.

We have looked at a lot of trackers and briefs across a good many sectors. From this, I now believe that, as a direct consequence of the two meta-trends above, clients are getting diminishing returns from their investment in tracking.

What’s more, I think this is getting worse because, while the context for tracking has changed fundamentally, trackers themselves haven’t really moved on. And that’s the opportunity for marketers.

In recent years we’ve helped a number of major clients move their trackers on. More than anything, this has shown the deep commercial value that tracking can deliver – so long as the tracker evolves to embrace and leverage the changed context in which tracking is done.

O2 is a very good example. We took over O2’s CSI tracker in 2009 and, since then, have worked closely with the business to evolve it as a commercial tool. O2 is a terrific story which, for the first time ever, was told publicly at last month’s Esomar Congress in Nice. (Please contact us for a copy of the paper).

I don’t want to tell the O2 story here, but use it to illustrate what’s involved in evolving trackers as a commercial tool. There are seven points I’d particularly highlight:

1. Do less better: don’t try to measure everything; instead, focus obsessively on ‘what matters to customers’. Whatever happens, do not change anything until you are certain you know ‘what matters’; then re-work the tracker around this. And make sure you periodically refresh your understanding of ‘what matters’.

2. Prioritise key journeys: generally, 80 per cent-plus of ‘what matters’ centres around a handful of customer journeys. Concentrate your effort and resources against these.

3. Be ruthless: shorten, merge and synthesise every ‘parallel’ tracker you have. If you have, for example, a tracker for offline and another for online, or different trackers for different touchpoints, then integrate them. You are interested in tracking customers, not measuring fragments (but use analytics for the diagnostics).

4. Get a competitive read: you can’t track ‘how we’re doing’ in the eyes of customers without having a competitive reference point. Customers do, so you need to too.

5. Link tracking to transactional data: this is the single most crucial thing to do. It takes time and a bit of ‘test and learn’ (via a strong, commercial analytics capability), but the returns are enormous. Essentially, this is what enables you to put a £-value on what you’re tracking, quantify the commercial impact of movements in tracker metrics and get the full attention of the board.

6. Link tracking to operations: this is the most difficult piece to get right but, again, it’s worth the effort. Being able to (a) connect operational data to tracking metrics; and (b) use the tracker (with transactional data) to prioritise operational improvements is a game-changer. Analytics is key to this, but the critical factor is confidence that you are building on a deep, current understanding of ‘what matters to customers’.

7. Get it right: evolving an existing tracker is a journey – it takes time. Yes, there is an imperative to improve stuff as soon as possible but there is an even greater imperative to get things right in evolving the tracker (which includes not losing historic comparability). Integrate the team – research, analytics and marketing – and allow time for ‘pathfinder’ work, testing and learning, and a robust ‘parallel run’ before going live.

Above all, have patience.

Tracking used to be the most dull-but-worthy corner of the research industry. This moves it centre-stage as a powerful commercial tool that marketers can use to build customer value and profitability. It’s the most exciting opportunity we’ve come across in years.

John Gambles

Chairman
Quadrangle Group

The Butlers Wharf Building
36 Shad Thames
London SE1 2YE

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