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How Master Data Management Supports Sales: Focus on Profitable B2C Cross-Selling Opportunities

By Gino Fortunato posted 05-16-2021 09:23

  
How Master Data Management Supports SalesClarified data helps enterprises expose sales and marketing opportunities that would otherwise remain under the radar.

Sales professionals and marketers know that cross-selling is among the most effective ways to increase revenues.

Increasing average cart size and value is among the top priorities for enterprise retailers, but the advantages of cross-selling are not limited to this industry. It’s a key driver for growth across the spectrum: Banks, IT vendors, and financial service firms all do it.

But that doesn’t mean that cross-selling is always profitable. In fact, a 2012 Harvard Business Review study found that a significant subset of cross-buying customers are highly unprofitable.

The strategy of indiscriminately encouraging customers to buy more can be more expensive than the revenue it generates. To actually drive value through cross-selling campaigns, enterprises need to target their most profitable customers – and exclude their least profitable ones.


Which Customers Cost You More Than They Pay?


To focus on profit-generating cross-selling and opportunities, enterprises must first identify the customers who cost more than the value they generate. This can only be done with detailed, accurate master data record management that tracks and updates customer data. Your master data records are your window of visibility into the profitability of each customer category.

There are four general customer profiles who end up costing enterprises more than the value their purchases generate. These are the customers you need to look out for:

Service Demanders

A service demander is a customer who habitually overuses customer support and service channels. In high-touch industries like finance, human resources, and B2B technology, overusing phone, web, and face-to-face support generates costs that easily exceed the value of the services purchased.

Cross-selling increases the number of services a single user has access to. Customers who overuse support services will have more opportunities to make demands of your support system and infrastructure. This is especially common in regulated industries, because customers tend to rely on enterprise support to understand and navigate regulated services.

Master Data Management solutions help enterprises segment their customers based on behavioral data. People who routinely overuse customer service and support solutions generate an audit trail that is easy to follow – once you have the right data available. 

Third-party data from credit bureaus like Equifax can also help identify these customers. This is because they are likely to check their credit score frequently. 

Revenue Reversers

Revenue reversers are customers who generate revenue and then take it back. For retail enterprises, this typically happens through returns. For service-oriented enterprises, this generally happens through early contract termination or payment defaults.

Enterprises that can identify these customers and exclude them from cross-selling campaigns have a distinct advantage over their competitors who cannot. Every industry has a large number of customers who default, and many who default more than once.

Without a master data management solution in place, it’s not always possible to identify which customers have defaulted in the past. Since this information is not always included in customer relationship management (CRM) profiles, sales and marketing specialists can’t always exclude revenue reversers from their campaigns.

Promotion Maximizers

There is a sizable segment of customers who spend an inordinate amount of time maximizing discounts, especially in consumer-oriented industries. Customers who avoid regularly priced items can end up costing more than the value of the items they purchase. Fashion and consumer goods retailers are particularly susceptible to this behavior.

There is an argument for promotion maximizers offering a “lesser evil” when compared to the cost of simply throwing away heavily discounted items, especially perishable ones. However, identifying whether this is the case for your enterprise or not requires collecting and analyzing customer data across multiple verticals.

The ability to consolidate data gathered across systems and reference a single point of truth is key to determining whether your enterprise should encourage or discourage promotion maximizing customers. You need accurate, timely data on customer interactions, relationships, and preferences in order to find out whether these customers are helping or hurting your business in the long run.

Spending Limiters

Customers who only spend a small, fixed amount with a given company are called spending limiters. These are people who do not increase their total spending with a company, regardless of the availability of new products and services.

There can be multiple reasons for this behavior. Some customers simply don’t have the discretionary income necessary to increase spending. Others spread their purchases across multiple companies. In either case, offering more to these customers does not generate profit – it drags profit down.

This is common in retail, but not exclusive to it. Financial service firms may discover their business customers drawing down their existing checking accounts to buy insurance or Certificates of Deposit (CDs). If the sums involved are not large enough, the profit that these products earn does not cover the cost of cross-selling them to existing account holders.

Don’t Cross-Sell When You Can Smart-Sell

Targeting profitable customer segments is an obvious, time-tested strategy for boosting revenues and generating value. Marketers and sales professionals have long relied on full-featured customer relationship management software to leverage customer data to identify and target these customers.

But when it comes to cross-selling initiatives, predictive modeling is often the go-to method for determining campaign success. This is a mistake that enterprises can only remedy by analyzing transaction data on a customer-by-customer basis. Extra steps must be taken to find out whether customers fit into one of the four problem profiles described above.

Once enterprises fit customers into one of these problem profiles, crafting a comprehensive response to their behaviors becomes possible. Bad cross-selling options might make more sense transformed into significant up-sells or other promotions. For example, you may convince a spending limiter to loosen their purse strings by upgrading them to a premium account, instead of trying to add auxiliary services to their existing account.

Launching a cross-selling campaign can be a powerful revenue generator. Doing it correctly requires asking hard questions about your customers – and leveraging the appropriate data infrastructure to answer them.


Reltio is a Master Data Management vendor that empowers enterprises to gain 360-visibility on their users and partners. We analyze and curate user behaviors in real-time, enabling advanced analytics and customer segmentation with accurate, high-quality data. Find out how our
Connected Data Platform can help your enterprise thrive! Try Reltio Identity 360 for free

Learn More with the Reltio Community

The Reltio Community is a great place to learn more about how to use the Reltio products and connect with Master Data Management peers. Rely on the expertise of Reltio employees, customers and partners. 

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