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Customer Relationship Management – System or Attitude?

October 2, 2009 Articles, Customer Service No Comments

Customer Relationship Management

Why Customer Relationship Management is so important…

A colleague recently lamented to me “I was so annoyed that the XYZ coffee shop in the ABC Centre took sooooo long to give me a second coffee one morning, even though I was close to the machine and kept looking expectantly, I decided to ‘punish’ them by going elsewhere for a year.

This is poor customer relationship management.

At an average of three coffees a day @ $3.20 each = $9.60 a day for about 220 working days a year, that could cost them $2,112 a year.  (That’s why my new office now has a cappuccino machine!!)  Given that I was traveling a fair bit, I figured their poor service cost them at least $800 to $900 for the year that I gave them a miss.” Consider how poor, or excellent customer relationship management could cost, or earn your business each year.

Improving your customer relationship management. Do you know how much business each individual customer brings you?  More importantly, do your front line staff know?  I wonder what impact it would have on the staff at this coffee shop if they knew that every regular customer had the potential to bring them at least $2,000 gross revenue each year.  Do the staff know how many “regular” customers they have per day?  And, what does it take to turn a “drop in” or “first timer” into a regular customer?

Motivate your staff to improve their Customer Relationship Management skills.

How would the staff respond to customers if every time someone came in they had at front of mind “this customer is paying $3.20, but they could be worth $2,000 to our business”.

It’s been said that your first time customer, even your first time visitor (say, to your website) is always the highest cost to you.  You’ve had to spend your hard earned advertising dollars to get them.  But it’s the repeat customers that really provide the best returns.  If they keep coming back to check out your site, your products, your services, or your information, you’ve clearly developed a relationship with them. You have established credibility and trust.  Once you’ve done this, the chance that these repeat visitors will buy from you increases exponentially.

Building trust with your customer.

Building customer relationships, whether you sell single cups of coffee, jet airliners or major service deals, depends on trust.  The trust the customer has in you, your product or service, and most importantly, your people.

Back in the 80s and 90s, Customer Relationship Management Systems were a popular innovation as a way of building relationships.  However, research shows that more than 50% of Customer Relationship Management Systems failed.  Generally this was because senior managers failed to see the holistic nature of a Customer Relationship Management System – often they were merely used as a customer information data base.

If on the other hand…

Customer Relationship Management is seen by the organisation as the key underpinning philosophy on how we want to manage our customer relationships, it can be extremely successful.

Successful Customer Relationship Management at its heart, depends on the commitment and drive of senior management.  And trust is the outcome of a successful Customer Relationship Management.

Five strategies that will achieve successful customer relationships . . .

1.  Customer Profiling

Those involved in marketing will know that there are basically two types of customer profile – demographic and behavioural.  Demographics gives us an image of what the customer looks like (e.g. age, sex, domicile, likes, dislikes etc).  A behavioural profile, tells us what the customer does in relation to our service and/or product.  What are they doing?  When did they last buy?  When are they likely to buy again?

Customer behaviour is a much stronger predictor of your future relationship with a customer than demographic information ever will be.  You need to look at the data, the record of their behaviour and it will tell you things.  It will tell you “I’m not satisfied.”  It will tell you “I want to buy more, give me a push.”  It will tell you “I think your product is great (or not so great).”  And of course, as in the coffee shop example, it will also tell you how much each customer is worth to you.

2.  Skilled, Knowledgeable and Committed Staff

Customer service is only truly effective when people inside the organisation treat one another as customers.  It’s those internal “trusting” relationships that flow through to the staff who deal with the external customers.  Do all your staff know who their internal customers are?  If all staff build internal customer relationships, there is a very high likelihood that those who meet the external customers will do likewise.

For example, when an invoice turned up for payment in the accounts department of a bank (for a junior manger’s accommodation expenses) it had a note attached from the hotel “Mr. XXX has been a guest here for the past 3 weeks.  He has been an exemplary guest – always courteous, friendly and polite.  He is a great ambassador for your company”.  Now, that was a nice compliment.  It may be an indicator that the bank had a successful Customer Relationship Management philosophy.  However, the real Customer Relationship Management indicator then appeared.  The Accounts Payable clerk immediately sent the note to the CEO who in turn immediately phoned Mr. XXX and congratulated him on the image he had built for the company.  The CEO also congratulated the Accounts Payable clerk for promoting a Customer Relationship Management philosophy.  Internal customer relationship at its best!

3.  Effective Communication with Customers

No doubt you’ve spent a good deal of money on advertising – good brochures, newspapers, journals, annual reports, perhaps billboards and TV.  But do you communicate with your customers and potential customers through the social media such as Facebook, Twitter and so on?

Most of the major news networks, now use “eye witness” reports from viewers and various social media.  As we have seen, no country, organisation or person can hide or “polish” the truth any more with slick PR communication.

The world of communication has changed in the last decade.  Historically, the form of customer communication was one-way.  Yes, you might have a help desk or complaints department, but essentially the communication with the customer was one-way.  The major benefit to the organisation was that you controlled this information.  With social media, it is two-way, often instant, and not always under your control.  That’s why it is essential to have a social media strategy with assigned responsibility for its management.

4.  Managing the Customer Interface

If you are a senior manager reading this article, let me pose a question.  “When was the last time you actually met with (and perhaps served) a customer?”.  I’m not talking here about the relationships you have with the senior managers of your customers (which are important).  Rather, the customer whom your front line people have to serve every day.

As a former senior manager in a bank, I had to spend one week each year serving retail customers.  This policy applied from the CEO down.  How scary (for senior managers) was that?  The results were fantastic.  Every manager in the organisation – from the most junior to the most senior – had an excellent knowledge of what happens at the customer interface.  As a result, our appreciation and understanding of customer service, the challenges front line staff faced, and most importantly, customer’s needs and wants, improved dramatically.

5.  Feedback and Measurement

The ultimate measurement of success, is sales.  However, in terms of building customer relationships, there are many things one can measure to assess progress.

The important thing about feedback, is timing.  To be relevant, it must happen as close to the customer interface as possible.  For example, in one hotel as I checked out, I was asked to take a card from the pack on the counter whilst the clerk processed my account.  On the card was one question relating to their service with a “tick the box” five-point rating scale.  Being a keen student of service, I asked about the system.  Apparently, they had 10 service success indicators, each with a question on a card, so each indicator was repeated with every 10th customer.  The results were fed into the computer as the customer checked out.  Next morning, each hotel in the chain got their results for the previous day, plus those of other hotels for comparison.  The energy and enthusiasm evident in the staff over their service levels, was contagious.

How do you engender this total Customer Relationship Management philosophy?

  • Number one priority is training – customer relationship training. And this must start with the top team, and move down through the organisation.
  • Secondly, select a Customer Relationship Champion – a senior manager who is well respected throughout the organisation and who will make Customer Relationship Management his or her personal responsibility.
  • Thirdly, implement a recognised Customer Relationship Management system that tracks customer profiles, trends, feedback, results etc. Make sure the system is an integral part of everyone’s job, not an add-on.
  • Finally, invite some of your best and worst customers to be part of your Customer Relationship Management development and the evaluation of its success. If you do really want to be recognised for your customer relationships, your customers need to become an integral part of the development of your Customer Relationship Management philosophy.

Oh, and at all costs, avoid using incentive or reward programs as part of your Customer Relationship Management.  Just as you can’t buy customer loyalty, neither can you bribe your staff to perform – it takes good leadership!


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