CRM: Where mindset drives practices
BRANDLOGIC BY L K G UPTA The greatest danger in times of turbulence is not the turbulence; it is to act with yesterday’s logic – Peter Drucker The buzz these days is about using Big Data in selling and marketing. Fair enough. With growing technology and emergence of social media, companies have greater access to consumer information than ever before. So it is only logical that this data be used to increase sales and market share, and perhaps profit. In most companies that boast of legacy or enterprise data, some progress (a lot, in many cases) has been made in thinking along the lines of Customer Relationship Management (CRM). But is it really relationship management? Is it loyalty management to maximize the lifetime value of a customer? Unfortunately, the reasons for investing in CRM are mostly all internal to the company. In a study among companies asked to name the reasons for investing in CRM, 64% said it was to increase sales, 58% to increase sales effectiveness, and 36% to increase market share. Improving customer loyalty as a reason was ranked fifth at 25%. Now, granted that increasing sales must underlie most initiatives, but CRM needs first and foremost to be about retaining and nurturing the loyalty of the customers we have – people who depend on us for our goods and services, and who in return reward us with their money. Another study has pointed out that a 2% increase in customer retention has the same impact on profit as a 10% cut in costs. That’s because retained loyal users will invariably cross-buy and upgrade over time, while acquiring new customers will cost five times as much. In the end, it is about customer experience and not about the deal of the season and your new offering that you must sell. Whether it’s telecom, or retail, or IT products, it is about recognizing what stage of consumer journey is a certain individual at, and hence what his need is. It is of paramount importance that the company start its CRM programme not with the question “how will this pay off?” The question should be “how am I making the life of my customer simpler and better?” Because when you make their lives better, they will pay you gladly. That is what the relationship is about. Depending on the stage of decision journey a customer is at, your communication and offering to him must be customized. It is easy to use analytics to segment customers into groups like high value, medium value, loyalist, festival buyer, discount hunter, etc. and shoot off EDMs and offers to them. It takes a little more insight to figure out when a customer is probably ready to start a new purchase journey, and what he might want at various stages during that journey. Added to this is the fact that relationships get solidified more during the time the customer is not in purchase mode, but in usage mode. What kind of communication, offerings, and delight factors is your company delivering during this non purchase mode when there are innumerably more touch points than in purchase mode? Many of us tend to construct offerings from the company’s point of view, believing we’re creating consumer value because we spent money delivering something. But customers weigh each touch point and interaction based on the value they believe they get from it. While you may think you delivered a service, the value of that is determined by the customer’s perception of how it made his life better at that stage of his journey. Sometimes a loyalty-based discount may leave him cold because perhaps what he really needed was help and advice in reducing his risk of choosing the wrong product. Other times, a free trial of your fancy new service or technology might mean nothing to him because he’s still waiting for that waiver on service charges you levied three months ago. It’s all about when does he need what, and that question must be answered by a combination of analytics of past incidents and insights into the consumer purchase life cycle. This also implies that the company must gear all of its divisions and departments to deliver on better relationship management. A SAP/EIU survey showed that 86% of companies believed that CRM is important, but only 30% said CRM was a strategic companywide effort. What’s worse, only 12% admitted that CRM was focussed on customer-facing processes across multiple channels. We must look into our own companies and see whether there is seamless alignment of all customer facing departments on the issue of relationship management, be it the CRM department, marketing, trade management, after-sales service, finance, et al. Most of all, the company’s top management must be aligned and agreed to the shape CRM will take in their organization. In times of economic hardship, a CRM professional may find it hard to sell through the idea of lifetime consumer value rather than immediate up-sell and cross-sell, but it’s critical that the investment be channelized toward consumer benefit orientation for long term sustainability. Pilots must be done and rigorous measurement performed to demonstrate long term value. It is only then that the age of hugely expensive carpet bombing will give way to efficient and effective precision targeting via CRM. Feedback: lkgupta610@gmail.com
Tags : Spotlight