CRM for the ‘new middle class'

It is estimated that the new middle class market makes up around 43% of the adult population. It has gone by various labels, namely Blackoisies, Buppies, Emerging Black Market and Black Diamonds.

Not homogenous

Black Diamonds are not a homogenous group, but rather consist of four different segments within which there are further sub-segments, each defined by ethnicity, language, life stage, age, occupation, education and income. Language aside, this diverse group has different cultures, values and social backgrounds that affect their purchasing decisions and buying behaviour.

SA's history, further complicated by very strong community links and feelings of uBuntu, also drives behaviour. Word-of-mouth is a very strong driver, particularly within community groups such as religious, professional and trade unions. “Cultural factors exert the broadest and deepest influence on a consumer's purchasing decision as a fundamental determinant of a person's wants and behaviour” is the belief of renowned marketing author Philip Kotler.

Homosapiens have dreams and aspirations. All want to feel a sense of belonging and recognition - these are natural human traits. Although there are a number of similarities between the so-called “white middle market” and “black middle market”, there appears to be major differences when it comes to purchasing assets. Previously un-banked, this group now has access to financial products - credit cards, cheque accounts, insurance and home loans.

Marketers need to understand the psyche of each target market, whoever they are, to tailor communications and develop relevant, value-added offerings and services.

All about relationship-building

CRM, direct marketing, 1:1 marketing, segmentation marketing - call it what you will, at the end of the day, it is all about relationship-building. It is how a company goes about finding customers, getting to know who they are, keeping in touch with them, trying to ensure they get what they want and then checking that the promises made, were actually met.

I cannot emphasise enough that before you embark on any CRM initiative, your organisation must place the customer at the centre of everything it does, its core focus. Everyone, from the CEO to the frontline staff, must buy into the concept and most importantly, understand their customers' needs and wants. If you do not have this support, your CRM initiative will fail and there are no opportunities for a second chance.

What then is CRM? It can be defined as the ongoing developing and maintaining of long-term, mutually trusting and beneficial relationships and engagements with customers. The importance here is that CRM is not a tactical solution, nor a piece of technology. It is a business process, derived from a strategy that enhances relationships with valuable customers and prospects. CRM is dynamic, constantly changing and testing through interactive dialogue with customers. Technology merely supports this business process, making it reasonably simple and straightforward to implement.

Growth strategy

From a business perspective, it costs 10 times more to acquire a new customer than to retain an existing customer (McKinsey Report 2004). The most successful growth strategy is one where existing customers buy existing products, and the next most successful strategy is to sell new products/services to existing customers (Maister 1997).

For the average business, studies indicate that repeat-business accounts for 70% of total revenues. The reason for this is that improving customer relationships increases both emotional and transaction bonds between the brand and the consumer, resulting in brand loyalty and faithful customers. Loyal customers become brand advocates. They discuss your offering and not your price, require less “servicing”, provide more business and contribute to new customer acquisition by offering positive word-of-mouth referrals.

In part two of this series, I will provide invaluable advice on how to develop a simple CRM strategy for the ‘new middle class' market.