THE BLOG
11/11/2013 08:32 pm ET Updated Jan 23, 2014

Preference Centers: Are CMOs Overlooking Their Importance?

A good preference center is akin to a good first date. It is all about initial appropriateness, understanding, and communication. Once accomplished, you have earned the right to a second date and deeper levels of discussion.

"Is Your Preference Center Hurting Your Customer Experience?"--the first article in this two-part series--discussed why marketing executives should be concerned about the role of preference centers in enabling their companies to capture the deep customer insights necessary to drive personalized communications.

This article focuses on recommendations from CMOs and senior execs regarding preference center functions and experiences that are critical--whether you are about to build a new center or make improvements to an existing one.

Before You Invest. . .Research When Thomson Reuters decided to build a preference center, research was its first step. "We did market research ahead of deploying our new email preference center," said Diangelo Tyler, Thomson Reuters' director of online marketing. "Our objective was to determine what was most important to the customer."

Tyler offered the following tips:

  • Do your homework prior to building the preference center. Refined requirements are the key to success.
  • Seek answers to the tough questions.
  • Keep in mind that the preference center is for the customer, and they hold the power of voice.

Don't Be Afraid Of Opt-Outs

Tyler went on to discuss a topic noted by many of the CMOs who my company, ERDM, interviewed while preparing this article. "It's better to be transparent and open about your intent. It was critical that we make it as quick and simple as possible for our customers to manage their preferences and [for] marketers to get access to their permissions," he said.

Many marketers shy away from creating truly customer-focused preference centers because they fear mass opt-outs. However, giving customers the ability to provide you with their preferences regarding communications and experiences actually provides you with a powerful competitive advantage.

Per findings from our Voice of Customer Relationship (VoC) research, customers and prospects consistently stated they were willing to provide trusted brands with deeper levels of information in exchange for more personalized information and experiences.

B2B and B2C consumers cited that willingness so frequently we gave it a name: the Reciprocity of Value Equation. Following are some key VoC findings regarding Reciprocity of Value:
  • Consumers recognize that to receive or access relevant information, they must provide preference information.
  • If they trust the brand and receive a useful value proposition, then consumers will opt-in to sharing increasingly detailed preference information.
  • Reciprocity is seen as a valuable exchange of information. This information will constantly change, grow, and be enriched through ongoing interactions with consumers.
  • This customer-driven information exchange results in uniquely accurate databases that consistently achieve 25 percent to 50 percent increases in revenue.

"The key is to establish an ongoing dialogue with the customer. As they give personal information to you, they are building a relationship with your brand," said Jennifer Downes, director of direct response marketing at Lenovo NA. "Critical to the learning process is the level of engagement that a customer has with your preference center. The customer must perceive value in your preference center so they proactively update their preferences as they evolve in their journey."

Another issue marketers face in this space is compliance. "We have to comply with telemarketing regulations and the new cell phone rules, so we've used this opportunity to build customer preferences for phone contact," explained Jane Bulman, VP of telesales at Comcast. "We ask them and are transparent about the benefits of future calls--special offers and notifications about new products, for example. Over 70 percent who purchased previously said, 'Yes, contact me again.' If we ask how customers want to be contacted--and for what purposes--we gain marketing efficiency, customers welcome the call, and we follow the law."

Preference-Based, Not Transaction-Based, Data Is Key It is important for executives to realize that transaction-based spray-and-pray blasts are causing significant damage to their brands. Irrelevant communications are training customers to associate their e-mail and direct mail with "delete" or "throwaway" behaviors.

Per our VoC research findings, consumers believe that transaction-based data is inadequate and an inaccurate indicator of their true preferences regarding future communications they would consider relevant. They stated repeatedly that they want brands to treat them "as more than just a sale."

Rather, they want relevant and engaging communications:

  • "I want more than just buying history-based e-mail."
  • "With today's technology, I expect the experiences and e-mail to reflect my preferences."
  • "I think being able to select just what I'm interested in would be very helpful. It would mean a lot less searching on the Web site and a lot less email I don't usually open anyway."

Key Takeaways

Following are recommendations regarding what you need to consider in order to develop a high-quality preference center. These were provided by Scott Frey, a preference management innovator and president and CEO of Possible Now, which provides enterprise preference management solutions.

Tip 1: Account for all of the systems currently in use to collect and store preference information from customers. There are multiple touch points--e-mail, mail, point of sale, social, and mobile--that must be taken into account to ensure the preference center is as comprehensive and effective as possible.

Tip 2: Understand the business rules and needs of the business owners. An effective preference center must take into account all of the existing business rules and needs of the business owners who are impacted by the data collected by the preference center. Bringing those parties together early and keeping them informed throughout the build of the preference center is crucial.

Tip 3: Start with the end in mind. Creating a plan for how the information collected through the preference center will impact marketing campaigns and customer correspondence assures that all of the right elements are accounted for in the preference center and provides a guideline for reporting.

Tip 4: Viewing from the customer's perspective. Companies must think about building preference centers from the customer's (user's) perspective. Avoid internal language and make sure the preference choices are clear and descriptive. The content within the preference center is important to the center's effectiveness in decreasing opt-outs and increasing opt-ins.

In conclusion, keep in mind that preference centers enable you to deliver truly personalized offers, communications, and experiences. These, in turn, will drive significant increases in response to cross-sell offers, new product introductions, and loyalty-building initiatives.

"As our markets become increasingly fragmented on interests and needs, delivering the right message at the right time in the right way will be impossible without a solid preference management practice," said Denice Hasty, Comcast's SVP of consumer marketing.

Ernan Roman is recognized as a Customer Experience innovator and was inducted into the Marketing Hall of Fame for creating three transformational methodologies: Voice of Customer Relationship Research, Integrated Direct Marketing, and Opt-in Marketing.
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He was also named by Crain's B to B Magazine as one of the "100 most influential people in Business Marketing".

His latest book on marketing best practices is titled, : Voice of the Customer Marketing: A Proven 5-Step Process to Create Customers Who Care, Spend, and Stay.

Ernan is also the author of the widely read blog, "Ernan's Insights on Marketing Best Practices", (www.erdm.com), and author of "Opt-in Marketing" and "Integrated Direct Marketing".

ERDM's Customer Experience strategies achieve consistent double-digit increases in response and revenue for clients, which include IBM, MassMutual, QVC, NBC Universal, Microsoft, Hewlett-Packard, and Symantec.

As a leader in providing Voice of Customer research-based strategies, ERDM has conducted over 10,000 hours of interviews with customers and prospects of these clients to gain an in-depth understanding of their expectations for high value customer relationships.

www.erdm.com
ernan@erdm.com