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All Customers Are Not Created Equally
CRM magazine Editor-in-Chief Ginger Conlon, moderator of the SuperPowers of CRM panel at the recent Frost & Sullivan Sales & Marketing Executive Summit, asked the panelists, Should companies offer stellar service to every customer, no matter what their true value to the organization?
Posted Apr 19, 2004
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There is an eternal debate over whether companies should give outstanding service to every customer or whether they should reserve the best treatment for the most profitable ones. At the recent Frost & Sullivan Sales & Marketing Executive Summit, I moderated the SuperPowers of CRM panel and asked the panelists, Should companies offer stellar service to every customer, no matter what their true value to the organization? Their responses follow. Barbry McGann, vice president of product management, PeopleSoft Enterprise CRM, PeopleSoft: The key is, you've got to pick your investments wisely. I equate customers to assets, just like you would your stock portfolio. You need to be able to figure out what's the right allocation and mix of your investment, so you can return the highest profit potential back to your corporation. And you have to look not only at short-term value, but, even more important, look at the long-term value--what you can grow those customers into. That was one of the problems with the earlier conversations around this: People weren't looking long-term, as well as short-term. And just because [customers] may spend low revenue, it doesn't mean that they're not profitable; [they] could be low cost. They could be going to your self-service channel and returning a high profit back to you. Those are customers you don't want to lose--those are customers you want to grow in your portfolio. Jon Wurfl, director, global CRM communications, SAP AG: Last year I delivered a series of lectures at Chico State University on CRM and the [students] were appalled that we would use systems that would allow us to [judge] which customers should be gold and which ones shouldn't. And it took a lot of communication to work with them on getting them past that hurdle. We can't forget the fact that [all] customers are worth something and that we shouldn't discard them quickly. There is a tendency to be that way. In other words, unless you're gold on United, you get in line with the cattle. You shouldn't be treated like cattle. Robb Ecklund, vice president, CRM product marketing, Oracle: A lot of folks are wary of using the words profit and customer in the same sentence. But this question gets at just that issue. CRM is an opportunity to deliver higher levels of profitability to your organization, and a way [to do] that is to differentiate service levels. So, take it from the positive perspective--that you're delivering superior levels of service to your most important, most valuable customers and making sure that you're adequately addressing the customers on the other end of the spectrum.
Jeff Pulver, vice president, worldwide marketing, Siebel Systems: There are also ways to drive the lower profitable customers to other channels. Many companies have been very successful at driving lower-value customers where they can still get the answer to their questions, but maybe they've got to do a little bit more work, whether it's self-service on the Web or other areas. So even if there are lower-value customers, there are still ways to deliver a great customer experience. Brett Queener, vice president, field operations, Salesforce.com: People have been deploying CRM for the past five to seven years, and what we've seen is actually the view from a customer perspective that service has gotten a lot worse across the spectrum. Witness the success of Washington Mutual, which is doing everything sort of reverse from what companies should be doing in banking, which is segmenting, sending the poor people to the ATMs and offering only brokerage hours or banking hours for wealthier clients. And yet we see them succeeding. The trick is, while you shouldn't offer superior service to everybody, you better set the right expectation with the customer at the time of purchase or pre-purchase, in terms of what level of service you are going to deliver.
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