This is to show how customer-centric marketing

1. White PaPer
Customer-Centric Marketing: You Can Get There From Here
It’s been nearly fifteen years since Peppers & Rogers published their eXaCtLY What iS CUStOMer-CeNtriC MarKetiNG?
seminal book, The One to One Future. Nowadays, few marketers To implement customer-centric marketing, organizations need a
seriously question the importance of focusing on the customer. working definition. What is it, exactly? How does it differ from
Unlike many buzzwords of similar vintage, customer-centricity has traditional marketing?
never been discredited or gone out of fashion. In fact, it has become Here’s our definition: customer-centric marketing is marketing
even more urgent, as powerful market dynamics have relentlessly designed around each individual customer. It relies heavily on highly
reduced the efficacy of traditional marketing tactics. granular, personal targeting and customer segmentation.
Nevertheless, the ranks of companies that are truly customer-centric Most traditional marketing organizations have been organized in
remain thin. Those that have achieved this goal, like Best Buy and
fundamentally different ways: around mass markets, in which all
Southwest Airlines, have become Wall Street and media darlings.
customers are treated essentially alike; around specific products
But too many companies and marketing organizations are still stuck
and families, reflecting the internal structure of the business and its
in the no-man’s-land between knowing and doing.
managers; or around channels, such as stores, catalogs, Internet
Even in the banking industry, which has earned a reputation for sites, and direct marketing via sales forces.
pioneering marketing innovation, customer-centricity has made
It is now both possible and essential for customer-centric marketers
surprisingly little headway. “Despite ten years of effort,” says Tower
to transcend these distinctions—which are, after all, largely artificial
Group’s Kathleen Khirallah, “just a few banks have made real
from the customer’s viewpoint.
progress in becoming customer-centric. Most banks still care more
Using new technologies—and the immense amount of detailed data
about process and IT efficiency than about individual customer
they generate—marketers can now identify and leverage new syner-
satisfaction.” Financial services firms are far from unique. Op-
1
erationally focused metrics—such as load factors and occupancy gies in sophisticated multi-channel marketing. They can reach every
rates in travel and hospitality, or same-store sales per square foot in customer where and when that customer wants to be reached.
retail—still drive most decisions. They can make offers that have been individually personalized to be
Unica works with more than 800 of the world’s leading marketing
® as relevant and compelling as possible to each individual customer
organizations. Our clients include legendary innovators like Best Buy and prospect. More broadly, using the technology and data, they
who have successfully made the journey to customer-centricity and can drive strategies that align the entire enterprise around customer
are reaping the benefits. Our clients also include companies at all needs and desires—including non-marketing functions such as
stages of the journey: companies who have learned hard lessons product development.
and are making slow progress, but nonetheless continue in the
right direction. WhY iS CUStOMer-CeNtriC MarKetiNG
SO iMPOrtaNt?
In this white paper, we’d like to share what we’ve learned in working
Over the past decade, every marketing “megatrend” has converged
with all of these organizations, starting with our two most important
to make conventional marketing less effective, and customer-centric
insights: Customer-centricity can be achieved. And when it is
marketing more essential. These trends are familiar to the
achieved, it can deliver the results it promises.
professional marketer:
We’ll begin by taking a closer look at the promise (and necessity) of
customer-centric marketing. Then, we’ll outline a nine-step blueprint • More competition and new alternatives are giving consumers
for becoming the customer-centric, one-to-one marketing organiza- more market power and reducing the power of suppliers
tion you need to be. • Both market channels and media have proliferated and frag-
mented, making consumers harder to reach on a “mass” basis
• Offerings are increasingly difficult to differentiate based on
features; commoditization is relentless, and low-cost strategies
1 Tower Group, Best Practices in Customer Management: Some New Methods are difficult to sustain profitably
Breaking Out, October 2006
Unica Corporation | www.unica.com 1

2. • Customers increasingly value their individuality, demanding to be • Extended their core direct marketing processes to deliver
treated as participants in a two-way conversation, not as passive programs across customer touch points to deliver a more
recipients of marketing messages consistent customer experience
• Leveraged predictive modeling to target programs
Just as marketers have traditionally been structured to deliver
conventional mass marketing solutions, so too have entire organi- Having done all this, they have reached the point where additional
zations. Many, if not most companies, have long been organized campaigns and models have begun to target the same customers,
around product lines or sales channels. In recent years, executives and where multiple marketing programs compete for attention with
have become increasingly aware of the shortcomings of these each other. More of the same simply exacerbates the problem. A
traditional structures: new way forward must be found. (The good news? Organizations in
• Duplication of effort across product groups this position may already possess many of the tools they’ll need to
succeed with customer-centric strategies.)
