Customer Relationship Management Solutions

Creating Integrated Marketing Solutions
Based on VOC Research

I. Background

Per Dave Schatteman, President of Progressive Hydraulics, (PHI); “Our goal is to increase the size of our company 2X over the next 5 years.  Until now, we have handled marketing like many other small businesses; send out some mailings and sales reps and hope for the best.  As a result, our response rates have not lived up to expectations.  Finally, we decided to re-think our whole approach to marketing and develop strategies based on what customers and prospects truly need.

As a small company, we did not have in-house marketing research and strategy planning expertise, so we turned to Ernan Roman Direct Marketing. Their role is to teach us this process so we can do it ourselves in the future.”

II. 3-Step Marketing Process

Following is the 3-Step Voice of Customer-Driven Marketing Process that helped PHI significantly increase marketing return on investment and achieve double-digit response rates.

The guiding principle behind this process: companies need to stop “Spray and Pray” blasts of mail, email and telemarketing. They do not work!

Successful marketers are switching from “Push” and “Blasts” to establishing opt-in, preference-driven relationships with customers and prospects.

Companies with solid brands and compelling value propositions have nothing to fear from opt-in strategies. Customers and prospects welcome the opportunity to self-profile their message, offer and media preferences – in exchange for meaningful value propositions provided by the marketer.

The resulting self-profiled data creates uniquely powerful databases which enable companies to deliver very targeted messages and achieve consistent double-digit response rates.

The 3-Step Marketing Process is comprised of the following:

Step 1: Voice of Customer (VOC) Research
Step 2: Opt-In Marketing Strategy
Step 3: Integrated Multichannel Marketing.

Step 1: Voice of Customer Research:

Action Item #1: Define Voice-of-Customer Research Objectives
The first step is to define specific and actionable Objectives you want your Voice-of-Customer Research to achieve.

For PHI, the Research Objectives included:

1. What attributes and services are customers looking for in a provider of hydraulic and pneumatic products?
2. What are the decision-making steps in selecting a hydraulic and pneumatic supplier – and who is involved in the decision?
3. What factors influence the decision to remain a customer of a hydraulic and pneumatic supplier?
4. How do customers define a competitively differentiating “value added”?
5. What would cause a customer to change their distributor?
6. What are customer’s expectations of the role and value of a distributor’s;
   • Field Sales
   • Inside Sales
   • Technical Service
   • Web Site
   • Stores.
7. How do customers react to the PHI web site, brochures and flyers?
   

Action Item #2: Construct the Research Sample
The next step is to design the Research Sample that supports the Objectives.

The Voice-of-Customer Research Methodology is based on one-to-one depth telephone interviews. We switched to this methodology because over the past 15 years, we found that the value of traditional focus groups could easily be compromised by powerful personalities in the group who are outspoken in their positive or negative views.

In the course of testing, we found that 1 hour, one-to-one, in-depth interviews have proven to be the best means of generating the substantive information required to meet the in-depth marketing objectives necessary for developing an effective marketing strategy.

Another benefit is that given the depth of information generated from these interviews, relatively few interviews are required.

As you can see below, the PHI Research Grid was based on 6 interviews per cell.

However, if your Research Sample has less than 10 cells, we recommend a minimum quantity of 8 interviews per cell.

Active Customers Inactive      Customers *, ** TOTAL OEM    Purchasing 6 6 12    Engineering 6 6 12 Users    Maintenance 6 6 12    Engineering 6 6 12 Store Customers 6 6 12 TOTAL: 30 30 60 * Large and medium customers ** Purchased within 12-24 months

Action Item #3: Design the Interview Guide and Conduct Interviews
To allow sufficient time for in-depth questions and discussion within the 1 hour interview, questions should be limited to 35 - 40.

The actual interviewing should be conducted by people with training in market research interview techniques.

For PHI, sample questions included:

1. What is your role in your company (i.e. purchasing, engineering, technician…)
   • What is your role with respect to purchase of hoses, fittings, pneumatic and hydraulic products?
2. Are there others in the company you need to coordinate with regarding the purchase of hoses, fittings, pneumatic & hydraulic products, and if so, what are their roles?
3. How many suppliers for these types of products do you order from? If more than one, how do you decide which one to order from?
4. What might cause you to change suppliers or add a new one?
5. PHI offers several resources which allow customers to obtain information about products and subsequently purchase them. How effective are the following 5 resources in satisfying your needs:
   • Field Sales
   • “Inside Sales” (Phone-based)
   • Technical Service
   • Website
   • Stores
6. How should these 5 resources be improved to serve you better?
7. How can the website be improved to provide you with a better customer experience?
8. Would you be willing to self-profile your preferences and interests so PHI could customize an e-newsletter and other communications per your individual interests?

Step 2: Customer Driven Opt-In Marketing Strategies:

Based on the in-depth learnings from the VOC Research, we were able to design customer relationship management solutions that enabled PHI to:

1. Communicate powerful value propositions which encouraged customers and prospects to “opt-in” and self-profile their preferences and needs.
2. Effectively deployed an integrated multichannel mix web; including Inside Sales, Field Reps, Email and Stores.
3. Develop relevant messages and offers, which for the first time in PHI’s experience generated double-digit response rates.

Step 3: Going Live With Integrated Multichannel Marketing: 10x Increase Response:

Based on the learnings from the VOC, PHI created value-added Hydraulic and Pneumatic Training Workshops to drive qualified visitors to its various locations.

Highly targeted lists of customers and prospects were invited to attend the training events.

Invitations were generated via a carefully integrated multichannel mix of Field Reps, Inside Sales Reps, Store personnel and Email and Fax communications.

Following is the 7-Step Registration Process that was developed for PHI:

1. Invitation Call
2. Follow-up Information
3. Follow-up Call within 24 Hours
4. Confirmation Letter
5. Reminder Call 72 Hours prior to the Training Event
6. Follow-up Letter, Certificate, etc. within 5 Days after the Event
7. Follow-up Needs Assessment Call, Field Visit, etc. within 8 Days.

III. Results

According to Dave Schatteman, “PHI experienced a 10x increase in qualified attendees to the training events compared to the response baselines established over previous years. This was the proof I was looking for that Voice-of-Customer-driven marketing translates into significant increases in response and revenue.”

These results are consistent with the double-digit response rates achieved by other clients:

• Small / Medium Company Results:
  • Palms Trading Company:
    • Increased annual sales 10% year to year.
  • Golden Rule Insurance:
    • Increased sales conversion 88%.

• Large Company results:
  • Hewlett-Packard:
    • Increased response 300% - 1,000%.
    • Increased registration rates for web and e-mail offers from 2% to 31%.
    • 50% less marketing waste.
  • Microsoft Small Business Program:
    • Opt-In rates of 40% to 70%.
    • Click through rates up to 75%.

Click here for additional customer relationship management solutions case studies.

We wish you the best of luck in using the Voice-of-Customer-driven 3-Step Marketing Process to achieve double-digit response.

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