Making the Transition to Customer-Centered Marketing
Customer Relationship Management. This is the latest approach to achieving a business concept that has been studied for years and is now aggressively being applied at companies large and small worldwide. Building strong, lasting customer relationships — and the requisite information technology (IT) systems and business practices associated with them — is ever more critical to success. In fact, given that customers today have more choice and businesses have more competition, building customer trust, loyalty and retention are proving far more important — and profitable to the bottom line — than attracting new customers. And Customer Relationship Management is the key.
While many companies are seeking new ways to leverage customer relationships, a major hurdle remains, and it has to do with point of view. Many companies view customers from the inside out (Who are the customers who own my products?) instead of from the outside in (How do customers experience their relationship with my entire company?). To truly understand and manage relationships with your customers, you must understand their total experience with your company — not just their experience with one of your products. If every one of your product managers develops an exceptional CRM program with customers who have purchased products, you still won't understand the customer's experience with your company. You must move from a product-centered view of the customer to a customer-centered view of your company.
It used to be that the primary point of contact between customers and companies occurred either in a retail environment or via a sales representative. In both cases, knowledgeable people could leverage personal relationships to build trust and loyalty. While both channels are still vital customer contact points, companies today have many additional opportunities and channels for interaction with customers. As with everything else, the Internet is dramatically changing the way companies and their customers interact. Customers are stampeding to the Web to get information, to obtain support and to make purchases. Today's customers make contact with companies through TV, radio and print advertising, via Web sites, the phone, and e-mail, and through relationships with sales people at retail outlets or via direct sales programs.
This multitude of touchpoints presents both tremendous opportunities as well as significant challenges. How do you build trust when there isn't a human point of contact? How do you leverage the knowledge of key people across your enterprise? In short, how do you generate, capture, analyze, and then act on customer information to build better relationships and increase the lifetime spending of your customers?
Maslow's Hierarchy Revisited
Getting from where we are today — product-oriented — to where we want
to be — customer-oriented — is a lot like Maslow's Hierarchy of Needs.
You can't start at the top and become immediately self-actualized while you're
fighting to get enough food to stay alive. In order to begin building a relationship
and eventually gain loyalty from customers, you need to understand what a customer's
experiences are with your company today. If your company is like most, however,
you capture information about these customer experiences in dozens or hundreds
of isolated silos with no consistent way of identifying or recognizing the same
customer across multiple silos. We are starving for information while often
drowning in data as we sporadically try to pull inconsistent data out of various
silos and manually link it all together.
What's more, you probably rely on an assortment of non-integrated tools and techniques to analyze this data. Clearly most challenging, if your company is like most today, your employees manage customer relationships on an individual, ad hoc basis — with no consistent, clearly articulated enterprise-wide process for building and maintaining customer loyalty.
A Multi-Faceted Approach
To transition from a product-centric, direct marketing approach to a customer-centered
approach, you must simultaneously address challenges on three fronts: information,
technology, and people. While reaching the ultimate goal of a true customer-centered
enterprise may require significant capital resources, process changes and time,
small advancements along the spectrum are proving invaluable as companies scramble
to build and retain customer loyalty in a global market undergoing unprecedented
change.
Click Fig. 1 To Enlarge
Information — From Fragmented Data
Points to Integrated Knowledge
Consider the following cautionary tale. When a large manufacturing corporation
begins looking to establish improved CRM processes it discovers an obvious disconnect.
The system utilized to track purchase agreements with top customers is separate
from and incompatible with the system used to process orders. This presents
a significant problem because customers receive discounts on orders (managed
by the order processing system) based on their purchase agreements (managed
by the purchase agreement system). For years, employees processing orders at
this company either learned, over time, which customer received which particular
discount, or they had to access two systems to process a single order.
An obvious solution would be to link the purchase agreement system with the order processing system. But because these two systems were designed around independent, vertical business processes, they were not set up to identify customers the same way or track them across business processes.