• Internal competition for customer attention, resulting in customer
contact fatigue The decision to adopt a customer-centric approach is usually a
• Lack of visibility into higher-level customer needs strategic one made by senior executives, often in the context of
other core strategies. Wachovia, for example, needed to generate
• Inconsistency in customer behavior that is increasingly
organic growth while consolidating a string of acquisitions. Hyper-
multi-channel
competitive markets also spawn customer-centric strategies, often
• Inconsistent customer experience
by firms seeking differentiators that will help them leapfrog the
• Inefficient marketing operations that cannot be accurately leaders they are competing against.
measured or aligned with business strategy
For Best Buy, the commitment to customer-centricity began when
senior management fore-saw declining marginal returns from adding
Customer-centric, one-on-one approaches help enterprises respond
more stores. Hence, senior executives shifted gears from geo-
to both their marketing and structural challenges. At their best, they
graphical growth to growing loyalty and wallet share. In the wireless
transform marketing from an intrusive annoyance into a welcomed
communications business, increasingly ubiquitous signal coverage
customer service. Even when that ideal can’t be fully achieved,
is reducing carriers’ ability to differentiate based on “the network.”
customer-centric strategies offer the potential to significantly
Hence, we see competitors adopting more customer-centric strate-
enhance loyalty and retention, reduce customer acquisition costs,
gies, such as Alltel Wireless’ emphasis on customer control over rate
increase revenue, support cross-selling, and drive sustained
plans and other product features.
improvements in profitability. More broadly, customer-centricity can
point to new and better ways to handle everything from R&D to Forrester Research2 has identified three approaches senior man-
financial measurement. agement can adopt once they have decided to pursue a customer-
centric strategy. They are:
For marketers themselves, customer-centricity offers one more
important benefit. Within the organization, marketing is, or ought • Most aggressive: reorganize around customer segments. For
to be, the “voice of the customer.” Where marketers are viewed as example, Best Buy created five key customer personas and
credible and effective, customer-centric strategies tend to signifi- focused everything from merchandising to channel initiatives
cantly increase their influence throughout the business. around these personas.
• Moderately aggressive: create new customer-centric brands.
What triGGerS the COMMitMeNt tO A major hospitality firm broke from the hospitality industry’s
CUStOMer-CeNtriCitY? traditional price-point segmentation to create customer centric
Often, organizations decide to undergo the upheavals required to brands segmented by lifestyle. Each brand is positioned around
become customer-centric in part because they have already wrung the emotions and experience desired by its unique segment.
all possible performance improvements out of their current market-
ing models. They may already have:
• Refined their direct marketing processes into highly automated,
closed-loop, high-velocity machines that can rapidly execute
2 Peter Kim, Forrester Research, Reinventing the Marketing Organization,
large, highly focused campaigns
August 9, 2006
Unica Corporation | www.unica.com 2

3. • Less aggressive: layer customer initiatives over the current customers on a daily basis. Silos must be blown up and attitudes
structure. Procter & Gamble is layering customer initiatives over changed. What’s needed is more akin to coercion and support.
its current product-driven structure. For example, its innovative
Fortunately, in many cases the ball starts rolling with an executive-
Home Made Simple program markets multiple products across
level decision to adopt a customer-centric business strategy, so
P&G’s brands to customers with common needs.
there’s buy-in at the top to begin with. As KeyBank CEO Henry L.
Meyer III put it, “I want KeyBank to be at the forefront… of a move-
iNtrODUCiNG a PrOCeSS FOr CUStOMer-CeNtriC
traNSFOrMatiON ment away from an obsession with selling products to one that
In Unica’s experience, organizations that are successful with emphasizes meeting client needs.”
customer-centric transformation typically follow a path that includes Harrah’s Entertainment, Inc. stands out in the world of travel and
nine main steps. While several of these can proceed in tandem, this hospitality as an early adopter of customer-centricity. The com-
list presents them in roughly chronological order: pany’s self-description perfectly captures its alignment around the
customer—an alignment that is systematically being achieved, not
1. An executive-level decision to adopt a customer-centric
merely promised:
business strategy, followed by sustained, long-term executive
commitment Harrah’s Entertainment is focused on building loyalty and
2. The implementation of a comprehensive data infrastructure and value with its customers through a unique combination of
tools that provide a “360º view of the customer” great service, excellent products, unsurpassed distribution,
3. Strategic segmentation, built from solid customer data by skilled operational excellence and technology leadership.3
analysts Once the journey towards customer-centricity has begun, it
4. Organization of teams that “own” each strategic segment and requires highly visible and enduring executive support. Leaders
serve as its voice—supported by a broader organizational must sustain the commitment over multiple years; five years into
structure that facilitates their success the process, even respected leaders like Best Buy believe they
5. Development and implementation of detailed, segment-by- still have many additional opportunities to drive greater value from
segment business strategies and marketing tactics customer-centricity.
