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The 360-Degree View
The key to effective relationship management is crafting a comprehensive customer view.
For the rest of the June 2001 issue of CRM magazine please click here
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Any discussion of Customer Relationship Management must necessarily begin with customer understanding. Clearly, relationships with customers are not possible without understanding who your customers really are, what they value, what they want to buy, and how they prefer to interact with and be served by you.

In short, CRM requires that you adopt an enterprise-wide "360-degree customer view." The customer experience cycle in the diagram at right demonstrates the centrality of customer understanding to CRM investments and strategies and, ultimately, to your ability to consistently optimize each customer's experience with your organization.

Understanding the customer experience is at the center of the CRM universe. All marketing, service, support and sales efforts are driven by an intimate knowledge of customer characteristics, preferences, usage or purchase history and needs at each stage of the purchase cycle. This immediately creates significant customer interaction opportunities at every point of contact across the enterprise.

Increasingly, customers are making buying decisions based on more than just the four Ps of marketing (product, place, price and promotion). Key influencers also include such variables as service quality, recognition, brand relevance and customer support--factors for which competitive differentiation may actually be easier to achieve. Indeed, delivering consistently on these latter factors will bring about high levels of customer satisfaction.

But moving from customer satisfaction to loyalty, and finally to value, requires a deep understanding of customer characteristics and behaviors, such as your customers' purchases and related spending patterns, their current potential value to your organization, and their demographic and lifestyle characteristics.

Based on all of these factors, what are the unique segments of customers you serve? Which segments are most important to your organization today and tomorrow?

Identifying Customer Segments

To adopt a 360-degree customer view, start by profiling your customers and determining how they are segmented. Why is profiling and segmentation so important?

By breaking customers into groups that differ on behavioral, attitudinal, demographic and other relevant dimensions, organizations are able to optimize their product offerings, service and support systems, order processing, marketing communications and all other significant customer interactions, thereby gaining an ever greater "share of customer."

Several examples will help illustrate this principle.

First, segmentation usually springs from the common sense notion that all customers are not created equal. In most businesses, a small fraction of top customers contribute the lion's share of sales and profit. Therefore, not surprisingly, many companies go to great lengths to ensure a highly positive experience for their "high value franchise" across all parts of the organization. Practices, such as flagging these individuals for special care at point of sale, directing their inbound telecommunications to experienced supervisors, sponsoring private shopping nights and other VIP treatments, have become common. At the same time, many of these same organizations incent their unprofitable customers to use lower cost automated call centers and delivery systems.

Second, many organizations have long recognized that demographics create powerful divisions among customer groups. After all, young, lower-income families have very different product needs than affluent empty-nesters. Segmentation, thus, has strong intuitive appeal when a key CRM focus is to develop new products or services or expand existing lines to meet emerging needs of customers at different life stages or socioeconomic levels.

Finally, leading B2B companies strive to optimize the allocation of limited field sales resources across customer segments. High volume, high margin customers--and those customers predicted to become so in the future--are often assigned one-to-one "consultative" account reps who have intimate knowledge of the customer's business and special marketplace challenges. At the same time, low volume unprofitable customers are migrated to the company's Web site, telesales or similar direct channel.

Humanizing Segments Through Research

CRM segmentation can be rendered even more actionable across the organization by "humanizing" segments through qualitative and quantitative research. The heart of segment humanization is gaining a deep understanding and appreciation of what is important to each customer group by actually seeing and hearing members of the various groups identified in the segmentation process. Through dialogue techniques such as focus groups, mini groups or one-on-one interviews, you can learn how customers view their relationships with all aspects of your company and with your competitors.

Qualitative research provides essential insights and hypotheses about the needs, behaviors, motivations and attitudes that characterize each segment. The downside is that although these findings are rich in specific detail, they cannot reliably be projected to the larger customer base due to the limited number of study participants. Most organizations that adopt a 360-degree customer view get around this by conducting a quantitative survey, using a representative sample that is large enough to produce statistically significant results for each segment.

Putting the 360-Degree Customer View to Work

Certainly, application of segmentation results will be critical to maximizing the return on your company's CRM investment. To that end, the planning process supporting implementation should include strategies for:

• Development of measurable, impactful segment-specific goals, objectives and tactics for every point of interaction customers have with your company.

• Establishment of enterprise-wide business metrics, customer measurement, tracking and reporting processes for all segments and points of contact.

• Proposals for segment-specific customer interaction guidelines that span every part of your organization that has customer contact.

• Development of CRM strategies for new customer acquisition.

• Conceiving test designs and rollout schedules related to each specific CRM initiative.

Successful implementation of a 360-degree customer view necessitates building a multidisciplinary team charged with CRM strategy and program oversight. This is the only way to ensure that a unified front and consistent segment messages will be presented at all points of contact. In turn, sustaining team cooperation, focus and energy requires clear communication of the CRM vision by your company's senior management, as well as training for those involved in the implementation. Experience has shown that, without a top down commitment, organizations run the risk of falling back into their previous "silos" and operating modes, potentially crippling the best thought-out CRM efforts.

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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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