Tips 2009 Customer Relationship Management in and after the recession

The next 12 months are threatening to be far tougher for organisations than the last. So what has the world of customer relationship management tought us this year that will stand us in good stead for 2009?

Seven lessons

By Neil Davey, editor

“Credit crunch” – a phrase that neither you nor I had heard of 12 months ago that is now shaping up to be the bane of our lives. There’s no escaping the fact that there is some serious belt-tightening going on around the globe. And all the business forecasts for 2009 make for bleak reading.

Speaking at the Microsoft Convergence conference, Brad Wilson, general manager of Microsoft Dynamics CRM, emphasised that the most important thing to do during a recession is to keep your eye on the customer.

“It’s critical now for every company to think about how they invest in the processes needed to help their customer relationships,” he explained. “Nucleus Research says the one area you should continue to invest in is CRM. Nobody today has unlimited funds to pursue all the projects that they want to do, but guaranteeing the best possible customer experience is really important.”

So with that in mind, it’s a good time to take stock, and consider some of the key lessons that organisations have leant in the past 12 months – and that will stand them in good stead as we move into challenging conditions in 2009.

Use your online communities as a tool for feedback and innovation

At the recent Dreamforce global gathering, Starbucks discussed the success of its site, which was set up to solicit ideas from customers for how to improve the coffee giant’s service. To date, some 65,000 ideas have come through the site. The functionality of this site is now integrated into Facebook.

“This allows us to engage in regular dialogues with our customers. Facebook gives us the personalised local experience.”

Chris Bruzzo, CTO, Starbucks

“It’s an experience for a brand like Starbucks that allows us to embrace our customers and bring them into the boardroom,” says Chris Bruzzo, CTO of the MyStarbucksIdea site. “That’s happening on a consistent basis. It’s changed our capability to see our customers. We went from one great store in Seattle to today when we have tens of thousands. In the process, you lose some of the connection with your customers. This allows us to engage in regular dialogues with our customers. When you get to 65,000 ideas that is too many ideas to understand. Facebook gives us the personalised local experience.”

Elsewhere at the event, Michael Dell also shared his thoughts on using customer communitites for feedback and innovation. “We have an ecommerce site that has 35 million visits a week and 480 million unique visitors a year,” he explained. “We have put the idea of listening into a whole other realm. We have more conversations with customers than any other company I know. We have had 10,000 ideas posted on our IdeaStorm site. We are inspired by listening. We have this incredible model of co-participation whereby our customers are driving the development of our products. Listening is in our DNA – we are a company with big ears!”

Ensure you are managing your reputation online

The surge in online consumer generated content presents many challenges and opportunities for marketing professionals in businesses across the world. Studies suggest that the majority of brand comment online is negative and firms need to engage with these commentators.

At the same time, Web 2.0 can be a blessing for firms who have an army of advocates. Many companies are not yet clear on how to identify and influence brand advocates or manage their reputation within a wider social network environment. Brand advocates are critical for companies to effectively manage their reputation on social media sites.

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Identifying users and supporters of one’s brand and then offering incentives for voicing support in a group often creates brand advocates. However, some brands are lucky enough to already have a number of brand advocates without carrying out any official activity on social media. In this case, brands should use this as an opportunity for consumer research and then introduce some kind of non-invasive presence to reward loyalty.

Either way, users must welcome brands into the fold and they must also be absolutely certain they are not going to be interrupting conversations. The key to this is providing information and content to advocates that is valuable and non-intrusive.

Move from monologue marketing to dialogue/conversational marketing

Direct marketing as it stands is nothing more than ‘monologue marketing’. Whether the consumer deems the communication relevant or not, simply bombarding them with marketing messages isn’t indicative of forging a long-term, two-way relationship.

“Like anything that is new, [next best action marketing] is something that can actually provide key competitive advantage, so they don’t want to make a song and dance about it until they have actually got it bedded down.”

