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CRM 2.0 and "The Customer Module"
destinationCRM 2008: The customer module is based on the idea that united we stand, divided we fall -- and it's what CRM has been missing.
Posted Aug 19, 2008
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NEW YORK --  In his presentation today at the destinationCRM 2008 Conference, Denis Pombriant, founder and managing principal at Beagle Research Group, explained how CRM is no longer just your typical sales and marketing – in today’s customer driven world, companies are finding they have to dig deeper if they want to get the gold. This “deep cycle,” he says, is what companies need to better understand their customer’s needs, wants, preferences, and to do so, requires not just an understanding of the customer herself, but of what Pombriant refers to as “the customer module.” [It's a notion that Pombriant, a regular columnist for CRM, wrote about in the June 2008 issue of the magazine.]

The logistics behind the structure of a customer module is simply based on the idea that united we stand, divided we fall – none of these can carry the weight of an effective CRM solution should it operate in isolation. The four components are:

    * a community database;
    * a community interface;
    * analytics; and
    * a loyalty program.

As these parts work together, the customer module will prove to be extremely valuable in addressing the following inevitable changes in the business landscape:

    * aging and sophisticated demographics: once companies reach the “know-how” zone in the marketplace, they’re forced to reevaluate the relevancy of their product or services and recapture its relevancy;
    * aging markets; and
    * new challenges – particularly around the cost of oil and environmental concerns that force companies to seek alternative sources of energy – that will change current business models.

What’s often misunderstood about creating a community, Pombriant noted, is that merely having a customer database is not enough. A viable community is one comprised of people who are active, or at least semi-active, in engaging with your product or with other customers. It’s “absolutely critical,” he added, that companies know who these people are in order to determine whether the data is valid. According to a definition produced by Forrester Research, a community must strive to achieve the following:

    * listen;
    * speak;
    * energize;
    * support; and
    * embrace.

Then Pombriant asked a seemingly innocuous question: “Who is the customer?” If you ask sales, it’s the person with the budget. Ask customer service, and it’s the user calling in the complaint. Unfortunately, Pombriant said, there’s a disconnect: the person with the money, doesn’t feel the pain, and the person with the pain usually doesn’t control the money. The customer, therefore, must be someone “with business pain and the budget to do something about it.” 

The community interface defines the channels by which vendors can learn about their customers preferences and passions. It marks a place, too, where customers can interact with the company and each other, and hopefully, provide further insight. A common tool here is the customer survey, but Pombriant encourages companies to step out of the monotony this medium and take advantage of all that Web 2.0 has to offer, from blogs, to photo and video sharing, to online chatting. 

Pombriant introduces the concept of a “research community.” Compared to an unstructured community of what can often comprise of 15,000 known and unknown customers and prospects, a research community is small -- roughly 300 to 400 people, and their presence is short-lived. “What you ask them to work for you, they’re committed, but you recognize that they have a day job,” Pombriant said. Therefore, committees like this often convene 90 to 120 days, then rotated out to bring in fresh faces to generate fresh perspectives. 

Ideally, Pombriant added, the modern community is one that is sponsored by a third party, thus avoiding vendor biases, and one that facilitates the free exchange of communication. In such a setting, there is not only intimacy but trust. Pose an intelligent question and give consumers the chance to “massage an idea,” he added, and sometimes, it comes back in a form that it was never intended, but opens up doors for great possibilities. 

Cookies and crackers manufacturer Nabisco, for instance, hired a third party researcher to tap into undeniably growing population of American dieters. The company essentially handed the consumer the microphone and listened. From there came the birth of the 100 calorie snack pack – derived from a consumer who simply wished there was a snack that was packaged according to the recommended single serving size. 

It pretty much goes without saying that analytics is a critical component in CRM. Everyday, every month, every year is going to bring in more data, all of which should be fed into your analytics engine. “Whether you generate data into new information,” Pombriant stated, “is whether you do adequate analytics.” 

The last component is the loyalty program. Contrary to popular belief, it should no longer be a gimmick. People are skeptical to the flashy discounts, the promises of huge savings. While free stuff is always a good perk, believe it or not, a simple “thank you” is often enough, Pombriant said. Nevertheless, he goes on to suggest that in today’s highly connected society, companies should log on and communicate directly with customers at least a couple, if not several, times a week.

Click here for more of our destinationCRM 2008 coverage.

News relevant to the customer relationship management industry is posted several times a day on destinationCRM.com, in addition to the news section Insight that appears every month in the pages of CRM magazine. You may leave a public comment regarding this article by clicking on "Comments" at the top; to contact the editors, please email editor@destinationCRM.com.

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To contact the editors, please email editor@destinationCRM.com
Every month, CRM magazine covers the customer relationship management industry and beyond. To subscribe, please visit http://www.destinationCRM.com/subscribe/.
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