CRM without software

I have just spent an amazing couple of days with a major car dealership in South Australia. This company knows where it wants to be but is struggling to sort out the “how”.

I have been helping them sort out a potential strategic roadmap of initiatives. The interesting thing is that they are, in many ways, well on the way to becoming Customer Centric. Their Dealer Principal is an eneregetic, innovative customer champion who has implemented many initiatives that are outstanding. His team are equally passionate about enhancing the customer experience and already offer an experience that is loved by their loyal customers. Whether it is their use of customer follow-ups. Net Promoter or obsessive attention to customer service quality, it appears to be working. But here is the interesting thing: It has all been achieved without the use of any software. Many of the processes that CRM software automates is done manually. Their customer data is in the heads or on the notepads of their customer facing staff. It really is amazing to see just how effective a paper process can be! Just think what they could do with a CRM system enabling these processes. It is an exciting prospect for them but equally inspiring for me to see the power of good people combining with good processes to enable customer centricity.

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What is CRM? My point of view…..

My view on the Million Dollar question. I argue that it is not one thing in particular. It is the whole of all of those things.

I am often asked and have often read about this question. I felt it about time to come up with my perspective.

CRM (Customer Relationship Management) is a term coined by the Software Industry in the mid-late 1990’s. Since then, there have been attempts to modify the term, usually to introduce a new variety of software. There has been eCRM, CIM, Citizen Relationship Management and CRM 2.0 (of course!) to name but a few. However, CRM has stuck and many of those now becoming aware of this previously unexplored part of the universe are guilty of equating CRM to a tool. I find that view very limiting and narrow. Usually it comes from one’s own perspective. For example, if you are a Salesperson and use CRM software to manage your sales opportunities, customers, leads and forecasts then CRM is a Sales tool in that context.

Let me first of all explain how I view organisational decision making. This applies to any organisation from the largest multinational to the “one man band”. Everyone has a slightly different take on this and there are other steps I have omitted e.g Values that are also important but have less impact upon CRM than some of the other steps.

GOAL – VISION – OBJECTIVE – STRATEGY – ACTIVITY – TASK

Everything starts with a motive. What is your reason for existing and doing what you do? For many private organisations, the goal could be to maximise shareholder wealth. For the one man band, it could be to not have to work for another person. Irrespective, it all starts with an overarching goal.

Therefore the next step is the vision. Where do you want to be to realise that goal? A corporate vision is a hugely important statement and is often confused with Mission Statements. To me, a Vision is inspirational, stretching, future. A Mission Statement should define what the organisation will be (note: not ‘do’) to deliver that vision.

From the Vision, we need corporate objectives. These objectives should be S.M.A.R.T.

Next, we need a Strategy. A strategy tells us what we need to do to reach these objectives.

The Strategy will then break down into a series of actions and sub-tasks that should enable realisation of the strategy.

So where does CRM fit in? To many people, CRM is a class of software that can help organisations better manage their customer relationships. This is correct. However, to me it is like saying that Space Exploration is all about Rockets. Sure, you need a rocket but what about Astronauts, Scientists, Engineers? What about the leveraging of knowledge? What about the planning? Is that not equally important?

My definition of CRM uses the space analogy to suggest that CRM is the entire universe containing many galaxies. I will start my explanation with a look at the decision making hierarchy many organisations use:

“CRM” should start at the vision stage. What importance does an organisation put upon the type, nature and interaction with its customers? To some organisations, it isn’t important. They focus on price competitiveness or other competitive differentiators that allow them to be successful even with mediocre customer satisfaction. Just look at your mobile phone provider for evidence of that. How many of those providers are truly customer focussed or offer outstanding customer service?

Assuming the Customer is central to an organisational vision e.g “Our Customers loyalty to our products and services will be the envy of all of our competitors”, then we now need to come up with a way of realising that. The objective will help define timeframes, measurements etc but will not tell us HOW. For that, a CRM Strategy is required. What do we need to do to achieve the objective to help realise our vision? It usually starts with a blunt appraisal of where you are today: (“How do you know where you are heading if you don’t know where you are?”)

The Strategy should define a series of initiatives that impact upon the entire organisation. It might affect the Corporate Culture, Organisational Design, R&D, Sales Strategies etc. Nevertheless, the CRM Strategy will be the focal point for all subsequent tasks and activities that are required to help realise the vision. It is likely the CRM Strategy will cut across functions which leads to another key question: Who is accountable for CRM. I will address that in a subsequent post.

