Where are we headed? Ad Age’s Where Series examines the unprecedented challenges facing marketers and offers a look at where the industry is going in 2021 and beyond. In the last of four quarterly reports, we highlight the trends fueling the evolution and growing importance of customer relationship management.
Why customer relationship management is the top first-party data brand strategy
For Panera Bread, the future of customer relationships looks like this: One of the 45.4 million members of the MyPanera loyalty program walks into a Panera location. When the customer reaches the register to order, the associate behind the counter knows the customer, based on the payment and loyalty ID, and responds appropriately—saying hello by name, and perhaps offering a free cookie or personalized treat.
Or maybe that customer places a pickup order online or via the MyPanera app. The café staff is notified when to prepare the order—in a “just in time” way—so that the food can be as fresh as possible, via a geo-forecasted guest arrival system the chain plans to roll out in the first half of 2022.
It’s all part of an expansion of the chain’s digital capacity, with the goal a coordinated, 360-degree view of the customer that leads to a best-in-class experience. George Hanson, senior VP and chief digital officer for Panera, says, “With the app, we know who is ordering and what they’re ordering, and have been able to leverage that data with surprise and delight rewards for customers. This year we rolled out in-app personal product recommendations and personal reorders that begin to leverage that data further. It allows us a data-driven merchandising approach. We can obsess over what we feature for each MyPanera customer, including the sort order, like Amazon obsesses over how its category searches are sorted.”
At the heart of relationship management is acquiring and retaining customers—and hopefully creating maximum lifetime value. Brands like Panera are using a host of tools, from CRM and CDP platforms to second-generation loyalty apps and programs, to manage their customer relationships in “hyperpersonalized” and ever more sophisticated ways.
Why? According to new Salesforce research, 80% of customers agree that the experience a company provides is as important as its products or services; on the flip side, 80% of marketers say customer experience has become the key competitive differentiator. That Salesforce research shows a big boost in marketing organizations tracking metrics such as customer acquisition, retention, referral rates and overall customer satisfaction. And when marketer respondents were asked for their top priorities, three of the top five were new in 2021, led by “creating a cohesive customer journey across channels and devices.”
Response to the pandemic
Mike Kostow, exec VP-general manager for Salesforce Marketing Cloud, says the pandemic is partly responsible for the amped-up focus on customer relationship management. “The massive acceleration to a digital-first environment during the pandemic raised the customer expectation bar,” Kostow says. “I don’t believe that is going to unwind just because the pandemic is waning.”
CRM platforms that started as sales-management tools—with a b-to-b focus and a big presence in industries such as insurance and real estate—keep expanding their reach and their features, from social media integration to AI-powered chatbots. Even the biggies like Salesforce and Adobe are increasingly available to all sizes and types of companies, in virtually all categories. If those are too much or too pricey, there are enterprise customer data platforms that work to connect brands’ data stacks.
“Although the general tactics in CRM or lifecycle marketing aren’t new, the tools and tech and analytics are so much more sophisticated than even a handful of years ago,” says Jason Heller, CEO of Transformation Ventures.
AI drives customer experiences
For Tasso Argyros, founder and CEO of customer data platform ActionIQ, the term CRM itself “is so old-school. What people talk about now is the customer experience.”
Key to using data to deliver those highly personalized experiences is artificial intelligence. Heller says the best AI models can quickly predict lifetime customer value, and help engage new customers immediately. “At the end of the day, the more power your models have at predicting the right experience for each customer, you can create more value in a particular way—for instance, help prevent the churning of that customer—by optimizing messaging by time of day, day of week and the channels you choose,” Heller says. Salesforce, for instance, says its Einstein AI product delivers more than 80 billion predictions per day for clients.
“The more accurate those models are—the more AI-based they are—the more value you get out of the system,” Heller says.
Hovering in the background of all these customer relationship efforts is the knowledge that in a cookieless world, first-party data will be more valuable than ever. Kostow says, “It’s a pretty significant shift going on, as brands think about the digital-first customer. Pretty much every conversation I’m having with our customers now is about building that first-party data asset.”
World-class customer experiences
Steve Silvers, senior VP-product and general manager-customer experience for Neustar, says, “The confluence of events—the pandemic, the growth of digital interactions and the drumbeat of cookie deprecation—has made this first-party data asset more important than it was before. We’re seeing a lot of direct-to-
consumer brands pop up in nontraditional areas, and traditional brands launching their own DTC products, because DTC brands have become so adept at leveraging their data—and brands want to compete with them.” Brands that historically didn’t have a direct relationship with their customers—CPG brands and automakers, for instance—will continue setting up loyalty programs and apps in the effort to connect directly and to acquire their own first-
party customer data.
As brands and marketers seek more ways to bring together the entire customer experience, expect more companies to implement organizational changes that reflect that goal—managing data and the customer experience in a more seamless way.
Argyros points out that many companies still often function as two separate parts—the corporate and marketing functions on one side, and on the other side the team on the ground. Think hotel chains, airlines, restaurants, retail. “CMOs have the opportunity to become chief customer experience officers,” says Argyros. “Historically these two sides of the business might have only connected at the CEO level. More and more companies want these sides to come together. So who’s on top of that? There’s an organizational and governance aspect to this, and there’s no reason for marketing not to have that role.”
It all comes back to the customer. “Becoming more data-driven and customer-centric means providing more relevancy to consumers,” Heller says. “And the holy grail is delivering a world-class experience for the customer and for the company.”