Are your customers giving you attitude?

Attitude. It's that intangible and complex human component that shapes so many of our decisions. Did you know that it's also a key ingredient in understanding which customers represent the path to profitability for your organization?

Attitude. It’s that intangible and complex human component that shapes so many of our decisions. Did you know that it’s also a key ingredient in understanding which customers represent the path to profitability for your organization?

In the past, marketing leaders interested in implementing effective CRM tools have relied solely on demographics and behaviour patterns in order to truly ‘know their customer.’ Unfortunately, these methods account for only about half of the reasons why a consumer would purchase a certain product or service in the first place. So where does the rest of the information lie? You guessed it: attitudes.

A truly effective CRM program not only explores behaviours and demographic data, but also focuses on targeting customer segments based on motivations and attitudes. After all, just because you can afford to buy a brand new Mercedes Benz doesn’t necessarily mean you will. You may find luxury cars to be ostentatious, or you may have a host of other ideas for spending all that disposable income – a BMW perhaps?

The point is that the measurement, analysis and utilization of attitudinal data (such as customer satisfaction rates) is critical to the success of any CRM program.

Picture a large clothing retailer doing brisk business through three channels – storefront, catalogue and Web site. The latest styles are literally flying off the shelves, inventory turn is high, and so are profits.

Each channel, fully integrated into an advanced analytical CRM environment, supplies a wealth of detail on who the retailer’s customers are, what styles they buy, and when and where they buy them. Several marketing campaigns have also been planned around intelligence derived from all that data.

While our clothier seems to be operating on the cutting edge of CRM, crucial information is missing. In order to truly leverage the power of CRM, a key question must be answered: Why do my customers react the way they do?

The answer lies with attitudinal data. Incorporating attitudinal data into the analysis of traditional CRM information can have a profound effect on the success of any customer-focused initiative.

To make attitudinal data more valuable, it should be paired with data from traditional CRM applications. Transactional information imparts important knowledge about customer behavior, and attitudinal data becomes much more reliable when supported by the behavioural assessment of customers.

Using our clothing retailer example, traditional data analysis could have shown that a certain demographic segment of historically profitable customers had stopped buying. Without attitudinal data, the retailer would then be forced to rely upon an unsubstantiated and costly marketing campaign to combat this attrition.

In most situations, attitudinal data is generated by survey research, which can provide previously unavailable insight into customers’ thoughts and feelings on a particular subject, and their receptiveness to specific marketing strategies such as cross-selling.

Once in place, attitudinal data translates customer feeling into the probability of customer action, giving an organization a more focused approach to marketing strategy and product development.

For example, if a large financial institution wanted to create tailored services for college students, customer attitudes would add important strategic information to the project. Using the segmentation of college customers as a starting point, the bank could contact each new customer, directing each to an online survey that documents demographics, banking preferences and other portrait-painting characteristics. This attitudinal intelligence could then be analyzed along with transactional data and used to create more focused marketing and sales initiatives.

Without insight into the feelings of the students, the bank could have lost money on an ineffective project. By including technology designed to improve intelligence based on customers’ attitudes, the bank gained a well-rounded view of each customer.

While attitudinal CRM remains a relatively new weapon in the war on declining profit margins, it is rapidly becoming a key element in many successful CRM solutions.

Business leaders have come to realize that in order to gain a truly comprehensive picture of the customer relationship, organizations must incorporate information on attitudes with traditional demographic and behavioural data.

So, the next time your customers start giving you attitude, take heed. It just may be a perfect time to start serving them better.

Michael Turney is CRM program manager at Toronto-based SAS Institute (Canada). He can be reached at (416) 307-4597 or by e-mail at michael.turney@sas.com.