CRM buzz words

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I often hear of CRM terms like "Customer Profitability", "Customer satisfaction" , "Customer loyalty" .....

But as a novice in CRM area, I feel all the terms mean the same. But many articles say "Customer Satisfaction" doesn't necessarily lead to "Customer loyalty" .
Could any one explain me why maximizing customer profitability doesn't always lead to customer satisfaction which in turn imply customer loyalty?

Santosh Srinivas

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By admin
18th Jan 2002 15:18

'vintage consultant', like a significant proportion of the CRM industry is in serious danger of disappearing up his/her own backside.

If this industry spent as much time and money on the people who actually operate call centres i.e call handlers and their training and working conditions, as it does employing technologies that actually reduce 'customer satisfaction', and carrying out reams and reams of worthless analysis it might actually start achieving some the goals it should be trying to reach.

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By admin
18th Jan 2002 12:37

"Customer Loyalty" and "Customer Satisfaction" have both macro and micro implications to a company. They are both used to arrive at the "life value of a customer." Let's talk micro implications first. Customer loyalty says I can count on this customer to place their next purchase with my company, at whatever interval is typical for such purchases. Customer satisfaction says, currently, this customer is happy with the way we are doing business together. This gives me a benchmark, a single Kodak moment that can be examined for several factors existing at that moment. In the macro implications, customer loyalty, combined with the value of that customer, means I can forecast baseline revenues from that customer and can reasonably target that customer for deeper wallet share, cross-selling, and up selling. Customer satisfaction required trend analysis, as it's volitility may have impact on the customer loyalty. In the macro examination, my company will look at total customer satisfaction within that trend analysis and the factors that create that satisfaction environment.

The tie-in to CRM applications is that I can do both macro and micro analysis of both customer loyalty and customer satisfaction...supposedly. That qualifier is there to indicate that it is up to my company to use CRM intelligence for both strategic and tactical decision.

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By admin
16th Jan 2002 13:16

If you consider the options available
to you to increasing profitability, you will be no doubt be drawn to cutting costs. Once you start this you can increase profits but the down side is the impact of reduced costs - customer expectations are not met. i.e poor service.

Be careful...

This could mean that the percieved value of your product is worse - which in turn leads to
customers voting with thier feet.

If you're interested in reading more about this try Phillip Kotler - Marketing planning analysis & control.

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By admin
30th Jan 2002 09:05

I'm no novice but neither am I an expert with CRM. At first thought, it may seem so, I mean you'd think that getting great satisfaction from a product or service is a pre-requisite for getting Customer Loyalty. Of course, one could argue that it'd be very difficult to imagine a customer being "loyal" to "lousy, even a loathsome" product or service...(or is it?:) but hey, look at Windows. To most of us, our choices (of putting our "loyalties") are not really because we're conscious about which company offers better "CRM" but for the most part because they're just "available" at the right moments. I feel only certain products or services have the most "CRM" potential to which these buzz words apply.

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avatar
By admin
30th Jan 2002 09:05

I'm no novice but neither am I an expert with CRM. At first thought, it may seem so, I mean you'd think that getting great satisfaction from a product or service is a pre-requisite for getting Customer Loyalty. Of course, one could argue that it'd be very difficult to imagine a customer being "loyal" to "lousy, even a loathsome" product or service...(or is it?:) but hey, look at Windows. To most of us, our choices (of putting our "loyalties") are not really because we're conscious about which company offers better "CRM" but for the most part because they're just "available" at the right moments. I feel only certain products or services have the most "CRM" potential to which these buzz words apply.

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21st Jan 2002 17:51

Remembering the part that says, …”I am new to the CRM area” let’s try to help Santosh, CRM Manager and Vintage Consultant understand eachother.

You have a favourite restaurant. You eat there every Wednesday at 19:00. This is because you typically finish work and 18.00 and it takes you an hour to get to the restaurant. The head waiter of the restaurant knows this (as he has observed your routine and behaviour) and (because he wants you to come back) he ensures that he keeps your favourite table free between the hours of 19:00 and 20:00 every Wednesday.

