Attack on all fronts

10 February 2006

Most organisations limit their customer interaction to phone, web and direct mail. But there are newer channels available that could prove even more effective.

Used car dealers have a bad reputation for overselling. On the forecourt, they frequently convince customers to spend hundreds of pounds more than they need to on the car of their choice. Without the right information to hand, it is difficult for the customer to prove the dealer is asking too much.

Parker's Car Guides, which produces an exhaustive list of 'street prices' for used cars based on age, mileage and condition, has devised a way to supply car buyers with this ammunition - by sending a guide price on a particular car directly to their mobile phone.

Prospective buyers send Parker's a text message ('go parkers') which initiates a wireless application protocol (WAP) session with the company's car database. The site then provides any guide price required at a cost of £1 for every ten minutes the user spends online.

Parker's may be a very traditional 'bricks and mortar' business - it only started to deliver a web version of its car guide in 1999. But its new WAP and SMS customer channel maps onto the patterns of buying a second-hand car, as

The new customer channels

Although they may describe themselves as 'multi-channel' businesses, the majority of organisations restrict their interaction with customers to face-to-face contact, the call centre, web and direct mail. But according to Forrester Research, 15% of organisations' digital marketing budgets will be spent on newer channels, such as mobile phones, digital TV and broadband by 2005. What are the benefits of introducing these channels?

SMS (Short messaging service): SMS exploded as a peer-to-peer communication device two or three years ago. Marketers predict that 2003 will be the year it takes off among businesses as an inexpensive means to interact with customers, colleagues and partners. The main benefits of SMS are its low-cost - a text message can cost as little as 4 pence compared with as much as £1.50 for a call centre transaction - and the ubiquity of the mobile phone compared with other devices.

WAP (Wireless application protocol): Despite a false start at the end of the 1990s and mass consumer rejection, WAP is now quietly gaining ground as a customer interaction channel. Because it is essentially a wireless version of the Internet, it works well in situations where consumers need to browse for information rather than simply receive it, as is the case with SMS. According to UK industry body the Mobile Data Association, the number of WAP page impressions per day will reach 20 million in 2003.

Broadband: With data access speeds of around 500 KB/second compared with the average 56KB/S dial-up many consumers have to the Internet, broadband will prove a great opportunity to enrich the customer interaction experience, for example by using streaming media. Furthermore, as broadband service providers lower installation and subscription costs, the potential audience will increase.

Digital TV: Like WAP, digital television attracted much hype but little in the way of additional revenue, partly because operators insisted on charging large tenancy fees to companies that wanted to sell their goods through this channel. This is still being resolved, but many companies see the value of offering an information service over digital TV, which can then be fulfilled through another channel, such as the call centre or Internet.

Picture messaging: Picture messaging will be 'the next big thing' according to the mobile network operators, who say the key benefits will be the ability to send diagrams to field engineers, or product details to consumers, that could not be conveyed in a 160 character text message. There are a number of early adopters, such as London estate agent Foxtons, which sends house hunters property details by picture message. However, widespread adoption of this channel depends on how quickly consumers adopt compatible handsets.

most buyers travel around gathering information on several different models before they make a purchase, and most carry their mobile phone throughout the process.

Alongside the magazine guide and the web site, Parker's text service is already bringing in significant incremental revenue - revenue that is generated with virtually no additional overhead.

Many consumer-facing organisations are yet to grasp the opportunity to add such customer channels. According to analyst group Forrester Research, 90% of organisations in the UK say they now conduct business with their customers via multiple touch points. However, the vast majority restrict these touch points to stores, call centre, Internet/email and direct mail.

But as the Parker's example proves, exploiting newer channels, such as SMS and WAP, or other newer channels such as digital TV and broadband, enables organisations to hit customers from a far greater number of angles.

Bad press

One of the reasons organisations have been so reluctant to go down this route is the bad press such new customer channels have received in the past, particularly in the case of WAP. "The problems have been well documented," says Andrew Hawkins, head of new channels at CRM consultancy Detica. "WAP gave us a terrible user interface, SMS has been hugely successful for peer-to-peer messaging but is not well suited to highly transactional applications. With digital TV, most companies tried to recreate a web-like experience, but the format is far less forgiving. Unlike with the Internet, the mobile and digital TV experiences were not proven before services were launched."

The lessons some early adopters of these new channels have learned, however, show that with the right approach, certain channels can enable organisations to have the kind of interaction with customers that are impossible through other channels.

