In a recent speech for the 25th National Center for Database Marketing Conference & Exhibition in Las Vegas, I reviewed Hewlett-Packard’s experience with customer relationship management.
During the conference I was pleased to see that basic CRM ideas and assumptions have become a standard part of the conversation in direct marketing and database marketing.
The adoption of CRM is driven by at least four factors:
• CRM technology vendors are helping drive the discussion with the development of new applications.
• The Internet is a powerful interactive medium and it has generated a new level of interest in direct selling, support and CRM.
• Many companies recognize that customer loyalty creates profit.
• Many companies recognize that customer information is a strategic asset.
These factors are a big part of the CRM story. Another theme in the CRM story is its connection to your brand. The connection is based on customer experience at every touch point with your company. And the implication is simple: First create an exciting brand promise, then deliver the promise with CRM. In other words, brand-building and contact management are mutually reinforcing activities.
These threads connect CRM to brand:
• Effective CRM implementations are built on the foundation of an exciting brand promise. CRM tools and processes can yield efficiency gains, but the “big bang” can occur when new tools and uses of customer information support a powerful brand with the ability to create new products and services based on customer needs.
• Analysis of the relationship between measures of customer satisfaction and loyalty reveals a nonlinear relation. That is, increases in satisfaction do correlate positively to increases in loyalty, but not in a simple straight line. A diagram of the relationship looks like a “slow” response curve line, with loyalty waiting to increase rapidly at the very high end of satisfaction.
• Very dissatisfied customers – “terrorists” – will tell others and they will cost you beyond the loss of their individual lifetime value. Very satisfied customers – “apostles” – will tell others and they will contribute beyond their individual lifetime value.
• As satisfaction ratings increase in the middle range – “fair” to “pretty good” – loyalty measures do not increase at a corresponding rate. Customers that are “pretty satisfied” are subject to competitive threat. You must have excellent marks to create loyal brand advocates and apostles. There is a qualitative leap from “pretty satisfied” to “thrilled.” The difference between indifference and profitable loyalty is an exciting brand promise.
You can’t get real loyalty by executing perfectly on a dull brand promise. If market tastes change and your brand loses its appeal, brand advocacy will dry up.
CRM strategies bring the brand promise to life in the experience of customers, as they “touch” your brand at every contact point – from Web sites, to salespersons, to advertising to product use.
CRM can integrate the experience of customers across all touch points, creating a consistent, branded experience. Ideally, CRM processes should be designed to eliminate fragmented, inconsistent experiences, as customers move through the cycles of pre-sales, learning, purchasing and using your products.
Finally, CRM implementations can be measured and continually improved in at least three dimensions:
Recognize customers:
• Know basic customer identity.
• Gain a unified view of your customers, and provide customers a unified view of your company.
Remember customers:
• Know what they want and what they have told you.
• Manage the “conversation.”
• Design customer experience through key touch points.
Reward customers:
• Deliver what they need and want – deliver on the brand promise.
• Integrate data and develop contact management systems.
Limited budgets and competition for funding are a fact of life in most companies. This can create conflict between brand-building and CRM approaches. Companies that find the right balance of spending on both, using an integrated approach, may generate superior long-term returns that support ongoing investments in both brand-building and CRM programs.