Why would he do this? Because he has observed that you typically come to the restaurant with at least four of your clients and in order to impress them you are 'not shy' with your Gold Card. He wants you to play the 'let's show off with my Gold Card Game' at his restaurant and not somewhere else. He does this by doing the 'little things' that he has come to learn you enjoy.

You know he does this - you like the fact that he does this and the 'special treatment' that you get when you go to the restaurant reflects well upon you (and is observed favourably by your clients).

However, one Wednesday you don't show. Have you suddenly become dissatisfied with the service of your favourite Head Waiter? No. It’s simply that your biggest client has a favourite restaurant too. You took him THERE because YOU knew that YOUR CLIENT would be impressed by this. Due to a 'freak visit' you may have become a fan of the new environment. You missed your appointment with Restaurant 1 and there is a serious danger that you wont go back. Hey, Restaurant 2 is a ‘change of scene’.

However, the Head Waiter of Restaurant number one has observed your behaviour and noticed the change. He calls you up to make sure that 'you are ok'. You think, "that's nice!" explain to the waiter and next week you go back to your favourite restaurant and start waving your Gold Card. The waiter, as a welcome back, has an especially large bottle on ice.

What if the waiter HAD NOT or COULD NOT observe this change? He could have lost you 'even though you are a satisfied customer and he has done all he can to keep you happy'.

The larger the organisation and customer base - the harder it gets to OBSERVE customer behaviour AND to react accordingly. CRM Software and CRM Strategies can help you do this. However, in spite of this - customers are HUMAN and capable of random thought and decision making. It is the job of the HUMAN to use Software tools in order to properly react to customer behavioral changes (or, cater to repatative behaviour).

Customer Service keeps 'em. When that fails, noticing behavioral change can bring 'em back. For that you must have (and can never sacrifice) the human element of any organisation.

Shane Thomas
http://www.networkings-uk.com/

Thanks (0)
avatar
By admin
18th Jan 2002 12:37

"Customer Loyalty" and "Customer Satisfaction" have both macro and micro implications to a company. They are both used to arrive at the "life value of a customer." Let's talk micro implications first. Customer loyalty says I can count on this customer to place their next purchase with my company, at whatever interval is typical for such purchases. Customer satisfaction says, currently, this customer is happy with the way we are doing business together. This gives me a benchmark, a single Kodak moment that can be examined for several factors existing at that moment. In the macro implications, customer loyalty, combined with the value of that customer, means I can forecast baseline revenues from that customer and can reasonably target that customer for deeper wallet share, cross-selling, and up selling. Customer satisfaction required trend analysis, as it's volitility may have impact on the customer loyalty. In the macro examination, my company will look at total customer satisfaction within that trend analysis and the factors that create that satisfaction environment.

The tie-in to CRM applications is that I can do both macro and micro analysis of both customer loyalty and customer satisfaction...supposedly. That qualifier is there to indicate that it is up to my company to use CRM intelligence for both strategic and tactical decision.

Thanks (0)
avatar
By admin
18th Jan 2002 15:18

'vintage consultant', like a significant proportion of the CRM industry is in serious danger of disappearing up his/her own backside.

If this industry spent as much time and money on the people who actually operate call centres i.e call handlers and their training and working conditions, as it does employing technologies that actually reduce 'customer satisfaction', and carrying out reams and reams of worthless analysis it might actually start achieving some the goals it should be trying to reach.

Thanks (0)
avatar
By admin
16th Jan 2002 13:16

If you consider the options available
to you to increasing profitability, you will be no doubt be drawn to cutting costs. Once you start this you can increase profits but the down side is the impact of reduced costs - customer expectations are not met. i.e poor service.

Be careful...

This could mean that the percieved value of your product is worse - which in turn leads to
customers voting with thier feet.

If you're interested in reading more about this try Phillip Kotler - Marketing planning analysis & control.

Thanks (0)