The activities required to reach the objective can take many forms.

  • One of these activities might be to analyse and redesign the Customer experience.
  • Another may be to develop systems and tools to better capture, understand and monitor inbound and outbound customer facing initiatives. In other words, CRM Technology.
  • Another might be to train the workforce on customer communications and customer service.
  • Another might be to change the hiring strategy to evaluate potential recruits against a templated “customer focus” criteria.

There are many, many more things that could be done but nearly all activities will impact upon and/or involve People, Process and Technology.

Therefore CRM to me is the entire universe of customer orientation. This universe contains many galaxies of activities which contains many solar systems of tasks.

Customer Centricity is a journey through the universe without a real destination. Why? Because the goal (destination) keeps changing. Customers have different expectations and needs today than even a year ago. Even as recently as five years ago, how many organisations had a Digital Marketing or Social Media Strategy?

As the world evolves, so must our vision and enabling strategies to ensure that if customers are important to our overall vision, then we never lose sight of the need to evolve in alignment to the changing world.

Avoiding the Tipping Point

Everybody has a tipping point. That moment where an equilibrium is broken and the trend is reversed. Look at any election. What will cause a voter to “switch” from one particular choice to another? That ’cause’ is the tipping point.It is when the reasons to change become stronger than the reason to stay. The weight has shifted on the scales. The tipping point is reached and the scales sway in the other direction. It is the final nail in the coffin. The last straw. The moment of realisation.
With Customer Loyalty, the same is often true. Customers will follow a particular buying pattern or behaviour until they reach a tipping point. If loyalty to the brand or product is low, it does not take much. Buying fuel is, to me, a commodity. Out of habit, I tend to buy petrol at my cheapest local petrol station. However, if I’m running late, I may choose to go somewhere even closer but slightly more expensive. It’s not a big deal. I have no particular loyalty to a particular brand or petrol station. Being a bit cost conscious, I fill up habitually at the station offering the cheapest fuel around but the price differential is not that great. Therefore if I am time poor, I may shop closer to home and pay just a bit extra. Low tipping point. Low loyalty.
However, most Marketeers will tell you that creating a brand is everything. The brand has an intrinsic value that causes customers to perceive it differently and value it more. Brands attract loyalty, but that loyalty also has a tipping point at which that loyalty will be tested once too often or too far and the customer will subsequently defect to another product.
So the goal of most organisations dealing with customer loyalty is to do two things. Firstly, create brand loyalty. Secondly, ensure the tipping point is never reached. The Customer Experience has a major impact on both of these factors and partially explains why there is an increased focus on it. The latter is equally hard to do yet, in my opinion, gets less organisational attention.
Ironically, organisations cannot always wholly control the tipping point. Virgin Blue, the Australian airline, has a pretty good reputation for creating customer loyalty. Partly through its Velocity Frequent Flyer Programme but also by differentiating on attempting to improve all stages of the customer experience. Just over a week ago, Virgin Blue’s ticketing system crashed causing the cancellation of the majority of flights and leaving passengers stranded. It took several days to rectify and had a major negative impact on the brand from a reputational point of view. Ironically, the Virgin system at fault is not their own: It is (apparently) an outsourced solution. Not that this is any comfort to the thousands of irate passengers last week. My point, however, is that Virgin could not wholly control this “tipping point” although they could mitigate the risk. The dilemma facing Virgin Blue now is the longer term impact on its loyal customers. How many of them may regard the problems of last week as their personal tipping point? It will be a real test for the strength of the brand.
Organisations must always be on the look out for these tipping points. Years ago, people joined a bank and tended to stay with that bank for life. Nowadays, banks have made it easy and enticing to switch and, with customer expectations increasing over time, the tipping point is more easily reached than in yesteryear.
The same is true of many services, yet the tipping points are not always studied. How many organisations conduct ‘exit’ interviews on defecting customers? How many organisations attempt to identify weaknesses in their service offerings to proactively remove potential tipping points?
Consumer choice and awareness creates the potential for churn. Yet, often people buy for emotional reasons, whether it is habitual, a remembered good experience, what your parents did or even a familiar ‘name’ heard through mass media. With such a fragile recipe for loyalty, is it any wonder organisations should spend as much time protecting the brand from churn as they do in building the brand in the first place?