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Can a company change from one that does direct marketing to one that’s focused on customer relationship management?
The main question is, “Does this company want to understand what customers truly value and apply that knowledge so consistently that it creates a competitive advantage?”
This is more of a philosophical change in how a company approaches its customers.
What does it take?
Simply put, hard-wiring the voice of the customer into the company. When a contractor hard-wires a fire alarm system, for instance, he connects all the smoke sensors to the building’s electrical power and to a central control box. The central control box can set off an alarm, turn on an emergency light and call the fire department.
In the future, if the customer isn’t hard-wired into your company, you’ll be out of business. So changing from direct marketing to CRM-based solutions is what’s going to keep you in business. You need hard-wiring that yields a durable, failure-proof communications channel.
Most direct marketing approaches represent the business equivalent of a battery-powered fire alarm. They do reach the customer, but they haven’t closed the loop with a method to ensure that data actually reaches the fire department. Many companies that depend on direct marketing often don’t end up with a dependable pathway connecting customer information with people who must act on that information.
Often in direct marketing companies there are two kinds of failures.
First, the failure to collect the right information and share it throughout the organization. Someone in the organization knows what the customer wants, but the people making the decisions that determine what the customer will get, don’t.
They never get the information they need. Second, in companies where the information is shared, it’s hardly used.
When a company has moved from direct marketing to effectively hard-wiring the voice of the customer into systems, the benefits are obvious.
Giordano is an example.
As one of the fastest-growing retailers in Asia, Giordano has seen its sales increase from $200 million in the mid-1990s to $600 million and growing today.
The new chairman took actions to improve profitability and aimed at becoming outstanding with customers. He committed to move away from direct marketing to a whole new focus on not only listening to the customer, but also using data to improve the company.
One of the biggest adjustments Giordano had to make was to its culture. The first step was to build profiles about the customers. The data showed that customers thought the salespeople were overly zealous.
Digging deeper, Giordano found that many of its Chinese customers were more conservative and felt uncomfortable when sales associates were overly friendly. The company taught its salespeople how to deal with different types of customers. They eventually won Nest Magazine’s Best Service Award.
If your company is like most, you already have lots of customer data from direct marketing. The challenge is to use it effectively.
The key is listening properly.
This step is the hardest and most likely to be neglected.
Take Toyota Motor Sales USA, for example.
The company decided to place the emphasis on getting an in-depth understanding of what its existing car buyers thought about its cars and services. Ultimately, the strategy was to understand how these buyers would make their next purchase decision.
Chances are if you’re a direct marketer, you’re not tuned in to a lot of customer information that flows into your organization. With the fierce competition that virtually every product or service faces, companies must continually scramble to stay ahead and earn and retain the loyalty of their customers.
Faced with ever-increasing options and variations and the “have it your way” impact of mass customization, consumers are constantly bombarded with the latest product wrinkle designed to lure them away from their current vendor.
Despite the work you do collecting customer information, the ultimate indicator of whether customers really matter to you is whether your customers’ information becomes as important an indicator of performance as profits.
With strategic listening, good communications and a way to track the information, an organization is ready to create a business that’s really hard-wired to its customers.
But it’s listening to more than the words.
Companies changing to CRM are communicating what they know about customers to their employees and are getting them to focus on the customer’s voice.
William Brendler is president of Brendler Associates Inc., Houston, an organization development consultancy.