Don't Manage Relationships, Optimize Them

A sure sign of a maturing technology is when people begin drafting its next generation. Chris Twogood is one industry veteran who has his eyes on where the industry is headed. Twogood, director of analytical applications and business intelligence at Teradata, mapped out his view of the next incarnation of CRM during his presentation at Teradata's user conference. Rather than managing all customer relationships, he says, companies should be optimizing each one--hence his introduction of yet another concept for the industry to absorb: Customer Relationship Optimization (CRO). In fact, Twogood says, even the "C" and "R" parts of the acronym remain misleading. "Customers don't want 'relationships,'" he says. "They just want to be treated as humans." Nevertheless, he places CRO a step above CRM on the industry's evolutionary chain. Twogood frames the progression toward CRO in terms of how companies reach out to their respective audiences. His chain of development proceeds from undifferentiated communication (mass marketing) to the increasingly differentiated marketing: segmentation followed by target marketing followed by event-based marketing, and, finally, to an interactive dialogue with individual customers. The idea of one-to-one marketing is hardly new, but Twogood says the emphasis typically has been placed on perfecting the company's activities, rather than the customer's experience. Where CRM has traditionally focused on customer acquisition and the initial sale, CRO raises the bar, to focus on maximizing the value of each existing customer. True economic value, Twogood says, can only be achieved as each customer's experiences improve. Twogood's concept of CRO is relevance linked to personalization. By moving from CRM to CRO organizations can continue to improve marketing relevance, product awareness, and sales--all traditional CRM goals. But CRO really begins to show its value by improving customer wallet share, customer satisfaction, and customer retention. At the same time, companies can reduce the cost of customer acquisition and support (especially among the lowest-value customers), minimize knowledge gaps about customer needs, and help eliminate inefficiency for customers and employees. CRO depends entirely on customer loyalty--a company can hardly optimize a relationship with a customer who doesn't come back--and takes into account what Twogood calls the three main buying emotions sought by customers:

acknowledgement that their patronage is valued, and that their identity is recognized;

respect for their time, for their privacy, for their previous requests; and

trust that the company will endeavor to solve any problem.

That loyalty will only derive from a dynamic environment that integrates "multichannel, event-based, optimized, customer-relevant dialogue and relationships"--an environment that depends entirely on the availability of accurate and timely data across the enterprise. Twogood says, "You need a foundation that lets you do all this consistently across the organization." Related articles: The Next Chapter of CRM A leading CRM exec says the industry is entering a new phase, finally poised to make substantive impact on customer-facing enterprises. The Next Great CRM Success Strategy Companies are looking to realign their approaches to CRM by better integrating technology and business processes. Business Process Management Is the Next Phase in the CRM Evolution