Org: Structuring customer centricity
An Optimove professional workshop about how to build a more customer-centric company
So welcome to the session Structuring Customer Centricity. My name is Shauli and I’m the Chief Strategy Officer here in Optimove. And I’m doing this session in intervals with Yael and you got stuck with me. So, you were handed the short side of the stick, but we’ll make the most out of it.
What we’re going to talk about is how to build a customer-centric organization. And when we say build, we’re going to talk more about organizational structures. So, how should you build your CRM teams, your companies in terms of processes and orgs, org charts in order to actually be customer-centric. And the reason this is a challenge is because our teams are structured around different things like products, like acquisition versus retention, like the channels of communications, like geography, customer value. Just as an example I might have a VIP team that treats all my VIP customers but six months from now I’m no longer a VIP customer. I still want whoever treats me to know I used to be a VIP customer. I’m used to a certain level of treatment and maybe, okay, I shouldn’t be treated as VIP anymore, but I should be treated differently. And some time just the fact that it’s a different team that manages me now creates some lack of customer centricity.
So, we’re going to talk about a few of those, we’re not going to cover all of them and what they mean to our organizational structures. But the question is, is our organizational structure actually harming customer centricity? And let’s take a first example which is product diversity. Many companies have multiple products and sometimes they build the company based on those products, they verticalize the company based on the product. A very, I would say, a simple example and very well-known example would be Microsoft. Microsoft has different business units, different CRM team, different marketing teams for Skype, Xbox, and Office. And if you are by any chance a customer of both Xbox and Skype, you know, both teams will contact you and probably will also not coordinate between themselves when they contact you. Now is this a problem? Microsoft thinks not. Why?
First of all, the overlap between the customers is not that big but also because of when you are an Xbox customer or an Office customer, you’re considering yourself more of an Office customer than a Microsoft customer. So, the product themselves are brands by themselves. But in other companies one customer can be a customer and can be using many products in a way which is actually meaningful for the business and that should be communicated around in the same way. An example for that will be insurance companies. So, think about an insurance company that sells house insurance, car insurance, life insurance. Me as a customer, I am a customer of all of those product lines, but I’m most and foremost believe and see myself as a customer of that company, more than the product line that I’m currently associated with. Also, another fact is for that kind of product line cross-sell is much more relevant, right. If you have car insurance from my company I do want to upsell you, I do want to cross-sell you to my home insurance so cross-sell is much more relevant. And that’s why this structure might be less relevant for those kind of company.
So, the discussion today not only in this org structure but across this entire discussion will be around tradeoffs. You always need to make a tradeoff between one extreme and another. In the product example, one extreme is to completely verticalize my company based on that product, the Microsoft example. And the other one, is to have a centralized organization where the product sits under marketing and are all seen under the same CRM or marketing executive. And when should you choose each one of them? So, you go for the left one in case you are actually looking at different audiences. For example, if one of your product is aiming at teenagers and the other product is aiming at golden age people. There is no really sense of combining them together and the vertical structure makes a lot of sense. Also, if you have multiple products and each of them has enough of business on its own, that’s also a good reason to go for that kind of structure.
On the other end if you have one strong product and the other products are more of accessory product or side products, it makes sense to put them all under a single management. And also, if many customers use the same product and you want to do a lot of cross-selling, this structure works well for you. And I’d like to give you an example of one of our customers, LeoVegas, it’s a gaming operator based in Malta. We have permission from them to show this, of course. And they were facing a problem. So first of all, let’s talk about the structure. They chose a pretty verticalized structure. So, they have the head of CRM for casino is one of their products. And head of CRM for sports betting which is another product. But they decided to put a CRM manager on top of that to be the one who makes decision when there is a conflict. But the fact there is somebody managing both of them and can resolve a conflict doesn’t mean that they cannot solve some of the conflict by their own.
So, what they did, they had a discussion around the business value of each product, about communication timing, is there a different cadence of communication between casino and sport and how you keep contacting customers on the two products. Because one decision that you can make is you can say, “Hey, look, I have a product that I want to kind of cross-sell all of my customers to that product.” For example, I can make a decision I want to drive all my customers through casino. I want to take them out of sport, sport is not profitable, or sport is not big enough, that’s not my strongest point. I want to take them to casino. They made a decision, they looked at the data and they saw that multi-customers, people who play both casino and sport are the most important, are the most valuable customers. So, casino teams have part of their objectives to cross-sell people to sport, the sport team has an objective to cross people to casino.
But the big question still remains, if someone plays both sport and casino, who treats them? Okay? And I know we have other companies that share the same kind of thought. So, they made a decision and for them it was pretty easy, casino is their leading product. They’re first and foremost a casino company so they made a decision in any conflict the casino team makes the decision. So, casino is leading the treatment of multi-product customers and they sync with sports and the work with sports on sports-related events. They also change the cadence, casino is more of an ongoing communication but sports is mostly around events, specific games, that’s how they work together.
