In CRM, as in Life, Time Is Money
NEW YORK – When it comes to online videos, if a film clip takes more than five seconds to load, 25 percent of viewers have closed their Web browsers. In 10 seconds, more than half of all viewers have left, according to Brent Leary, co-founder and partner at CRM Essentials, during a morning session at the CRM Evolution conference today.
"We live in a millisecond economy," Leary said, pointing out that when companies schedule service appointments, 65 percent of customers are satisfied with the visit if the technician is on time, even before he does a single thing.
It is in this fast-paced, time-starved environment that the subscription model has flourished, according to Leary, who indicated that by 2015, as many as 35 percent of global firms will be offering products or services on a subscription basis.
This, he said, is fueled by changing customer dynamics, where customers want not just a single interaction with a company but an on-going connection with the brand over time. Sadly, though, many companies are not capitalizing on this.
"A lot of companies are spending money around lead generation, not on lead nurturing or relationship building," Leary said.
To really thrive in this economy, companies need a different approach, according to Leary. First, they need to get customers to their Web sites; then, they need to get those customers to buy something, and then, they need to get those customers to keep buying it on a recurring basis, he said.
Amazon, Leary pointed out, is a master at this. With its paid Amazon Prime service, where customers get free two-day shipping for eligible purchases, unlimited access to Amazon Instant Video, and the ability to borrow books from the Kindle Owners' Lending Library for $79 a year, the company has raked in millions of extra dollars.
According to some researchers, Amazon Prime has roughly 10 million members now, and that number is projected to reach 25 million by 2017. Additional research found that Amazon Prime members shop on Amazon more often, shop in more departments, and buy more expensive items.
Leary also cited Netflix as a subscription model success story. Though membership plummeted when the company announced new fee structures, by changing memberships to include more free programming and the ability to view content on smartphones and tablets, the company rebounded greatly, he said.
In an uncertain economy, "subscriptions are all about recurring revenue per year or per month," he said. "That's guaranteed money coming in every month."
But, companies that participate in the subscription economy need to be concerned about churn, Leary warned, which is where CRM systems hold the greatest promise.
When customers are happy, along with recommending the service to others, they become really strong brand advocates, he concluded.