5 Strategies for Creating a Competitive Edge

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NEW YORK — Scott Hornstein hates the turnstile approach to CRM. The representation of a customer coming in and then immediately exiting — as if through a revolving door — is neither realistic nor smart in the context of a long-term customer relationship. The proper concept, according to a presentation last week at the CRM Evolution 2009 conference by Hornstein, told attendees to embrace the concept of a corner store. Managers of corner stores care, of course, about selling, but they know that getting that customer to keep coming back is of utmost importance. Hornstein provided this idea and others in his presentation about creating a competitive edge for a post-recession world. 

Hornstein,the president of Hornstein Associates, a customer-focused marketing consultancy gave attendees five strategic suggestions for companies wanting to improve their positions: 

1. Forget the turnstile relationship. Embrace the corner store.

"Wall Street may have poked some holes in the concept of short-term thinking," Hornstein said. Instead of focusing on transactions, businesses should shift their focus to people and in building their trust and respect -- just as an owner of a corner store might do. Transactional success is impermanent. Trust and respect might not last forever, but the attributes encourage customers to come around a second, and hopefully, multiple times.

"We [too often try] to identify the people who are ready to buy right now, and focus on pushing them through the turnstile," he said. "We use CRM tools [that have] more emphasis on the end." Instead of seeing just dollars, the presenter told attendees they should seek to find out what customers need and go from there. 

2. Market to the customer lifecycle.

"We are concerned with identifying people who are entering the sales cycle," Hornstein said. "That's what we compensate and reward." The consultant pointed out the flaws in the linear sales process, which basically involves making stuff, selling stuff, and collecting money. "The fastest way to be forgotten by a company is to buy something," he said. 

However, Hornstein used AT&T as an example of a company that got it right. AT&T shifted to listening mode and asked customers post-sale, "What do you think of this product?" That question yielded some negative results. The company learned of hardware and equipment failures. AT&T then took the feedback into account, reconfigured the product for customers, and as a result boosted sales by 11 percent and brought the renewal rate up to 98 percent. 

"After the sale, [customers] go through a cycle of things, but we tend not to communicate during that period of change," Hornstein said.  Companies are so focused on the pre-sales and sales environments that they lose out on opportunities and relationships after the sale is made. 

3. Invest in Voice of Customer (VOC) research.

"Each customer interaction is a tipping point," Hornstein said. A good interaction can lead to a long-time customer. A bad interaction can be more damaging than a company might imagine. Hornstein shared that last time he checked there were 72,700,000 Google results for the phrase "I hate them." Customers have a lot to say, and with the advent of social media, they are not shy to say it.

Marketing has been in broadcast mode, Hornstein said, but we need to be in listening mode and open our ears to those "annoying customers out there."

4. Integrate the marketing mix and boost customer care.

"Every customer interaction is an opportunity to reinforce or blow up your brand," Hornstein said, citing research by Accenture that says that 61 percent of customers stated that poor customer service led them to change a supplier within the past year. To ensure positive interactions, sales departments need to be in tune with the messages put out by marketers. And the key to successful marketing? Relevancy. Hornstein said it comes down to how customers want to be spoken to.

A huge piece of evidence that marketers so many times get it wrong, Hornstein said, is the National Do Not Call Registry. The speaker conveyed that three out of four people in the United States ignore phone solicitations. "We, as marketers, took a powerful medium - telemarketing - and jammed it down their throats.

"The great differentiator is customer care," Hornstein said of all interactions. Combining customer care with relevancy is what keeps a customer coming back. Hornstein emphasized personalization of messages, but he noted that personalization doesn't just mean using a customer's name in the message. It involves delivering the right information that customers want and need. 

5. Concentrate on long-term profitability.

Circling back to the notion of not treating relationships as turnstiles, Hornstein advised attendees to follow through with customers and not think as a sale as an end to the relationship. As an example of success driven from long-term relationships with customers, Hornstein pointed to IBM's Software Premiere Club as a stellar example of looking through a long-term lens. The club, which is actually a collaborative portal open to IBM's largest accounts and senior software decision makers, makes IBM's software strategies and offerings available to its best customers. Club participants can ask questions and participate in a forum, which is great for IBM to learn about VOC -- but also serves as a purchase trigger. The club has resulted in a 35 percent growth in incremental purchases and 90 percent member satisfaction. 

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CRM Evolution '09 concluded August 26 in New York. Full coverage can be found here.

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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