Another point that raises structural requirements is the geography, okay. Customers who work across geographies often have a question on how verticalized they should be when looking at a certain territory. So, many companies have… The question is, do you verticalize across regions? One of the companies that is verticalizing across regions, for example, is Coca-Cola, right. They have their brand and that’s centralized, but they will change the communication, they will change even the banner a little bit, right. They will localize the banner, they will work with local distributors. So, for example, Coca-Cola in Israel owns some of the Israeli soft drinks companies and they sell Israeli soft drink companies. So, they’re very much verticalized based on geography.
Now a question that comes here is, why not always verticalize? Because if before when we said we have multiple products, let’s think if one customer can use both products, of course, yes. But can one customer be both in Tokyo and Tel Aviv? No, right? So why not verticalize the company? The Tokyo company will take care of the Tokyo person and the Israeli company will take care of the Tel Aviv person. So here the tradeoff is economic, the question is, are we making enough money in all of the regions to justify such an investment of creating a dedicated CRM team? This is a purely financial question when we are getting into the regional verticalization question. That’s why when we talk about the tradeoff between those two scenarios, we often see what we call a rest of world or an international kind of CRM unit. So usually a company would be very strong in one specific region or two regions and they will have verticalized, dedicated CRM teams for that region. But then they usually would have another CRM team which is kind of rest of world or international CRM team that takes care of the rest of the teams. What we recommend is, whenever you do verticalize, you should do create a center of excellence which makes sure that some of the communications and some of the best practices are learned across the different regions.
This is an example of one of our e-commerce companies who is working across different regions and none of their businesses is big enough to justify a CRM operation. However, they still wanted to make sure that they personalized their communication, that they localize, that they have a localization manager that is more in charge of the content rather than the strategy of personalization of the content, localization of the content and not the strategy.
The last kind of trade-off I want to speak about, and it appears less and less in organizations, and I like the fact that it does, is siloed channels. We used to have, and we almost no longer have those kind of organizations who are built based on communication channels. So, for example, there is going to be someone who is only working on email marketing, he’s the head of email marketing. And someone only working on mobile and only working on web or direct mail and so forth. This is actually a structure that we do not recommend, and we do feel that it should be one strategy across all of those. And honestly, we don’t see much of that anymore. I’ll tell you the one place that we do still see it and that’s mobile versus web. And that’s not only for CRM, that’s also for your product. Many times, a company was born on the web and now they have a mobile app and suddenly they have this mobile business unit. Something that comes up quite often with companies. And then what happens is that mobile becomes its own thing with not the same experience, not the same marketing. Sometimes it’s even much, much different in terms of even branding from the online. And for us we think that shouldn’t be the case. What we recommend is that email, push, web, and mobile, all of those, they do require specific expertise but not specific strategies. And that’s why we think it should be email, push, SMS, there should be more of an expertise which the CRM team uses in order to create strategy.
So, the strategy is created in the CRM team and email is a creative thing, SMS push, it’s a creative thing, it’s someone who knows how to create creatives into those channels. And if you have multiple CRM teams, we can still have only one email team that serves all of the CRM teams.
Before we go into some of the marketing personas that we believe should be part of the CRM organization. I’d like to ask if you have any questions on what we discussed so far? Okay, if you don’t have questions, I’ll just say one last thing which is, we talked about verticalizing based on product, verticalizing based on geography, and sometimes the question is, okay, how do I decide? Because you cannot do all of them, right? You either verticalize on product or you verticalize on geography or you don’t verticalize at all, but you need to make a decision. And that decision really depends on your business. You need to think about what is the driver of diversity with your business, is it the product, is it the geography, is it something else, is it brand? Sometimes even in one geography you have many brands that are working. And sometimes different brands have their own CRM team. If I need to give you some litmus test to decide on what is the main element on which you should verticalize, I would ask you to look at your P&L and where does the P&L responsibility lie? If you have different P&L owners for the different regions, that’s a good litmus test that this is how you should verticalize. If products have their own P&Ls; then that’s an indication maybe you should go by product. Still no questions, right? Cool.
Before we end this session, we just wanted to note some of the different functions that should exist in a CRM organization. And when we say function, we mean function and not people because some functions can be scooped together in a certain person, we don’t think there should be 10 people in every CRM team. But the key objectives is to have a head of CRM that decides on the strategy, creative which can either be part of the CRM team or an expertise, a central place where you work with developers, analysts, the actual CRM executives, people who are operating the CRM, localization managers, we talked about that, conversion optimization team.
I want to talk about that person for just one minute because one of the things that we see, one of the places where we sometimes see the ball being dropped is when people move from acquisition to conversion. What we feel is that this person would be the bridge between acquisition and retention. He can work together with the acquisition team to help them understand what kind of customers are better to be acquired. They can understand what are the different channels and affiliates that bring in customers and create different onboarding systems for the different acquisition channels. The lifecycle manager, the online marketing, and the project manager which is more of a logistic element to the team. Cool.