Customer Relationship Management – the strategic choice

Posted by on Feb 19, 2014 in Blog

I hear a lot of people at the moment talking about Customer Relationship Management (CRM) and how they need to do it – the problem though is most are not doing it and seem reluctant to start.  After over 15 years of doing marketing in a whole host of organisations each time I’ve begun working at a new organisation it’s been like starting at ground zero in terms of CRM.  Why is that? 

Perhaps it’s because it takes a lot of dedication and hard work starting with setting out a strategy. It won’t happen without one and what’s also important is to get the foundations right. It’s not about selling, it’s about marketing.  Focus on finding out who your customers are, what they want and actively seeking to meet their needs – that means developing audiences by seeking to change their behaviour but with their needs at the core not your own or your organisations. 

So what might a strategy look like?  As mentioned earlier getting back to basics is a good start.  Take a look at your customer data, the box office system should be an organisations’ most powerful CRM tool – the ‘database of truth’, encompassing all the information on your customers and their interactions with you organisation, from every ‘touchpoint’.  

More often than not there’s a systematic underdevelopment of box office data where only the top most loyal customers are every contacted and the rest are ignored.  I strongly believe that you also need to centralise your data, bringing the whole organisations contacts into once place.  There can be a lot of resistance from ‘over protective’ departments and it often requires a big cultural shift but it’s a no brainer in terms of good practice and making a CRM strategy work.

Why do we just focus on the people ‘in the know’ who are like us?  I suppose because it’s easy, a quick win.  The task should be to persuade the less knowledgeable and wary to come and to come more often.  Any audience development strategy should be about, at the most simple level increasing the number of attenders (often a priority for financial reasons), enabling both existing attenders to enjoy more often and new attenders to come along for the first time.  Not forgetting of course increasing the range and size of audiences.  So a model that is still relevant is the good old loyalty ladder with audience development being about getting your customers to move up the ladder.  This isn’t new but it’s astonishing how difficult is seems to be for many to achieve in a consistent, coherent and holistic way. 

To illustrate the CRM bit on the ladder here’s how something called the ‘Audience Builder’ system reinvigorated an ailing Royal Liverpool Philharmonic Orchestra and why it’s subsequently been adopted by arts organisations across the UK.  In the early 2000’s, like most other UK orchestras, the Royal Liverpool Philharmonic Orchestra’s audiences were in decline.  Two decades of ‘status quo’ marketing had failed to engage a whole generation of potential concert-goers.  As the audience aged, the subscription base began to ebb away and the huge numbers of group bookers that once thronged the ‘Classics’ concerts dwindled to a just a few die hards.

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We’d ended up creating a core of loyal, high frequency, subscribing super-attenders but for every core attender there were three irregular attenders, double that number who we hadn’t seen for a year or two and nearly three times that number who weren’t mailed anymore.  And our communications were either; brochures aimed at the tiny core audience or terrible direct mail letters that were full of patronising, hackneyed and clichéd phrases.

So we needed to stop selling tickets at the database and start helping individual audience members to buy them. It was a whole audience-focused philosophy.  It was real audience development and what was developed were relationships that yielded loyalty, frequency and risk-taking.  The philosophy was backed up by the whole audience-focused science of CRM. The Audience Builder system was bespoke Customer Relationship Management pioneered at the Royal Liverpool Philharmonic Orchestra, with Andrew McIntrye (Morris, Hargreaves, McIntyre), and has subsequently been rolled out across the UK and in the USA and Australia.

What was, and is so important about it, is that it wasn’t just another audience development scheme or just good marketing it was a new approach to arts marketing management – a complete, integrated system that helped to deliver the audience and financial targets needed to achieve our artistic ambitions.  What made sense for Board, Chief Executive, artistic colleagues and the marketing team was that it grew sales; increased audiences; informed planning; targeted campaigns at those most likely to buy, even if they hadn’t bought similar before; made us more persuasive; helped us manage our brand; maximised financial return; monitored performance; and produced clear, understandable reports. In short, it became a personal development plan for each and every member of the audience.

At the heart of the system is sophisticated segmentation.  We analysed the box office data to identify and define distinct segments with different behaviour, motivations, attitudes, needs, and responses.  We then set specific objectives and targets for each segment and devised detailed marketing strategies and plans to achieve them.  Everything can be, and is, differentiated: the product, the price, the promotion – indeed the whole marketing mix.  So it was no longer one size fits all, everything was relevant and persuasive.

We segmented our attenders into a Climbing Frame of Loyalty – they were graded according to their frequency and the type* of concerts they attended (*by that I mean the perceived difficulty from an audience perspective taking into account unknown or little known works, new music and artists).  The Frame included lapsed attenders right through to the most loyal subscribers and group bookers:

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There were also a whole host of Excel campaign planning sheets plus a Learnings sheet and a Marketing toolkit sheet.

We slashed the number of brochures.  We scrapped the ineffective ladder adverts.  We did away with the old-fashioned direct mail letters and replaced them with evangelical, celebratory messages that were genuinely personal from us rather than superficially personal to them.  We developed easy to use subscription material and we even started to ring the audience to talk to them about what they thought.

The results were spectacular.  At campaign level the exact return on investment doubled and sometimes tripled.  At strategy level the organisation was transformed with 14,000 new attenders meaning that the audience grew by a staggering 44% in three years.  Retention and frequency went up, seat occupancy went up 13% and ticket yield up by 14%.  We also gained 1,600 new subscribers and a quarter of the audience were persuaded to try more challenging concerts.  All this definitely showed the vital signs of a healthy audience.  It was the combination of a deep understanding of the audience, sophisticated segmentation, a totally strategic approach, application of innovative audience development techniques and lots of very hard work by the team at the RLPO.

Audience Builder did require a fundamental change to the way we planned, budgeted, communicated and monitored our strategy and the process of adoption needs very careful planning.  It could be compared to the challenge of changing box office systems. For example, you might have to change staff job descriptions to meet the increased data needs.

It’s not for the faint hearted but if arts organisations want to look to the future and survive in this brave new world of reduced funding then CRM, whether it’s Audience Builder or something else, has to become reality, a way of life, not something to be talked about and then forgotten.

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