During 2002, for example, confectionery maker Cadbury's launched a text message campaign where consumers sent an SMS to unique numbers that appeared on the side of its chocolate bar wrapper in order to possibly win a prize. Because Cadbury's products are not sold directly to its customers, but through other channels such as shops and supermarkets, this was a means of interacting directly with the people that bought its products, and Cadbury's was able to garner vital demographic information about its core customers.

Grab the opportunity, says Cynthia Gordon, marketing manager for Orange Business Solutions. "It is about launching new services you might not have been able to otherwise," she argues.

Furthermore, a lot of the issues that inhibited adoption of such channels in the past are now being resolved, particularly in the case of mobile channels. Most of the mobile operators now allow organisations to use their SMS marketing services across all four UK networks, rather than just their own, so they can target broader groups of mobile users. They have also made their billing processes a lot more invisible to the customer,

In practice: GMTV

Since its launch in 1993, GMTV has become the most popular breakfast television show in Europe, reaching an audience of more than 25 million people. Until a couple of years ago, however, it had limited its interaction with its viewers beyond the TV show itself to a series of fact sheets that could be obtained by calling a premium rate phone line, and an information-only web site.

In 2001, inspired by other UK TV marketing campaigns, such as Channel Four's Big Brother and ITV's Pop Idol - both of which had leant heavily on SMS technology, Margaret Sawdon, head of interactive TV at GMTV, decided her company should look to SMS as a potential new revenue stream.

Initially, Sawdon had concerns that what might have worked for a teen audience would not be as effective with GMTV's viewers - comprised mostly of women over 25. So in Summer 2001, GMTV launched a 'Get the Message' campaign, which asked viewers to text GMTV in order to win a mobile phone. This was designed to raise the audience's awareness, but wasn't a revenue-generating exercise. However, 72% of viewers 'opted in', allowing GMTV to add their personal information to a customer database, and this is expected to grow to 500,000 entries by the end of 2003.

The next step was to turn the channel into revenue. In January 2002, in conjunction with a dieting series GMTV was running on the show, it invited viewers to subscribe to its 'Inch Loss Text Tips' service, which would send 56 dieting tips via text message over the course of four weeks for a £4 fee. This attracted 4,000 subscriptions, and similar revenue-generating schemes have since appeared. Later this year, GMTV has plans to introduce picture messaging as a new customer interaction channel.

The most interesting thing Sawdon has found from the project is that the viewers that use the SMS channel are new to interacting with GMTV. "The people that used to phone the premium rate lines still do so," she explains. "SMS has added between one-fifth and one-quarter to our existing new media revenue."

so a fairly complicated WAP transaction will now simply appear on a user's bill as 'premium content'.

"One of the reasons we now have big consumer brands looking at these channels is that the quality of user experience is now good enough," explains Anil Malhotra, founder of UK mobile services aggregator Bango.Net. Only a year ago, most phone handsets simply offered a black and white interface, whereas many now have a colour screen, some have cameras, and many allow users to exchange pictures.

Many organisations - such as Parker's - have leveraged these channels to create additional revenue or, in some cases, to cut the costs incurred by using existing channels. British Airways, for example, allows customers to check in for flights using a WAP connection. It doesn't charge for the service, but saves £2 or £3 on the cost of an airport attendant handling the check-in in person. Similarly, insurance company Royal &SunAlliance's digital arm, More Than, enables customers to generate quotes over either mobile or digital TV channels, significantly reducing the number of calls to its call centre.

However, as with many early CRM implementations, integration continues to be a problem. Aligning the interactions of customer through a call centre with text messages they have sent earlier to register for a product or service is no mean feat and could require a significant overhaul to existing customer databases. With digital TV, meanwhile, transaction formats may not be compatible with existing systems.

UK holiday operator Thomas Cook is well aware of these integration issues. Katherine Gershon, head of Thomas Cook TV, explains that while the company has a central view of the customer across all of its interaction channels - web, call centre, TV, broadband and stores - it is still impossible to view cross-channel customer data. As a result, a call centre agent cannot view information on a customer's online activities with the company.

That does not faze Gershon: "We compete in a multi-channel environment, yes, but it's still important that each of those channels competes within its own market," she says. That said, Thomas Cook extends the value of each of the channels by combining them with others. In its stores, for example, users can browse holidays using a broadband connection or watch Thomas Cook TV while they queue for an agent.

"A growing number of our customers use us in a multi-channel way," she adds. "Before, I'd say we had multiple channels, but customers would only use one." This 'pick and mix' approach is clearly something consumers will embrace as new customer touch points become available - and businesses need to ensure they can reach customers across whichever channel they happen to choose.

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