27 months CRM @ limango - my learnings about customer dialogue & MarTech. (EN 🇺🇸)
I remember the day in the summer of 2016 sitting in an interview at limango where my counterpart explained to me that they are searching for a Product Owner (PO) to cover one of three development teams. These teams are responsible for the webshop, the app or CRM. My honest answer was: “Guys, I would go for app development." I said this because I wanted to learn more about app development, but I also offered to cover webshop development, if they wanted me to. Regarding the CRM PO position, I said: "I am the wrong guy because I have no idea what it is all about and I have no experience.”
Long story short: my first day as PO for CRM & Customer Dialogue at limango was January, 2nd 2017. BTW: Thank you, Thomas, for convincing and "selling" this position to me. Otherwise, I would not have found out neither the importance of CRM for the business nor all the tools & methods. And this is what I want to share now.
What does CRM mean for business?
During the last couple of years, customer relationship management (CRM) as business function became significantly important for every kind of online business. Between 2000 and 2005 it was good enough to invest in search engine optimization (SEO) to generate traffic for the online business. Now it is still necessary but became common sense in product development and go-to-market measures of an online business. Between 2005 and 2010 it was good enough to buy traffic via search engine marketing (SEM) and other channels because costs have been very low compared to the classic offline communication channels. Then between 2010 and 2015 Display and Real-Time-Advertising (RTA) became more popular in order to allocate marketing spend more efficiently. As the number of online businesses and therefore the demand for lead generation via performance marketing channels have increased, cost per lead and cost per buyer raised to such a level where unit economics do not work anymore.
Nowadays it became inevitable to keep expensively bought leads active and engaged in order to get new leads into action, prevent churn of existing customers and increase customer lifetime value over time. These are the main business goals of CRM in order to get customer lifetime margin higher than customer acquisition costs. Important to know is that a good CRM strategy does not start after first purchase, but already after the very first contact.
A business can be sustainable, only if the company acquires right leads by good brand and performance marketing, converts this leads into customers, keeps customers active and repeatedly buying by good CRM. This can be measured by year based cohort revenues of leads, as Sven explained at NOAH conference (starting at 5 min 30 sec):
The goal is to keep the revenue from all leads, which have been acquired during a certain year, at least stable. This can be mastered by churn prevention combined with the utilization of own lead and customer base. If a business masters this challenge, then it will profit from a very low cost-to-revenue-ratio for marketing spendings. It is possible because communication to existing customers or leads via owned channels is significantly cheaper than performance or brand marketing ad spend needed to convince a very new customer to buy.
How CRM works?
In order to reach excellent customer activity, it’s important to communicate relevant content and offerings to the customer. Therefore being customer-centricand to know what my customer wants and expects is inevitable. But how do we know? There are two possibilities: guess or ask.
By guess, I mean all the BI-driven methods to calculate the probability for a particular interest using behavior data of the customer with my product or service. These methods in most cases might produce appropriate results and bring business uplift, but they are obscure from the customer's point of view on the one hand. On the other hand, such methods usually need a minimum number of behavioral data and also time to adjust recommendation results once a customer changed her behavior. Otherwise, my recommendations will hang behind the customer's interest.
To overcome this it’s better simply to ask the customer for her preferences and interests. Using this first party data the company can satisfy customer’s expectations much better because it simply knows what the customer wants.
In order to achieve a valuable cost-to-revenue-ratio for CRM communication, it’s necessary to set up automated communication paths. The benefit of automation is its scalability: there is only a one-time effort to set up the path and almost endless profit with really low marginal costs. Therefore it’s not important to use as much data as possible for automatic segmentation and using as many variables as possible for content personalization. The most important thing is to set up a coherent communication strategy based on very few data variables along the customer’s lifecycle. This way the complexity will be reduced and automated communication paths can be set up based on each other for the entire customers lifetime.
The best results can be achieved by combining both worlds: automation and relevance. This can be done by introducing reminder services for customers. They work simply: the customer selects what she expects and the company reminds the customer as soon as the product or offering of her interest is available.
The masterpiece of doing good CRM communication is to provide relevant content via the right channel and to be consistent with the marketing message for the particular customer across all channels this customer is using. From the tech and product point of view, the challenge here is to identify this particular customer across all the devices and channels. Exactly this is the reason why user login brings a strategic benefit for an online business. Nowadays it pays off if a company implemented user login 10 years ago, especially if competitors did not.
What is the Tech behind CRM?
End of 2016 and at the beginning of 2017 (only 2 or 3 years ago) it was hard to find a tool which covers business needs for outstanding CRM. In order to accomplish all the requirements for doing valuable CRM, the so-called MarTech industry has grown up during the last couple of years. Marketing Technologies have the purpose to give marketing and CRM managers the possibility to provide the right message via the right channel at the right time to the right audience and measure everything. The development of MarTech is in essence comparable with AdTech, which has grown up 10-15 years ago. At those time there have been an uncountable amount of Software-as-a-Service providers. They have been hard to distinguish and their positioning in the value chain was hard to understand. Currently, we can see the same tendency for MarTech. It forces companies to think and decide about their tech strategy in this field. A good CRM ecosystem should combine the following capabilities:
Customer data platform (CDP) to store all the customer data in one central place.
Automated data import processes to identify customer data updates in own systems, transform and update them in the CDP.
Segmentation: this allows CRM and marketing managers to build their audiences by using any combination of segment criteria
Campaign management system: this allows CRM and marketing managers to set up a campaign among different touchpoints and over a period of time
Channel implementations which are necessary to deliver your message to your customer. This could be an email, an app push, a print mailing, a messenger, an on-site or in-app message or even a completely new unknown channel.
Tracking & Reporting among all channels to enable data-driven decisions by CRM and marketing manager
What else...?
I am very proud to have been part of limango, which is one of the CRM leaders in Europe’s eCommerce landscape. Credits for this go to Melanie, Verena and Daniela - three power girls with a passion for CRM, who introduced CRM tools and methods to me during my 27 months at limango.
For me personally, it was an exciting ride through CRM and the tech behind it during the last 27 months at limango. I had no idea about CRM but only some about AdTech. There have been no best practices for implementing a state of the art CRM tech ecosystem. So at limango, we’ve been pioneers to implement something replicable and affordable by other middle-sized companies, which we realized as other companies started to approach us for know-how sharing especially last year. The increasing interest of other companies shows me: CRM matters and what we did was not bad at all.
What about your business?
Take couple of minutes and think about your current CRM strategy. Do you have one? Does it pay off already? Is your tech stack prepared to reach your customers among different and even yet unknown channels?