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Understand Your Customers Better: Four Tips From Caterpillar

A guest post by Tim Altier of Bridgz.

Your marketing efforts are more successful when you focus on the customer—not the product—even when you sell machines large enough to move mountains.

When heavy-equipment manufacturer Caterpillar began selling smaller-scale machines to the landscape, construction, and agriculture markets, the company made a strategic decision to sharpen its customer-centric focus.

“Traditionally, Cat and our dealers personally know the buyers for our large-scale equipment,” says Connie LaFlamme, Cat’s marketing consultant for its Building & Construction Products Group in Cary, NC. “But for our equipment sized for use by small to medium construction firms, landscapers, and agricultural producers, we found that we had to stretch to find the right communication channels and messaging because of the expansive customer universe and a tougher competitive environment.”

LaFlamme and marketing consultant Stephanie Hetzel chose to work with Minneapolis-based Bridgz Marketing Group because our stock in trade is helping clients use data to connect directly to their customers’ feelings, attitudes, and buying intentions. The firm specializes in customer-centric marketing that builds the bridge between client and customer.

“We turned up the intensity in our data analysis to uncover more and better information about customers’ buying patterns and cycles,” says LaFlamme. “We refined our marketing metrics to measure right down to sales results. Around Cat, the tolerance for non-measurable marketing strategies is zero.”

The chief objective was to team with Caterpillar to understand its customers at a new, deeper level—and in the process improve the relevancy of customer interaction with the brand.

Here are four lessons we learned from Caterpillar’s success that can help any organization take a customer-centric approach.

1. Combine data sources. Caterpillar and Bridgz blended proprietary warranty data and dealer intelligence—plus public data from a variety of sources—to get closer to the customer. Combining these data sources let the team create a holistic view of the customer. A social media strategy also emerged from the data analysis, which revealed that small contractors are highly active on social media.

2. Customize. Armed with that detailed information, Caterpillar can anticipate when target customers in a given industry are likely to be looking for a new piece of equipment and then initiate a conversation with the target at the right time—with customized messaging modeled to each situation. “We try to address what’s on that particular customer’s mind, including how our value proposition fits with their business philosophy, such as business productivity, total cost of ownership, quality, and dealer support,” LaFlamme says.

3. Use competitive positioning. According to Hetzel, if the customer is using another brand now, Caterpillar’s messaging speaks to its brand’s specific strengths vis-à-vis the competitor. And the communications are integrated and multidimensional; they use the most effective channel, such as events, advertising, direct mail, online or communication, that the situation demands.

4. Measure. Because Caterpillar tracks sales data linked directly to marketing expenditures, ROI data is available. The results have been impressive. Sales to targeted companies yielded a 6:1 ratio of ROI from marketing expenditures in a recent measurement period. Bridgz National Account Manager Andrew Galarneault says, “The detailed metrics we are able to generate also give Caterpillar the predictive tools they need to build successful marketing programs in the future by evaluating each aspect of every marketing campaign.”

The customer segmentation work performed by the marketing team has helped Caterpillar improve its ability to develop machines that are right for each market.

“Marketing and engineering work together to analyze our competitive position, which results in products that we know our customers want,” Hetzel says.

Tim Altier is director of business analytics and insight at Bridgz.

Tags: customer experience, customers, Marketing, Strategy and Tactics

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