6. Implementation of event-based and behavior-based marketing Throughout the journey, appropriate executive “coercion” involves
programs driving all eight remaining steps, from implementing data infrastruc-
7. The reengineering of processes, customer experiences, and ture through transforming metrics. Executives will be asked to lead:
(ideally) compensation around customers and segments
• Organizational change. Leaders must create ownership for
8. Broad socialization of segment personas and extensive the “voice of the customer,” and reengineer business
communication of the resulting business benefits across the processes around the managers and teams who have been
organization given ownership.
9. The development, delivery, and active usage of customer and • Culture change. Leaders must instill customer orientation into
segment-oriented metrics organizational values, principally through hiring, measurement,
and compensation practices.
As you can see, these steps touch all three dimensions of the enter- • technology investment. Leaders must invest in technical in-
prise: organization, resources, and infrastructure. In the remainder of frastructure, including data integration and enterprise marketing
this white paper, we consider each step more closely. management (EMM) solutions.
1. aN eXeCUtiVe-LeVeL DeCiSiON aND SUStaiNeD • investment in people. Organizational, cultural, and technical
eXeCUtiVe COMMitMeNt change must be complemented by investments in people: train-
These days, advocates claim the need for “executive support” for ing and skill-building for existing employees and, often, head-
count growth for customer segment managers and analysts.
any corporate initiative beyond switching #2 pencil vendors. But
what’s needed for real, down-to-the-bone customer-centric transfor-
One point is worth stressing, because it may not be obvious. While
mation is of a different order entirely. Focus on the customer doesn’t
many of these points relate to customer-centric transformation of
come naturally to most frontline employees who interact with
3 Harrah’s Entertainment, Inc. investor relations site corporate profile
Unica Corporation | www.unica.com 3

4. entire companies, we also see many marketing executives success-
fully pursuing customer-centricity within their organizations in a What is enterprise Marketing Management
bottom-up fashion. In so doing, they are building a record of (eMM) Software?
success that we believe will ultimately motivate enterprise-wide EMM is enterprise software designed to make marketing
action at the CEO level. more effective, efficient, and accountable. It is analogous
Lands’ End is a retailer who has embraced customer-centricity to the enterprise systems that have already transformed
company-wide, allowing it to permeate all aspects of their busi- other business functions, such as finance and supply
ness including their organizational structure, the marketing dialogue chains. Using EMM, organizations can transform all of
their marketing processes—from budgeting and planning
they create with their customers, and even the merchandise itself.
to project management and workflow, real-time execu-
Through the Lands’ End website customers can create custom-
tion and closed-loop reporting. EMM helps organizations
made products like jeans, chinos, blouses, swimsuits, shirts and
systematically integrate all forms of online and offline
pants. Customers follow the site’s guidelines and type in their
marketing they engage in, including brand, product, direct,
measurements. The style, fabric, and fit choices are made from a set
and event marketing.
of options on the screen. Lands’ End keeps these measurements
on the system’s files for the customer’s future orders. They also
align their marketing to these customer-centric products. They send
electronic gift certificates to these customers to encourage them to oriented analysis. Retailers tend to have schema designs organized
purchase through the Lands’ End Custom Program again; ultimately, around SKUs or transactions. In the travel and hospitality industry,
not only increasing the rate of repeat purchases but also building it’s common for firms to house bookings and reservations data
long term loyalty. separately from frequent traveler databases.
2. Data iNFraStrUCtUre tO SUPPOrt a (NearLY) 360° The “360° view of the customer” is emphatically a moving target.
VieW OF the CUStOMer Our digital economy produces a growing flood of types, sources and
The customer data store is the foundation of customer-centric volumes of data. When Forrester last conducted its State of the
marketing. Your goal is to create—and then provide easy access Customer Database survey4 even crucial data such as online
to—a comprehensive collection of information about individual customer behavior was missing from more than 80% of customer
customers.Your customer data store should serve as your corporate databases. Openness and flexibility is critical to surviving this
memory for all your customer interactions. Without it, you’re doomed constant change: you can’t afford to be stuck waiting for IT to
to continually re-acquaint yourselves with your customers, unable to integrate any new source of data you may need.
differentiate between those you’ve known for years and prospects This raises one more point about the customer data store: the
you’ve never met. Without an effective customer data store, you marketing organization may end up taking a greater degree of
can’t know your customers as individuals. You can’t respect their ownership in it. According to Forrester, “ownership of the integrated
preferences. You can’t develop new offerings they will value. data asset is the critical first step.”
