Understanding Your Customers Improves Your Business

Jul 12, 2004

By John Hennessy

An article by John Goff in the July 1 CFO Magazine, gives several examples of how companies are using customer data to improve their business.

Harrah’s Hotels leads off the examples. It achieved a 95% room occupancy rate in 2003. More importantly, Harrah’s works hard to not just fill the rooms but maximize the profit on each room through a hotel revenue management system (RMS). That system allows Harrah’s to optimize revenue by customer based on a combination of gaming revenue and room rate.

Harrah’s captures gaming revenue data through a loyalty program it uses to keep in contact with customers. “About 75 percent of our revenue comes from direct-marketing offers,” notes Harrah’s senior vice president of relationship marketing David Norton. “If we didn’t do it, our revenues would tank.”

Volvo Cars of North America is also using customer data to improve its business. Volvo is in the middle of a segmentation project that uses patterns among current customers to segment prospective customers. The goal is to identify a behavior that indicates a propensity for buying a Volvo down the road.

In yet another way to make use of customer data, Brother International takes a fairly simple approach to analytics; make better use of the 1.8 million telephone inquiries it receives.

Analysis of the calls resulted in a list of customer FAQs along with the appropriate response to those questions. The result has been $1.2 million in savings from a reduction in the parentage of product returns and a 10 percent reduction in the average talk time per customer.

Moderator’s Comment: What are other examples of companies using customer information in a win-win scenario for organization
and customer?

It’s good to see companies putting forth these kinds of efforts to better understand their customers. The companies benefit from improved business performance
and their customers benefit from the kind of better service that can only be delivered by a company who is paying attention.

I like the variety among these initiatives. Harrah’s is a well-funded, sophisticated, integrated marketing program. Brother makes itself smarter and its
customers happier with data that goes unused in too many organizations. Volvo is using what it knows about current customers’ patterns to improve its odds and better utilize its
resources in the land of the unknown.

In all examples, both the business and the customers benefit. If you’re a top-level Harrah’s customer, they’ll know it, you’ll know they know, and you’ll
be treated accordingly. If you call Brother, you’ll get a thoughtful, consistent answer to your question – fast. And when you engage Volvo in a search for a car, its sales and
marketing efforts will be appropriate to your intention to buy the product.

John Hennessy – Moderator

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