CRM Demands Leadership from the Top

MyCustomer.com
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By James G. Barnes

I have long felt that the success of any customer-focused strategy in any organisation is dependent on the commitment of the CEO. It is patently wrong to delegate responsibility for customer relationships to the marketing department or the development of a CRM programme to the IT folks. Since long-term customer satisfaction is the single most important factor that drives shareholder value in a company, the CEO must take a singular interest in and responsibility for the creation of long-term customer satisfaction.

To implement CRM successfully, a company must be relationships focused. To be merely customer-focused is not enough. Many companies today pride themselves on being customer-focused. In many cases, however, this translates into a concentration on satisfying the immediate needs of the customer and on the creation of what I term functional value. That is, customer-focused companies tend to ensure that the customer is served quickly, that calls are answered within 20 seconds, and that orders are filled and delivery completed within 48 hours, or some such target. The emphasis is on efficiency and on being easy to deal with. But this is not about customer relationships.

To be relationships-focused is to be guided by a desire to create an emotional bond with the customer, to establish a sense of loyalty that is grounded not in efficiency, convenience and access, but in a genuine sense of attachment and closeness. Such loyalty is much more lasting and less vulnerable than one based on being the company that delivers most quickly or fills orders most accurately. The latter form of loyalty is based on the creation of functional value for the customer; the form of value that is often created through technology and is the most easily copied.

To create emotional value for the customer means that all components of the company and all of its employees must work together to create the right customer-facing climate and the right atmosphere to contribute to positive customer emotions. We want them to feel welcome, valued and appreciated. To do so means that we have to treat them properly, which means more than making sure that their orders are filled quickly and accurately. All employees must be constantly thinking about how their actions and the company's customer-facing systems and processes are making customers feel.

All of this requires that the right corporate culture is created that lends itself to this kind of thinking. James Heskett and his colleagues at the Harvard Business School demonstrated several years ago the link between the way companies treat their employees, and how those employees then treat customers. There is an undeniable link between how employees feel about working for the firm and how the customers will feel buying there. It is the CEO who must be responsible for demonstrating the leadership needed to create the right corporate culture.

CRM, if it is implemented as a business strategy, requires a corporate and organization-wide commitment. It has as much to do with human resources, communications, information systems, systems and operations, as it does with customer databases. It requires an integrated approach, and only one person can provide and insist on that integration, the CEO. CRM is not the responsibility of the marketing or IT departments; it’s the responsibility of all employees and of the CEO as leader.

Think for a moment about the connection between the leadership provided by a CEO and the ultimate provision of value for shareholders. There is an intuitive link - if the CEO is a good leader, shareholders will benefit. But the link is an indirect one. Let me suggest that it flows through the following steps, from the leadership provided by the CEO to the realization of enhanced value by shareholders. Strong leadership from the top will lead to a corporate culture that is nurturing of employees and encouraging of their treating customers well. Satisfied employees stay longer with the firm and are more committed to it and to its customers. These employees deliver superior service to customers, thereby creating lots of emotional value. This leads to more satisfied customers who are more likely to be retained by the firm. Over time, a genuine relationship will develop that will see customers demonstrate emotional loyalty to the firm as exemplified in greater share of spend, more referral business, and much less likelihood to defect. The sum total of these solid customer relationships and the loyalty that results is what guarantees the success of the firm into the future, and guarantees solid value for its shareholders.

Unless the CEO has created the right climate within the firm and right way of viewing the customer, this process can't work. Responsibility for the relationship focus of the company and for its CRM strategy rests with the CEO. It can't be delegated.

As always, any comments on this editorial can be made here, either by using the 'add a comment' link below, or by writing to us directly at: [email protected]

Best regards,

James Barnes

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03rd Oct 2001 09:28

Very good article James reminding us of the importance of emotional buy-in and not just the 'transaction hygiene' - a point that is sometimes difficult for your hard nosed & cycnical businessman to appreciate . The only other thing I would add is I would bet every time, that CRM projects which are not properly committed to by the top, will almost certainly fail as the lone enthusiast comes up against 'turf wars'. A big company problem.

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By admin
04th Oct 2001 22:46

It would be interesting to see if there is any link between the relationship a CEO has with his family and the reltionship with employees and customers.Providing quality service is different than growing and enhancing a relationship.
A CEO may be too focused/busy to observe the real and everyday needs of their spouce and/or family. Do they understand the need to pay attention to the person behind the action. Businesses handle too many transactions efficiently and miss the opportunity to deal with the person and organization effectively.

Ross

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avatar
03rd Oct 2001 09:28

Very good article James reminding us of the importance of emotional buy-in and not just the 'transaction hygiene' - a point that is sometimes difficult for your hard nosed & cycnical businessman to appreciate . The only other thing I would add is I would bet every time, that CRM projects which are not properly committed to by the top, will almost certainly fail as the lone enthusiast comes up against 'turf wars'. A big company problem.

Thanks (0)
avatar
By admin
04th Oct 2001 22:46

It would be interesting to see if there is any link between the relationship a CEO has with his family and the reltionship with employees and customers.Providing quality service is different than growing and enhancing a relationship.
A CEO may be too focused/busy to observe the real and everyday needs of their spouce and/or family. Do they understand the need to pay attention to the person behind the action. Businesses handle too many transactions efficiently and miss the opportunity to deal with the person and organization effectively.

Ross

Thanks (0)