As we've pointed out on a number of occasions recently, the CRM industry seems to have entered what Gartners call the "Trough of Disillusionment" phase of implementation. Early excitement generated by the new opportunities opened up by CRM has given way to the realisation that delivering the benefits of CRM is a little bit harder than having the idea.
This is, of course, typical of the implementation of new technology-enabled processes, and the next phase is for the industry to identify those techniques that actually work and deliver benefit, and incorporate them into their CRM programmes.
Over the past few weeks, a number of our editorials have been trying to encourage readers to see afresh some of the perhaps tired clichés of CRM, including One-to-one marketing, Customer Lifetime Value, and CRM itself. Those concepts in themselves move on with a growing interest in newer ideas such as the adaptive or learning organisation, or the integration of CRM with supply-chain management.
Whilst the development of those ideas will no doubt continue, we also need to find the practical CRM-related applications that actually work. Of course we have already outlined a number that have been proven in large numbers of organisations, such as the use of propensity and segmentation models to target communications; the use of event-driven techniques to deliver relevant communication, and the automation of the customer sales process using those very same event-driven techniques.
However, we've recently noticed a couple of trends which seem to be gathering acceptance and interest, which also instinctively feel right, and so we're going to spend some time over the coming quarter exploring them in some detail, after introducing you to them in this editorial.
The two techniques we want to explore, I'm provisionally naming "CMR" and the "Community Channel". We hope to look at how both these techniques can be used to support the major CRM applications (customer acquisition, value maximisation, customer service, and retention) - and in order to try and keep it relatively real, we're going to investigate how they apply to a couple of industries I know relatively well: retail financial services, and new media organisations such as the CRM-Forum itself.
Let's start with CMR...and the first and most important thing to say is that I lay claim to the name, having first used it publicly at a conference in London on 22nd October 1999 (see Real-Time CRM - Technological Horizons). (Competitive claims of earlier use, with evidence of such usage to [email protected], please!).
CMR stands for Customer-Managed Relationships, and is based on the premiss that, in a self-service channel such as the Internet, the reality is that the customer is in control, not the supplying organisation, and therefore our CRM processes should recognise that. One could well argue that this also applies in other, more interactive channels, where sales or contact center staff are in direct communication with the customer.
Ralph Harrison, of the Harrison Company claims: "Our CMR approach to relationship management will soon overtake most traditional forms of CRM for three very important reasons: 1) It's simple and easy to understand vs. the complexity of all traditional CRM solutions which take major commitment and cultural changes on part of the user entity; 2) Since the customer does most of the work with CMR, it is very cost efficient and easy to implement with, compared to traditional CRM technologies; and, 3) Our CMR solution is the only technology that actually delivers the important powers of customer and relationship "retention and consolidation", things that all competing "company-driven CRM technologies" claim, but in actuality, do not deliver - and will never come close to our "customer-driven model" when it enters the market." Ralph has been working on a CMR model for the last 8-10 years (and so may have a better claim than I to the acronym). I also note that Netonomy VP, Mike Evans highlights the same move to CMR in an article in our news section: Evolution to self-service makes sense, and claims the backing of Patricia Seybold for the same idea.
If the customer is in the driving seat in a self-service environment, how can we incorporate the sales, service, and marketing activities that we know as CRM? Well, real self-service advocates say you don't at all. Their view has often been that being responsive to what the customer wants and needs is good CRM.
We don't agree with such an extreme view. Sometimes conventional CRM results in companies talking at customers, but this sounds like customers talking at companies. Communication has to be at least a dialogue, so the company needs to be able to communicate with customers as well as vice versa. How otherwise do I tell a high-value customer in a self-service channel that I'm willing to do more for him/her than a low-value customer?
So how do we incorporate the sales, service, and marketing into the self-service Internet channel? Well, because there is no human contact in such a channel, we have to design it into the site itself. Currently, this often seems to be achieved with little consideration of the process that the customer goes through in becoming familiar with the site. Of course the site is made attractive, of course the benefits of the products are highlit, but this is a conventional product-focused approach. There is frequently limited, if any, consideration of the process the customer is going through.
