As legendary management theorist Peter Drucker once remarked: “The purpose of business is to create and keep a customer”. Indeed, the art of creating new customers, as per the maxim, has been well-documented by many business publications, but the challenge of keeping customers is not always given quite as much mainstream attention.
Research from Econsultancy a few years ago demonstrated that seven out of 10 businesses reckon it easier to retain a customer than acquire one. If this is the case, why is more attention is not devoted to this topic?
In recent years, customer relationship marketing (CRM) has emerged as a key means by which businesses can tap into their existing customer base to generate easy profit. To find out a bit more about the potential benefits of CRM, Business Chief spoke to James Ray, CEO of Armadillo CRM, a big player in the space which underwent a management buyout earlier this year.
Ray was part of the three-man team responsible for the buy-out, and has been with the company since 1996, previously serving as Armadillo’s Client Services Director, Chairman and MD prior to the buyout. We asked him exactly how CRM works.
“Data is our raw material,” Ray explains. “In our case our clients tend to be business-to-consumer (B2C) brands so we are usually working with consumer data, purchases, clicks, logins, browsing and so on. We mine the data for insights – analyzing patterns, trends and signals. That insight feeds a strategy to engage, influence or change the customer’s behavior in line with our client’s objectives – usually with KPIs and a business case attached. Then we bring that strategy to life with the right mix of data, creativity and technology to change the customer experience and deliver the behavior change our clients are seeking. That might be to get the customer to spend more, become more loyal, or even to feel more positively toward the brand. To complete the loop, we analyze the resulting data and optimize the strategy.”
Armadillo, which is celebrating its 25th anniversary this year, lists McDonald’s, the BBC and Disney amongst its clients. The company claims to have run a number of CRM strategies as part of integrated campaigns for clients which have driven double-digit uplifts in performance from the CRM channel alone. Impressive – but as companies embark on digital transformation and become more tech-aware, has CRM become more popular? “Yes,” says Ray. “The diversity of our client base points to this – digitally native brands like Hotels.com, where CRM is baked in to their DNA, as well as more traditional businesses like McDonald’s and Disney, where what started as a specialist channel is now core to their future plans.
“We often start working with businesses when they are consciously at a turning point in their approach to managing and using customer data. We help them build the strategy for managing their customer relationships, which helps define the associated requirements for technology within the business. I think there’s a shift in client expectations going on, not only in CRM but in marketing services more generally, too. With the accessibility of powerful marketing technology and the empowerment it brings, clients’ needs are more fluid and varied than ever before. Tailoring solutions and services to specific needs used to be a nice option to have – and a quirk of Armadillo – but now it’s an expectation.”
Armadillo is ambitious, and upon completion of the recent buyout, the new leadership announced the company now aims to double in size over the next five years. Integral to that is how it retains some of its bigger clients, while ensuring it enables its clients do the same.
“We’ve been the retained CRM agency partner for McDonald’s in the UK since 2011, helping them develop a CRM capability, originally from a standing start, with a full service that includes analysis, strategy, data management, creative and campaign delivery,” says Ray. “We’ve been working with Hotels.com since 2015, supporting their in-house team on strategy, analysis and creative projects that are tested in the North American market, and then rolled out globally. And we’ve been working with The Walt Disney Company since 2007, currently helping them deliver eCRM campaigns across five key European markets.
“What I love about what we do is that every client is different. For McDonald’s in the UK, who’ve had 48 quarters of consecutive growth, market share and sales are not a problem for them – the priority is building and sustaining customer affinity, so our approach is tailored to do that. That means eCRM programs that connect customers to new products and tastes according to their favorites and preferences, and driving them to use new convenience platforms like mobile ordering and delivery. For Hotels.com, who operate in a fiercely competitive and highly-commoditized market, it’s very different. Here, we work with the client to identify trends and patterns in customer behavior, and develop multi-channel CRM strategies to intervene with offers and messages in order to restore and retain customer booking behavior.”
According to Ray, the key to Armadillo’s success has been “fundamentally about finding the right people” and the fact the team has an “obsession with service”. That, alongside the company’s capacity to change and evolve, has helped it navigate any choppy financial waters caused by major events such as the global financial crash.
The CEO recognizes that you always need to have an idea of where the next major disruption or industry innovation may be coming from, and Ray has already identified the key areas Armadillo will be keeping an eye on over the coming months and years.
“For a while now, the big players in the marketing tech space have been sweeping all before them,” he adds. “We’re seeing quite a few frustrations on the client side as expectations have fallen a bit short. Our tech teams are increasingly called on to develop additional tech to plug some of these gaps. I can see this growing: the creation of mini bits of bespoke tech as a service rather than an off-the-shelf product.
“As well as artificial intelligence and machine learning, in Europe there’s the new GDPR legislation. Brands need to re-permission some or all of their customers ahead of the May deadline. We’re helping brands to make a virtue out of the opportunity for customers to keep their investment in the data they give and what benefits they receive in return. Although it’s been a long process for brands, it will also bring positive change in the long term, encouraging companies to talk to customers more openly about the value their data provides them.
“I think we’re still in the foothills of the potential for AI and machine learning, but it’s already changing the landscape. I think it’s a great opportunity not only for brands but for agencies like us – where machines can automate and do tasks better than humans, it leaves more time for humans to do the creative and lateral things that create resilient and loyal connections between customers and brands.”