Many companies are surprised at just how much value an effective
transforming Customer Data into Customer insight
customer data store can deliver. In fact, at Best Buy and many other
As we’ve stressed, a strong and consistent customer data store is the
successful customer-centric marketers, the customer segmentation
foundation of successful customer-centric marketing. Having said this,
that now drives the business has emerged organically from the
capturing customer data—and even owning it—is just the beginning.
database.
Customer-centric marketing also requires enterprise
While most companies involved in direct marketing have some
marketing management (EMM) applications to transform customer data
sort of customer data store, customer-centric transformation often
into customer insight and then drive actions and decisions. Simply
requires further investment. Additional, unintegrated sources of
put, customer-centric, one-to-one marketing cannot be done with-
customer data must be incorporated to provide a true 360° (or nearly
out the high degree of automation that is only realistic with EMM.
360°) view of the customer.
In organizations pursuing customer-centricity, EMM begins with
Schemas may need to be restructured to facilitate customer-oriented
analysis. For example, financial services firms often have siloed
4 Forrester Research, http://www.forrester.com/Research/Document/
account-centric design that complicates customer or household- Excerpt/0,7211,36982,00.html
Unica Corporation | www.unica.com 4

5. analytics: descriptive and predictive modeling, ad hoc reporting, and time for strategy and analysis. And they make it possible to
visualization intended to generate deep new insights about customers. deliver personalized messages consistently across touch points,
even in complex multi-channel, multi-step marketing campaigns.
Traditionally, analytics has been “locked in an ivory tower”: only
specialists in database marketing, analytics, and similar functions • Marketing resource management (MRM) gives marketers a
have worked directly with customer data. unified toolset for planning and budgeting marketing activities,
managing and collaborating on day-to-day design and produc-
Some leading companies use EMM software to serve customer
tion work, securely storing all marketing assets, and tracking
insight to real-time touch points such as websites, call centers, and the status and performance of every marketing project. Only
POS. However, the complexity of customer data and the tools used with MRM can marketing organizations efficiently manage the
to access it have prevented most marketers from making decisions additional organizational complexity that typically accompanies
based on their own data analyses. Most marketers have been customer-centric marketing.
limited to making requests, waiting for answers (often for a week • Tightly integrated contact optimization enables marketers to
or more), and then viewing those answers in the form of canned, identify the best offers for each customer from all possible
non-interactive reports. Often, marketers simply don’t bother to promotions. Historically, companies have selected the best
ask many of their questions: it’s either not worth the trouble or the customers for each campaign. Optimization instead selects the
analysts don’t have time to answer them. best campaign for each customer, while at the same time ensur-
ing that the goals of each channel and especially the overall
This can now change. New analytics and modeling tools are proving
business are achieved. This helps marketers shift incrementally
that data analysis can be democratized. With these products,
from their traditional channel or product roots towards a more
marketers are given the right data, specific to their domain and
customer-centric approach.
questions—and the right ways to look at it. For the first time, they
• Lead and cross-line of business referral management unifies and
get reports, visualizations, and analytics tools that have been
streamlines every facet of the lead development process. For
designed explicitly for them. Marketers no longer need doctorate
example, it can capture leads from all sources; “enrich” leads
degrees in data mining in order to perform crucial tasks such as
with customer data and potential selling points; qualify leads;
generating segments, identifying likely cross-sell opportunities, or route qualified leads to the right representative with the capacity
evaluating response propensities. to work them; ensure prompt follow-up and action as needed;
With today’s new tools, marketers, analytics teams, and IT profes- and systematically track the results associated with each type of
sionals can finally work together to bridge the gap between insight lead, channel, or representative.
and action: a gap that has often been the most important root cause
of dysfunctional marketing. As they bridge this gap, companies can Unica’s EMM technology offers powerful synergies to marketers—
begin deriving far more value from the 360° customer view they’ve and even makes it possible for companies to develop offerings that
worked so hard to create. might otherwise be difficult or impossible to support.
Beyond analysis to the rest of the enterprise Marketing 3. DeVeLOPiNG a StrateGiC SeGMeNtatiON SCheMe
Management (eMM) Suite At the heart of customer-centered marketing is segmentation:
Analysis provides the insights marketers need to craft customer- accurate, business-focused, and easy for everyone in the business
centric strategies. The rest of the EMM suite provides the tools to understand. Gartner Research drives home the importance of
needed to efficiently execute those strategies. For example: segmentation with this prediction: “Through 2010, only those who
formally segment their customer base will become truly customer-
• Campaign management and related capabilities enable
centric—increasing customer value by over 30%.”5
marketing to handle the higher volume of campaigns required by
granular segmentation strategies. The best campaign manage- While statisticians and analysts may wish to develop a rich, complex
ment solutions enable you to create, test, optimize, deploy, and segmentation scheme, the successful customer-centric transforma-
analyze multi-wave, multi-channel personalized communications tions Unica is familiar with utilize a small number of distinctly named,
through a single system with a single, easy-to-use interface. easy-to-comprehend segments that have been enriched with lively,
They can handle everything from scheduling and event-driven “human” profiles. These segments are often known as persona.