If we want to make that process customer-focused and hence more effective we need to understand it better. We need a way of visualising it. We need a way to visualise the customer - site dialogue and a tool-kit for implementing and changing it. I hope to outline such a methodology over the coming weeks.
One final point. In the conventional sales environment, dealing with customers face-face and via the phone, we think of three key processes on the customer development ladder:
- we identify suspects who may be interested in our products and services
- we qualify those suspects and convert them to prospects by identifying their specific interests today in those products and services
- we convert those prospects into customers by persuading them to purchase a specific product or service
In the self-service environment of the Internet, the number of these steps goes up, and the size of each step goes down. To outline just a few of the steps the CRM-Forum wants our members to go through:
- we want a 1st-time anonymous visitor to visit the site again
- we want a repeat anonymous visitor to subscribe to a newswire so that we can tell him/her what we're doing to the site
- we want subscribers to provide us with profile data so we can offer more relevant services
- we want subscribers to make comments on editorials and other content to add value to the site, and feel more involved
- we want subscribers and commentators to submit contributions so that we broaden and deepen the content we provide
- we want to convert regular, subscribed members of the site into transactors who actually provide us with funds
- etc, etc., etc.
Enough on CMR for the moment - though we will re-visit this area in later editorials - but now let's turn to the second area of interest, the 'community channel'.
In a sense we have already moved on to the community channel. If you look at some of the steps outlined in the previous section, we want you, as a member of the CRM-Forum to take a number of steps which are not conventionally considered part of sales and marketing. We want you to comment on what we write. We want you to contribute. We want the members to communicate and help each other.
I first became involved in such 'community-based' services when part of my responsibilities, in the mid-eighties, was to help the company I worked for to adopt PC technology. I needed support and help to do that, and I got that support mostly through Fido-based PC-networks using 300baud modems (oh the good old days!), and two particular sites: a PC support site run by Dr Solomon (before he got interested in viruses) and, if I remember the name correctly, PC Net.
The conventional wisdom when the Internet first moved into the commercial world was that the benefits to most commercial organisations would derive from the substantially reduced cost of communication and transacting across such a medium. Indeed I think I've written a few such articles myself.
However, that conventional wisdom is under attack. More and more commentators, including at least one of the Big-5 consultancy companies that I met with recently, are seeing the core value of the Internet channel as being the provision of the type of e-community based services that I was using back in the mid-eighties for PC support - but of course, now supported by the technology of the Internet.
Before looking in a little more detail at those services, it's worth highlighting the well-understood phenomenon of the breakdown of the physical communities in which we used to live our lives so recently. I've argued strongly in our recent debate on One-to-one marketing that despite the individualism so prevalent in Western thinking, humankind is a social animal that gets satisfaction from living in relatively small groups...or a community. With the breakdown of the physical small communities which met those needs, perhaps virtual communities - based on shared interest, rather than shared location - will meet those social needs.
Experience of using those community-based services, both back in the 80s, and today with more sophisticated services offered by commercial organisations like Dell and Sony (and hopefully also by the CRM-Forum itself) it is clear that:
- e-community is a great loyalty builder
- e-community is great for delivering customer service
- e-community is also great for identifying new products/purchases - maybe not for the corporation, but certainly for customer
- ...and one can also argue that e-community is great for maximising customer value
We hope to demonstrate the truth of those statements in a series of editorials over the coming few weeks.
As we noted as we moved into this section, much of what we do in CMR is relevant to the community-channel and if we put these two ideas together, then we have a customer-driven sales and marketing process working within a community environment.
We think that will prove to be one of the many success stories in the CRM space, and we hope to develop a methodology for how you achieve that over the coming weeks.
As always, we welcome comments on this editorial, both critiques of the ideas presented, and further development of those ideas. Those comments can be made here, either by using the 'add a comment' link below, or by writing directly to me, Richard Forsyth, at [email protected].
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