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Channel of Choice Makes Good Business Cents

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Derek Sales Director | Finance
September 18, 2012

The average cellphone user checks their phone 150 times per day. Eric Schmidt from Google calls it a person’s “alter-ego”—a single portal for voice, text, email, chat, video, and social with wallet and keys on the immediate horizon. Indeed, during meals, in the elevator, even in the bathroom, the immediacy of contact has become an assumption for both company and consumer. So how come that same consumer becomes irate if you contact them by phone during dinner time?

 

With all the advancements in digital communications, the balance of power has shifted to the customer. Today’s consumer expects to dictate how, when, and where they want to interact with a brand. And they wield enormous power with the ability to praise or pander brands based on a survey size of one. In this highly customer-centric world, what really matters is the channel of choice.

Selecting the right channel for a specific communication requires a mixture of permission, persuasion, and utility. We’ve already covered permission and persuasion and business cost benefits in previous posts, so this post will focus on customer utility. To understand customer utility, it’s important to know the ways in which the customer consumes the communication. Think about it:  match the content with the consumer intent and the right channel is easy to find. But beware; use the wrong channel and you create a negative experience from which your brand may not survive. Take a look at a chart I put together that lays out some core benefits and challenges across 10 different channels:

 

Choosing the Right Channel Requires the Right Objectives and Customers

Now that we know how the different channels compare, it is important to understand each program’s objectives and target customer base. Basic inputs like the size of the campaign, available budget, and overall expectations are a critical starting point. Next, we match those with the specific customer segments we are going after. Demographic details like age, location, and adoption of various channels is important to maximize reach and campaign ROI. For example, in the US, SMS is most widely used by 13-17 and 18-34 year olds, and those 18 and over prefer SMS communication from mobile service providers. In addition, elements like security and regulation must also be considered and followed. Check out the data from eMarketer charts below, as well as a chart I created to help companies in choosing the right channel:

 

 

 

Now let’s look at some examples to bring this to life. A customer who simply wants to be reminded of their statement balance is likely going to want a non-intrusive method like SMS that is easily accessed but doesn’t otherwise interrupt daily life. Customers concerned with fraud on their accounts may also opt for SMS because they are sure to receive and read the information real-time (on average, a text is read within 90 seconds of receipt) as compared to an email or phone call they may not get to. When you get into more complex needs like general account inquiry, many customers will prefer to pick up the phone and be able to speak with a representative. Finally, offers and promotions may be considered valuable to some customers and annoying to others – gaining permission to use the channel and frequency of choice is critical to remaining in a customer’s good graces. See the matrix I created below for more detail:

 

 

EXAMPLE: TATA Motors & Velti
Utility = Message + Timing + Channel/Call-to-action

At the end of the day, all companies want to create additional utility for customers and establish a meaningful relationship that drives loyalty and repeat business.  As such, they also need to make sure that a call-to-action can be executed on the communication channel selected.  Take a look at this example from the automotive industry:

 

Tata Motors sells 60% of all cars to consumers in India.   They approached Velti to determine ways Tata dealers could better engage with customers who purchased a car and encourage them to come back for repeat parts and servicing.  Realizing the seasonality of regular maintenance, Velti worked with TATA dealerships to capture the customer’s cell phone number and permission to contact them by SMS at the time of sale.  Velti then sent periodic messages to customers reminding them of regular oil changes and maintenance.  Customers could schedule an appointment via text, simplifying ongoing care and solidifying the relationship with the dealer. Once the car was at the shop, dealerships could even contact the customer by SMS with actual price quotes and additional service needs to which a customer could simply respond “yes” or “no”—even if they were in a business meeting.   For pennies a message, TATA motors reduced call center & dealer call costs by 35%; all while increasing profitability through creating utility for customers who wanted to “outsource” the worry of car maintenance to the original dealership.

 

Choosing the right channel to engage with customers is more than just cost.  It requires careful consideration of the objectives, audience, and the ability to create additional utility.  Service and marketing professionals who are successful can optimize their budget to deliver increased customer loyalty and revenue at the lowest possible costs.

 

 

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