programs to real-time personalization recommendations and
sophisticated cross-campaign optimization. Using these tools,
marketers can dramatically increase their productivity, freeing 5 Kimberly Collins Ph.D., presented at Unica’s Marketing Innovation Summit,
May 8, 2007
Unica Corporation | www.unica.com 5

6. Many companies will find that they have much of the quantitative
Using eMM to Support Differentiated New Products: business data they need to perform segmentation, but they need far
a Case Study more qualitative data to flesh out their portraits of the human beings
Unica’s EMM technology helped make it viable for the they want to do business with. This data can be acquired through a
credit card division of a large international bank to create a wide variety of methods, from surveys and focus groups to psycho-
flexible new credit card that allows cardholders to pick and graphic data.
choose card features (e.g., rate, insurance, airline miles, Customer-centric segmentation typically relies heavily on under-
etc.). This card’s individualized feature set has triggered standing customer needs: understanding why customers purchase
an exponential growth in both the organization’s marketing
certain products, and when they purchase them—i.e., what triggers
challenges and its opportunities. The firm’s marketers rely
the purchase. We agree with Gartner that “building needs-based
on EMM contact optimization to identify offer bundles for
segments is a more difficult task than building segments based on
each customer, execute events and scheduled campaigns,
more traditional dimensions. The fact that the customer is being
and track performance for each customer segment. The
segmented on the basis of an aspect to the relationship which the
result: the bank has differentiated itself from its competi-
tors without increasing either staff or marketing budgets.* enterprise may not have complete knowledge of makes the process
more difficult, but the end result more valuable.”6
* Unica White Paper, Enterprise Marketing Management (EMM)
—Enabling World-Class Marketing 4. teaMS that “OWN” eaCh StrateGiC SeGMeNt
Segments cannot thrive when left to fend for themselves. Most of
the successful customer-centric marketing organizations we’ve
worked with have assigned teams to “own” each of their strategic
Best Buy’s primary segments are well known examples. There’s segments. These teams serve as the “voice” of their segments
Buzz (the young technology buff), Jill (the suburban soccer mom), throughout the organization.
Barry (the wealthy professional guy) and Ray (the family man).
We’ve seen segment managers and teams empowered with various
The idea behind the naming convention is simple: if you give each
degrees of decision-making responsibility and authority. In organiza-
customer profile a distinct face, employees will be able to interact
tions that are not yet ready to fundamentally reorganize around the
more productively with people who walk into their stores. Once they
customer, they may operate as “overlays,” promoting greater aware-
recognize a customer as “Jill,” for example, they’ll recognize that
ness of the company’s customer segments and spreading segment-
this customer is likely to be more concerned with a digital camera’s
based insights to product and marketing teams. They may also
ease-of-use than with the number of mega pixels it offers.
help formulate business rules for addressing issues such as contact
By selecting straightforward segments that non-experts can under- fatigue and for implementing optimization software to help rational-
stand, companies like Best Buy also ease organizational adoption— ize product-oriented processes.
which, in the end, is indispensable to success. The challenge, of
Customer-centric organizations structure themselves to amplify
course, is to define segments that are intuitive while also being
the customer’s voice from a pleading whisper to an authoritative
statistically valid and powerful for driving business.
mandate. Best Buy, Washington Mutual, BMO Bank of Montreal and
Financial services institutions have traditionally divided their busi- other Unica customers have all centralized customer insight and
nesses into separate lines—e.g., consumers, small businesses, and marketing into a single organization with the charter and critical
large businesses. However, the opportunities for customer-centric mass to drive the transformation. These groups typically report
transformation typically arise at a lower level, with segments that directly to the company’s top marketing executive. According to a
reflect far more qualitative information about life stages and 2005 Forrester survey, 64% of them report to a CMO.7
customer behavior.
