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Keeping the Right Customers
Can companies use CRM as effectively to retain profitable customers as they can to escort unprofitable customers to the competition?
Posted Jun 8, 2004
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At the Frost & Sullivan Sales & Marketing Executive Summit, I moderated the SuperPowers of CRM panel and asked the panelists, Can companies use CRM as effectively to retain profitable customers as they can to escort unprofitable customers to the competition? Barbry McGann, vice president of product management, PeopleSoft Enterprise CRM, PeopleSoft: What you want to do is look at those unprofitable customers first and see how to get them more profitable. If you're looking just at the short-term value--what are they today and not the relationships and how they can potentially grow and what influence they have--you could be making a great mistake if you're trying to escort them off to the competition. When you find that a segment is unprofitable the first thing is the strategy: How do I get them more profitable? How do I drive them to lower-cost service channels that still deliver the kind of service that they're looking for? And try to see if you can upsell them to generate more revenue and look at patterns to see [if] they mirror your other segments and other customers to try to grow them out. That would be what I would want to do with a CRM solution versus, trying to get rid of them and pass them off to a competitor. Robb Ecklund, vice president, CRM product marketing, Oracle: You have to be pragmatic. Most of us come from for-profit organizations--it's about building value for the business. And many businesses have customers that aren't contributing, that are actually taking away from that value. You do it elegantly--"escort," maybe there are better words around that--[give] lower levels of service. Less expensive channels are all euphemisms for disengaging and prioritizing. I mean, take it from the glass-half-full perspective: prioritizing my higher-value customers for higher levels of service. Jon Wurfl, director, global CRM communications, SAP AG: I agree with that, because it's just as important to know who your customer isn't and that if you have a given business strategy that says "I'm going in this direction," you should figure out the customers that are heading in the same direction with you.
Yes, you can do inventive things like repricing or lower-cost channels to keep them engaged, but at some point in time you have to really ask yourself if the value of that relationship is it worth the energy, even if it isn't as profitable. Brett Queener, vice president, field operations, Salesforce.com: We can implement a system and we can tell our salespeople that you can't lose every deal--and then you hope that the salespeople will go and track the records and tell you what they're losing. But the reality is, from a sales perspective, what you don't want (given you only have so many sales resources) is to lose the ones they're really going after. And so...determine, from a prospective customer perspective, where are the deals that given a limited amount of resources we should focus versus not. It's okay to lose, because that will be an unprofitable customer acquisition. You only have so many sales resources in your company. Jeff Pulver, vice president, worldwide marketing, Siebel Systems: To me it's just being able to double-down and focus on really understanding your customers, and being able to attack those topmost profitable customers to sell more to them to build a deeper relationship. That is a huge competitive advantage for companies today, because so many of these organizations have so much data about customers. There's so much work to do to capture that data, to understand that data and be able to really act on it to retain those customers. [But doing so] truly will be a competitive advantage.
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