Umporn Tantipech, Teradata

Brands must change their current monologue mentality, whilst at the same time harnessing digital and other channels to their fullest potential.

Digital channels offer a huge opportunity for direct marketers to establish meaningful and two-way relationships with consumers, but only if brands can change their way of thinking and move beyond one-way communications. If a brand is going to develop a dialogue with a consumer it must take a step back and allow the consumer to decide, albeit with well defined prompting, what information they want to have and when.

In technology terms, next best action marketing has been increasing in popularity as a way for organisations to deliver the right message on the right channel at the right time, as opposed to just pushing the product at any and every opportunity. O2 and Orange are just two businesses that are benefitting from the technology.

“There is a lot of activity going on, but it is low key,” says Umporn Tantipech, director of Teradata’s CRM Centre of Excellence for Financial Services. “Like anything that is new, it is something that can actually provide key competitive advantage, so they don’t want to make a song and dance about it until they have actually got it bedded down.”

Know your customers (lifestage, values and lifestyle)

Last year, a McKinsey study berated managers for not understanding the important issues in their customers’ lives. Too many, they said, did narrow product research without understanding the context of lifestage, values and lifestyle. The result was a trust gap between companies and customers: consumers felt companies had poor CSR credentials and were more willing to take them to task about it.

An example of this could be found in the US, where executives thought data protection was a more important issue than it was in reality, and underestimated healthcare and retirement concerns because they didn’t understand the baby boomers. With the business of business becoming more social, generational value research must have greater prominence. You may think you know today’s customers but if your demographics don’t change, will you know who they are tomorrow?

There are cultural issues to consider, specifically:

• The rise of customer power
– The wane of the nuclear family and the rise of singles needing networks.
– Technology (and particularly the internet) that lowers market entry barriers and allows for knowledge/content sharing.
• The increasing ‘tribalisation’ of society
– Flexible living
– Future Foundation believes people are spending more on temporary enjoyment and less on what they can keep.
• Return to arts and crafts
– The concerns over manmade climate change and population size, and how this links to consumerism.
– The business of business being social rather than shareholder value.

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But there are also generational issues to consider, i.e. the differences between marketing to Generation Y, and the oft-overlooked over-50s.

Learn to locate real customer insight

Insight is the ability to get into the customer’s head in a way that is valuable to the business. Insight is not just data. It is a deep understanding of the customer in the context of the market.

According to Dr Brian Smith and Dr Paul Raspin, it should be useful and actionable. It needs to be ‘of its time’ and can include both hindsight (perception gained analysing the past) and foresight (perception gained from modelling the future). It is not obvious to others or easily found.

So how might real, valuable, hard to acquire, actionable insight be produced? Some tips include:

• Define the business challenges that the insight needs to address and eliminate noise. What are the key issues in your market to which no one has the ‘right answer’?

• Audit and plan out the areas where you need data and information to research the issues. Usually, they fall into three groups:
– PESTE trends (political, economic, social, technical, environmental).
– Market data on consumers, customer, competitors, suppliers, channels.
– Internal performance data.

• Someone needs to have ownership of that issue and be continuously scanning the relevant information for insight.

• The issue owner needs to build a ‘model’ of current accepted knowledge and insight for why things are currently done as they are.

• It is against this knowledge that new insight can be explored and measured for potential.

Measure your customer experience

Customer experience should be a leading KPI for customer-centred organisations, but firms run into difficulties measuring it. “The nearest many organisations get is the use of customer satisfaction surveys and average call answering statistics – neither of which adequately measure customer experience,” says Tony Mooney, consulting and propositions director at Experian Integrated Marketing.

“The nearest many organisations get is the use of customer satisfaction surveys and average call answering statistics – neither of which adequately measure customer experience.”

Tony Mooney, consulting and propositions director, Experian Integrated Marketing

“For example, most companies with call centres use average call answering as a KPI. This is merely a hygiene factor and, anyway, is usually inaccurate as it measures call answer times from the point at which the poor customer has made it through several layers of IVR. Of far greater importance than how quickly you pick the phone up is how the call is handled, e.g. single contact resolution.”