Some organizations, such as Royal Bank of Canada, take segment
For example, KeyBank couples “demand segments,” such as management even further by driving P&L responsibility to the
Young Transactors, Family Asset Builders, or Mature Thrivers, with customer segment level. Segment managers formulate customer
a “value” dimension (grow, retain, reduce costs, etc.). Segments like
these offer a framework that segment managers can use to create 6 Kimberly Collins Ph.D., presented at Unica’s Marketing Innovation Summit,
effective marketing plans. May 8, 2007
7 Elana Anderson, Forrester Research, Organizing for Customer-Centric Mar-
keting, July 7, 2005
Unica Corporation | www.unica.com 6

7. segment treatment strategies, and are responsible for customer Global, U.S. advertising spending will grow only 3.1%, while Internet
experience, cross-channel contact, product mix, delivery, pricing, advertising expenditures will rise 15%, and emerging platforms such
and other key issues. According to RBC’s Vice Chairman, James as mobile marketing, video games, advanced television, and digital
Rager, this approach has enabled the company to raise profitability out-of-home networks will grow at 31.7%.
across all of its customer segments. Given the appropriate authority, segment managers and teams
Recently, Unica has observed more customer-centric organizational should also be involved in articulating how their segments will be
structures spreading to new industries, such as wireless service treated in terms of product offerings, promotions, pricing, service,
providers, where many marketing departments have already taken and many other aspects of the customer experience.
the initial step of separating prospect and customer marketing, and
6. iMPLeMeNtatiON OF eVeNt-BaSeD aND BehaViOr-
are beginning to further segment customers beyond simple plan/
BaSeD MarKetiNG PrOGraMS
product holding and usage levels.
Marketers increasingly appreciate the importance of customer life
Customer-centricity isn’t free: building customer insight and cycles and timing in the success of their campaigns and programs.
segment management teams requires additional resources. These In the financial services industry, for example, it’s crucial that
new groups tend to operate in conjunction with existing analytical customers transitioning to a new provider have their accounts set
and product teams, though there may be some consolidation up accurately and find that their new account relationships are a
and overlap. good fit for their needs. Using banking as an example, organizations
Additional IT and DBA support may also be required. Forrester consistently report new retail customer attrition rates two to three
Research’s database marketing benchmark survey research8 bears times higher in the early stages of new account ownership than in
this out. Adjusting for size of business and other factors, customer- seasoned accounts. On the positive side, Bank Administration
centric marketing organizations (“consultative” or “strategic” Institute (BAI) reports that nearly 75% of all cross-sales from
according to their maturity model) had larger and faster-growing new retail checking accounts occur within three months of the
database marketing teams than other firms. “Customer and/or account opening.9
segmentation analysts” are the most common new hires (55%). Optimizing the first months of new customer relationships has
Unsurprisingly, customer-centric marketing often requires emerged as a crucial issue in many industries, not just financial
companies to exercise its analytical muscles more extensively. Less services. To avoid attrition and leverage the unique opportunities
obvious, though, is the parallel need for direct marketing teams to associated with new relationships, many companies are implement-
adopt a broader and more strategic, business-oriented perspective ing structured on-boarding programs.
that reflects their expanded charter. Beyond core marketing teams, Such programs are only possible with robust EMM technology—for
transitioning to customer-centricity also requires segment-oriented example, on-boarding solutions from marketing software vendors
training for large numbers of customer-facing staff. such as Unica. These solutions continuously sift customer data,
seeking triggers that indicate an incorrect product or service fit, a
5. DetaiLeD, SeGMeNt-BY-SeGMeNt StrateGieS aND
taCtiCS new product or service need, a defection threat, or even fraud. Once
Segmentation is only useful if it drives changes to strategy. Segment it uncovers an opportunity, it can automatically execute against that
managers and teams should define detailed, segment-by-segment opportunity—and then track and measure your success in convert-
business strategies and marketing tactics. ing that opportunity to business.
From the standpoint of marketing and media expenditures, For example, travel and hospitality providers are using Unica’s EMM
customer-centric segment strategies accelerate the ongoing trend to software to create rich, robust, automated dialogue with customers
shift spend away from traditional mass marketing and advertising throughout the entire “lifecycle” of each trip. These usually begin
channels and toward direct channels, such as email, direct mail, and with confirmation emails sent upon reservation. Such transactional
search marketing—which can deliver targeted, segment-specific emails are nearly always opened, since customers are highly
messages, and closely track their effectiveness. In 2007, according motivated to make sure their reservations are correct. Marketing
to recent estimates by Universal McCann and Universal Magna
9 Window of Opportunity, by Paul McAdam, Ajay Nagarkatte and Steve Klinker-
8 Elana Anderson, Forrester Research, Organizing for Customer-Centric Mar- man, BAI Banking Strategies, November/December 2003, www.bai.org/
keting, July 7, 2005 bankingstrategies/2003-nov-dec/window/index.asp
Unica Corporation | www.unica.com 7

8. offers embedded within these emails can be related to the specific who have just purchased high-definition TVs with a promotion for
trip: they are highly relevant by definition. adjacent product categories like home stereo systems.