These fragmented, stand-alone information silos — each designed to meet a specific business need, each tracking customer information in a different way — are rampant in most corporate environments and affect every facet of a company's operation. For example, consider a customer support system that can't access a customer warranty system to evaluate whether a customer is still covered for support. Ongoing free support can quickly drain corporate resources.
One of the first and most important steps in building a CRM solution is the ability to recognize a customer consistently every time he or she touches your company. There are several technical approaches possible (which are discussed in more detail in the following technology section), but the fundamental requirement is to make sure that your company can consistently recognize and identify the same customer across businesses, functions, and time. A primary requirement for consistent recognition is to avoid duplication and inconsistency. Thus strict data entry standards and practices are musts.
Metrics and tools for the ongoing management of data are also critical. Customer data deteriorates over time (people move, change jobs, and change names; companies move and buy and sell other companies). Managing your data to ensure quality data requires ongoing investment — otherwise there is no point in starting.
Once customer data is consistently identified, it can be linked across functional silos, so managers can begin using measurement and analysis tools such as statistical sampling to make informed business decisions. Further along the spectrum, managers can begin subjectively assessing a particular customer's value based on the unique parameters that are most significant to your business (e.g., customers that buy on a more frequent basis or those that require very little service and support, thus generate larger returns to your bottom line). It's critical that as you move along the spectrum, you develop an ongoing process to keep customer data fresh and complete.
Click Fig. 2 To Enlarge
Ultimately, your customer information resources will be transformed from fragmented and silo-based to integrated and knowledge-based. This is key to arming your personnel with the information required to build and retain customer loyalty.
Technology — Tool-less to Technology
Empowered
The vast majority of companies today do not have an integrated IT infrastructure
to identify, track, analyze, and leverage customer information. But ultimately,
if companies are serious about CRM, such a system must be in place.
The spectrum of customer-focused IT solutions ranges from no customer data tracking tools whatsoever (at the low end), to simple spreadsheet applications used on an ad hoc individual basis, to data warehouses that collect and store vast quantities of department or enterprise data (at the high end). Once a repository is in place, as well as a universal customer identifier, sophisticated analysis and modeling tools can be applied to the knowledge. These tools can be used to develop customer profiling and scoring techniques for customer assessment and to develop customer knowledge management techniques to better anticipate customer needs.
A key component, often overlooked in the technology arena, is to develop a "Universal Customer Identifier" capability. Several approaches exist. New companies or small companies might choose the "customer master file" approach, creating a single customer database that consolidates all of a company's customer knowledge.
Large companies, especially those with significant legacy systems, might choose to develop a "customer reference file," a thin layer of identity (ID) data (essentially name and address) that is linked to all applications that track customer information. The ID data is stored in a central database and is accessible via software tools that standardize names and addresses, look for name/address matches, and assign IDs. These tools are callable from any application that captures customer information, and the Universal ID is returned to the calling system.
People — From the Customer as Entity
to the Customer as Market Driver
Arguably the most challenging aspect of building a customer-centered organization
involves transforming the processes and disciplines employed by your personnel
to attract and retain customers. The goal is to move from totally product-centered
processes and measures to processes that put the customer and his experiences
in the center every time you interact with your customers.
For example, in the product-centered world, a customer support engineer, responsible for supporting personal computer users, would tell a printer customer to call another number because the problem is not a PC problem. In a more customer-aware world, that same engineer might be able to transfer the customer's call to the responsible support organization. The customer, however, would need to explain the problem again. But in a fully customer-centered environment, the support engineer would not only be able to transfer all the information, but also feel ownership for solving the customer's problem and having the resources to make that happen.
Once you have the technology infrastructure, a way of tracking and analyzing information, and customer-focused enterprise processes in place, you can invest in programs that will help you build and improve relationships with your most valuable customers — boosting both customer retention and intimacy.
As shown in Figure 2.0, establishing a customer-centered marketing organization is an ongoing and iterative process, involving virtually every facet of your organization. The end goal beyond driving profits to your bottom line — is very simple, according to Terry G. Vavra in After Marketing: "Treat your customers and clients as you would have other marketers treat you."