A company’s first thought should not be ‘how do we measure IVR effectiveness?’ but rather ‘what are our customers expecting when making a call and how do they feel when confronted by a taped voice going through messages and menus?’.

Measuring customer experience does not mean throwing new metrics into the pot along with the old, according to Jennifer Kirkby. It needs a thorough re-evaluation of the whole feedback infrastructure flowing into a balanced scorecard metric system.

Tips for ‘measuring’ customer experience include:

• Too many companies use magic numbers – KPIs which are deemed to be important because “everyone has them” – for instance, net promoter score, customer retention and leads. Model your processes from the customer perspective, and understand through research and feedback what happens at each stage – then put in metrics.

• We think we listen to customers but the evidence tells a different story. Break down your propositions and services – the customer’s view of process – and find out just what drives engagement, and how customers feel about each part. Norwich Union uses emotional feedback measures they have found to be important, such as ‘do you feel appreciated as an individual?’ and ‘do you genuinely feel that NU cared about meeting your needs?’ and use the result in ‘customer innovation’ sessions with staff.

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• Measuring word of mouth is hard but there are indicators. Ratings and recommendations on the likes of YouTube or TripAdvisor are examples of how Web 2.0 is opening this up to measurement.

• Too many companies ask customers what they want – e.g. do you want the phone answered in three or six rings? – and set metrics accordingly, rather than establishing what the customer’s objective is and setting measurement on whether it was achieved. Dig down to root causes and set metric systems accordingly; measure benefits not service levels.

Ensure your staff are your biggest brand advocates

Measuring, training and rewarding employees can all be effective tools to ensure that your staff are engaged with your brand message. But making customer-facing employees the voice of the customer can be even more rewarding.

Jennifer Kirkby suggests that frontline staff can be engaged by involving them in product and service design. She suggests their importance as insight workers should be recognised, for not only do they understand what customers want (after all they deal with them day to day) but they also understand what the solutions are because they know your business.

“Not only has Disney defined four things that are important but also an order: Safety, Courtesy, The Show, Efficiency. Based on this, staff can make the right brand choices every day in every interaction.”

David Williams, CEO, How To Experience

When your employees are used in this way, customer service moves from the end of the ‘make and sell’ process into the heart of the customer value proposition design (CVP) – and lo, sales through service enters the corporate DNA.

John Lewis recently came second in a consumer report on service across 77 retail organisations by Which?. Interestingly, the department store had managed the feat of a large organisation giving the much vaunted ‘corner shop experience’.

It was reaping the rewards of initiating a ‘selling through service’ programme. “The core of our programme is our ABC process – Acknowledge the customer, Build the relationship through conversation, Close the sale through listening and questions,” says Andrew McMillan, former manager of customer service at the retailer. “It took us five years to complete the enormous culture change and get our partners (the John Lewis staff) to be proficient in ‘acknowledging’ – putting across the message ‘I’m here if you need me’. Then we launched into B and C. This entailed getting groups of around 24 outstanding partners (six from each store) together to come up with ideas for building and closing.

“With that information, we put together a strategy and implemented it through a cascade run by the shop floor partners. Performance was measured in a mystery shopper programme. The mystery shoppers themselves were ex John Lewis shop floor partners and were intimately involved in both designing the measures and the research.”

But for firms to get this right and reap the benefit, they must ensure staff are aligned with the brand. Disney, for instance, has its entire business based on brand image and so it has been critical to ensure its staff live and breathe the brand message. “Helping frontline staff resolve day-to-day dilemmas is key to making your brand real,” explains David Williams, CEO of How To Experience. “Disney has done this brilliantly. Not only has it defined four things that are important but also an order: Safety, Courtesy, The Show, Efficiency. Based on this, staff can make the right brand choices every day in every interaction. You don’t need a big rule book, just clear guidelines. Human beings do the rest!” 19-Dec-2008

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