As departure dates approach, reminders are sent—often with
7. reeNGiNeer PrOCeSSeS aND the CUStOMer
relevant travel information such as weather forecasts or online eXPerieNCe
check-in options, as well as targeted offers cross-selling other travel By this stage, companies have effectively captured detailed
services from ski rentals to in-room movies. After the trip, “thank customer information; used analytics tools to glean insights from
you” emails gather feedback, reinforcing the message that the that information; implemented comprehensive EMM solutions that
company truly cares about the customer’s experience. Such can be used for automated one-to-one marketing; defined needs-
programs not only provide useful services to customers: they have based customer segments; and assigned teams that have defined
been shown to deliver outstanding results—including 5%-8.5% strategies and tactics for each segment. The next step is to begin
increases in per-stay revenue. systematically reengineering marketing, sales, and services processes
Throughout the customer relationship lifecycle, customers often to reflect their new segment strategies, tactics, and insights.
signal when the time is right for a cross-sell offer by changes in their Wachovia has defined cross-campaign business rules and modified
transaction behavior, and similarly signal opportune moments for its campaign design process to incorporate automated lead
interventions that could prevent an impending defection. To discover optimization. Using Unica Optimize, it can now communicate a
these signals, companies must first determine typical behavior single customized marketing message to each of its customers
patterns for each customer: the upper and lower bounds of each across multiple channels, including direct mail, email, telemarketing,
customer’s “normal” activity. ATM displays, and authenticated space web messaging. The result
When a customer’s transaction activity exceeds these bounds, your has been a 34% improvement in expected return on monthly
marketing and sales teams should immediately be made aware of campaigns and a 12% improvement in five year customer valuation.
this event, so they can proactively engage in meaningful, timely, By using Unica’s EMM offerings to accelerate its campaign develop-
customer-centric dialogue. Advanced solutions such as Unica’s ment and lead follow-up processes, Starwood Vacation Ownership
Enterprise Marketing Management suite make this possible— has made outbound callers more efficient and effective, reduced
enabling companies to act immediately based on real-time trans- the turnaround time of hot leads from 17 days to eight, and—within
actional data or subtle customer behavior patterns that can extend just six months—has driven 15% increases in response and 24%
over widely variable periods of time. increases in bookings.
Consider BMO Bank of Montreal’s powerful success in this area. One example of customer and segment-based reengineering is
Each day, the bank runs sophisticated models built using Unica the introduction of event-based marketing and customer com-
EMM software in order to identify individuals who have made munications utilizing advanced tools such as Unica Detect, which
deposits that are uncharacteristically large for them. Next, using empowers companies to take immediate action based on real-time
automated business rules created by marketers, Unica software transactional data or subtle customer behavior patterns that can
identifies the most attractive product offering for each customer. extend over widely variable periods of time.
The software then automatically assigns a representative to call each
customer within 24 hours of their deposit, with a message custom- 8. BrOaD SOCiaLiZatiON OF SeGMeNt PerSONaS aND
ized around the offer that which has been identified. Since launching BUSiNeSS BeNeFitS
its Priority Lead initiative, BMO Bank of Montreal has generated an Customer segmentation and one-on-one marketing does not come
average of $2,000 in additional income per identified lead, while at naturally to most organizations, and few companies truly understand
the same time strengthening customer relationships and reducing the real value of their customer data.
attrition. Therefore, the participants in a customer-centric marketing initiative
Regardless of industry, customer-centric marketers can increas- need to plan for and engage in extensive, continuing evangelism.
ingly uncover opportunities to replace traditional “batch” marketing That education should extend across the organization, not just to
campaigns with event-driven marketing that responds to “triggers” familiar partners and business functions.
in the lives of individual customers. For instance, an apparel retailer Marketing teams need to broadly socialize the segment personas
may send special offers to regular customers who haven’t visited they have created. In addition to providing baseline training to all
recently; or an electronics specialty retailer might target customers customer-facing personnel, successful companies closely align the
Unica Corporation | www.unica.com 8

9. marketing team’s success with that of the business, demonstrate Wachovia now focuses on measuring “five year customer value,” not
the revenue benefits of the new approach, and promote their just shorter-term, product-focused metrics such as the number of
successes widely. new checking accounts opened per quarter.
