Amazon’s valuations are another great example. Why has Amazon’s stock risen to stratospheric heights? Because CEO Jeff Bezos, back in the early days, focused on acquiring and retaining customers and building broad relationships. In the Net Economy, the depth of your customer relationships is directly proportional to the value of your business.
Knowing who your customers are and being able to interact with them to build strong, life-long, valuable relationships is the winning strategy in the e-business world. And it’s the first rule of good marketing. That’s why some dot-coms will continue to take over conventional companies. They have the formula right. Do you?
Building the basic customer profile
What should you be tracking and measuring in your e-business? First and foremost, you need to know who your end-customers actually are – not just to what market segment they belong. Start by being able to identify and greet each customer by name and by knowing his or her email address. And this definitely applies to the world of art and business.
Next, you need each person’s billing and shipping addresses, phone number(s), and any other profile information they’re willing to offer in exchange for trust and value. In the consumer world, you need to know whether they’re part of a household, and in business-to-business, whether they’re employers or employees of a business.
You also need to have a composite view of your total relationship with each end-customer. For example, Time Warner needs to know which of its end-customers and their households subscribe to which of its magazines and also use its cable service. Financial services conglomerate Fidelity Management&Research needs to know which of the end-customers for its employer-provided 401(k) plans are also customers on the retail brokerage side of its business.
How do you entice customers to give up their privacy by telling you who they are? That’s easy. If you’re already in a business relationship with someone, you should know who they are. So your first goal is to ensure that you can get into a relationship with each customer as early in the decision-making/buying/usage cycle as possible. Your goal isn’t to snoop. It’s to streamline customer scenarios. You need to know which contact method each customer prefers to use – phone, email, Web, face-to-face, PDA – and in which contexts. And you’ll want to know which purchasing channels they prefer – catalog, phone, Web, physical store – both direct and indirect, for different kinds of interactions.
What you really should know
Now you have the basis for a reasonable customer profile. What’s next? Forget eyeballs and conversion rates. These are the things you really need to know: How often do you interact with each customer? How often does the customer interact with you? How frequently does the customer purchase from you – tracked by channel and across channels? When was the last time they purchased or interacted with you? What is the value of the average order they’ve placed with you? How is that order size changing over time? How many categories of your products and services do they purchase?
Then track the quality of the customer’s interactions. How satisfied is this customer? How often do they complain? How were complaints handled? Did the interaction result in a more loyal customer or a more disaffected customer? Do they have any outstanding billing or service problems? The point of gathering deep information about your customers is not just to sell them targeted advertising. Nor is it to spam them with offers. No, the purpose of knowing your customers intimately is to start up lifelong relationships with them. You want them to continue to do business with you for years, not seconds. That’s how you build the value of your business or e-business.