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Implement CRM or Become Customer-Centric?
Companies face a choice.
Posted Jul 1, 2006
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Are CRM and customer-centricity are mutually exclusive? No. The findings of a new research study jointly conducted by David Mangen, Ph.D., and myself, titled "Customers Say What Companies Don't Want to Hear," draw a clear distinction between CRM as it's commonly practiced and customer centricity. Customers participating in the study, which assesses which company behaviors trigger positive purchase decisions--ranked highest as purchase influences behaviors that don't rely on traditional CRM for support, and in some cases don't even intersect with CRM as practiced. That's very troubling for a CRM industry that likes to consider itself intrinsic to customer-centric business. But what do I mean by "CRM as commonly practiced"? Namely, the people, process, technology mantra that's echoed throughout the industry since we learned that naked software implementations are guaranteed face plants. Unfortunately, people, process, and technology are three legs on a four-legged stool, and trying to rest on three legs will leave you upside down in more ways than one. What's the fourth leg? As a 2002 study that David Mangen and I were both involved in, "The Blueprint for CRM Success," proves beyond reasonable doubt, customer-centric business strategies are the fourth leg. And not only the fourth leg, but easily the most important leg--the leg that's most predictive of ROI from CRM. Although we didn't design our new study to revalidate "Blueprint" findings, we certainly received an earful from customers about which factors do and don't motivate their purchase selection. And as it turned out, the leading motivators are all behaviors that can only emanate from implementing customer-centric strategies and culture--people, process, technology notwithstanding. And among the nonmotivators that provide only secondary support to buyer selection are these very stanchions of CRM: providing online customer service; 360-degree view of customers; sharing customer data across departmental and divisional boundaries; and cross-selling. So what does motivate customers to buy, if implementing people-, process-, and technology-based CRM doesn't yank their chains?
The study revealed that:
  • a quality product designed to meet customer needs is very important to customers, but only when coupled with customer-friendly behaviors by companies;
  • customer-friendly behaviors by companies are very important to customers, but only when coupled with quality products; and
  • of all the individual company behaviors rated, customers scored empowering employees second-highest, trailing only product quality. The fact that customers consider neither product quality nor customer-friendly behavior alone sufficient to win their business, along with other data (especially the importance of empowering employees), sends a powerful message. Customer expectations of companies are rapidly rising, giving companies an increasingly high bar to clear in order to win customer business. Companies need to change in order to jump that high. And CRM should be the change agent that puts the necessary spring in company legs. So how is the business community responding to this message? And the CRM industry? Unfortunately, the business community as a whole has barely left its feet in terms of meeting higher customer expectations. Customers did rank highly individual companies including Amazon.com, Toyota, and Southwest Airlines. But they hammered Wal-Mart and Sprint for having lead feet. And for every company rising up to meet customer expectations, there are myriad nonresponsive organizations. Too bad for the latter, because the growing gap between what customers expect and what they experience creates competitive openings wide enough for responsive companies to roll through sideways. As for the CRM industry, sadly, it routinely fails to help companies elevate in response to newly empowered customers and their higher expectations. Why? Because people-, process-, and technology-focused CRM focuses on delivering value to companies, making little contribution to delivering value to end customers. Consequently CRM has become a vestige of traditional, internally focused business--instead of the leading edge of customer centricity it promised to be. Where does the CRM industry have to go in order to deliver on its original promise of helping companies achieve customer centricity? First, CRM has to become much less about consultants and software vendors maximizing sales of goods and services to companies--and much more focused on helping companies meet customer expectations. Second, CRM has to be about changing the whole company, down to its roots, to become customer-centric--not about doing what's easy for companies to digest. How likely are these changes to occur? On one hand, not likely because helping companies deliver what customers want would take money and focus away from the CRM industry and shift these scarce resources over to "nonindustry" players, including strategic planners, change management specialists, trainers, and research firms--whose work must be done first before it makes good sense to implement people, process, and technology CRM. But on the other hand, while the CRM industry has nearly killed the goose that laid the golden egg, there's still time to turn things around--if industry members will stop pretending that traditional CRM moves companies appreciably closer to customer centricity--and instead belly up to the bar to become effective change agents. It's time to pull together and promote a more holistic approach to CRM that really does help CRM-implementing companies make the critical changes needed to meet rising customer expectations. Otherwise, smart companies will ignore CRM and focus on customer centricity instead. And that would be lose-lose for companies and the CRM industry. About the Author Dick Lee is the principal of High-Yield Methods and has been involved in relationship marketing since the 1970s, and in CRM from its inception. He has authored and coauthored several books and research reports dealing with CRM-related issues, including the recent research study (coauthored with David Mangen, Ph.D.), "Customers Say What Companies Don't Want to Hear." Please visit www.h-ym.com or email dlee@h-ym.com
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