Marketers at one leading national florist systematically worked to Like Wachovia, many organizations now find it indispensable to
gain support for using data more strategically, reports Forrester. measure long-term or lifetime customer value. In the words of
One successful technique: sending out regular company-wide leading CRM expert Dr. V. Kumar, author of Managing Customers for
emails with “tidbits” of data designed to show executives surprising Profit, Customer Lifetime Value (CLV) “is the only metric that incor-
ways that data could be used to drive strategy and promote cus- porates into one, all the elements of revenue, expense and customer
tomer value. By evangelizing throughout the enterprise, the firm’s behavior that drive profitability.”11
marketers have gained powerful new influence in shaping business Customer value measurements can be complemented with a variety
strategy. of additional customer metrics. These include customer engage-
Companies successful in their customer-centric transformations ment, new/lost relationships, share of wallet, and loyalty. Many
have been assertive in demonstrating the financial benefit of their organizations, including GE, American Express, and HSBC, now
investments. To highlight the ROI boost achieved by customer- also rely on Bain & Company’s NetPromoter metric, which tracks
centric marketing, one bank added a “business as usual” group to customers’ willingness to recommend your company to a friend.12
its direct marketing standard control and holdout groups. In some cases, the data you need is already being captured, and
At Wachovia, where product managers were especially worried needs only to be massaged in new ways. For example, drawing
about losing control and product priority, proving value and educat- largely on existing data, Best Buy can now track its customer
ing business partners was especially crucial. Wachovia’s marketers measures down to the store level. Of course, building on the
identified several specific ways their new approach would help the segmentation work they’ve already done, customer-centric
product managers—ranging from shorter test-and-learn cycle time companies know they must also measure by segment—tracking
to additional campaign support. Then, they worked closely with segment profitability, whether or not P&L responsibility rests with
managers on parallel testing, demonstrating that individual product segment managers.
returns could in fact be improved through more sophisticated Whether delivered through scorecards, dashboards, or reports,
customer contact strategies. these customer and segment metrics should be linked to action.
Of course, alignment requires more than internal promotion. Drawing This is another area where senior executive commitment makes a
on extensive conversations with highly customer-centric companies, difference. It is the senior executive who is best positioned to ensure
Forrester recommends rotating marketers through business groups, that the organization actually uses its customer metrics to optimize
adopting joint metrics, and overlaying customer metrics with existing the allocation of marketing resources, to build customer-specific
processes. communications strategies—and, ultimately, to assess performance
and compensation.
9. CUStOMer aND SeGMeNt-OrieNteD MetriCS
As every manager knows, you can’t manage what you don’t
We CaN heLP YOU taKe the NeXt SteP
measure. Nowhere is this truer than in marketing, where—according
True customer-centric marketing requires a fundamental change in how
to recent research by the CMO Council—over 80% of surveyed
most organizations do business—but, with the right tools, practices,
executives are dissatisfied with their measurement of marketing
and commitment, the goal of customer-centric marketing is now entirely
performance.10
achievable. After years of hard work and experimentation, companies
Many organizations continue to rely on metrics that are focused in industries ranging from financial services to retail and hospitality have
primarily on products, product lines, and campaigns. For customer- learned how to make customer-centric marketing work.
centric marketing to succeed, these traditional metrics should be
Using Unica’s enterprise marketing management platform, organiza-
quickly complemented with customer metrics. Over time, customer
tions like Best Buy, Wachovia, and Starwood Vacation Ownership
metrics should gain increasing importance in tracking and rewarding
performance.
11 Managing Customers for Profit, V. Kumar, Wharton School Publishing, Janu-
ary 2008
10 CMO Council, Measures and Metrics: The Marketing Performance Measure-
ment Audit June 9, 2004 12 http://www.netpromoter.com/success-stories/index.php
Unica Corporation | www.unica.com 9

10. are successfully redefining their marketing around the needs of each
individual customer. They are differentiating themselves in an age of
commoditization by consistently delivering the right offer to the right
customer at the right time. They are using what they’ve learned to
reshape corporate strategy—and, ultimately, the entire organization.
And, based on every relevant metric, they are delivering truly
remarkable results. You can learn from their experience—and Unica
can assist you every step of the way.
aBOUt UNiCa
Unica Corporation (NASDAQ: UNCA) is the recognized leader in
marketing software solutions. Unica’s advanced set of enterprise
marketing management and on-demand marketing solutions
empowers organizations and individuals to turn their passion for
marketing into valuable customer relationships and more profit-
able, timely, and measurable business outcomes. These solutions
integrate and streamline all aspects of online and offline marketing.
Unica’s unique interactive marketing approach incorporates cus-
tomer analytics and web analytics, centralized decisioning, cross-
channel execution, and integrated marketing operations. More than
1,000 organizations worldwide depend on Unica for their marketing
management solutions.
Unica is headquartered in Waltham, Massachusetts with offices
around the globe. For more information, visit www.unica.com.
Unica Corporation
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Unica is a registered trademark of Unica
Corporation with the U.S. Patent and Trade- Reservoir Place North
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SUCCESS STARTS WITH U are trademarks of Waltham, MA 02451
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property of their respective owners.
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