The challenge of customer-managed relationships on the Internet

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I promised last week to continue the discussion on customer-managed relationships (CMR) and the importance of the e-community channel. Before I do that, however, I'd like to mention a few changes on the site that we hope you'll find helpful.

Firstly, we are under the impression that many of you are unaware of the richness of the content in the CRM-Forum library. To help you explore that library as a useful source of information on CRM issues, we've added a lot of links to the front page that provide common searches of the library. On the right-hand side of the homepage you'll find a list of market sectors (Banking, Insurance, Telco, and Other) which, if selected, will provide you with a list of all CRM-Forum library documents for the selected sector. In addition, you'll find a link to one of our most popular library searches: CRM Intros and Overviews which provides a list of the documents that members coming up to speed on CRM seem to find most useful.

On the left-hand side of the homepage you'll find further searches of the library by customer application area: Customer Loyalty, Customer Profitability, Customer Retention, Customer Service and Customer Acquisition. Of course you can still use the library search page to construct your own searches, use the 'pre-canned' searches listed, or find recently published documents. We do hope you'll use these facilities to find resources, from our library of around 400 documents, which can help you with your problem.

Speaking of solving problems, we've also introduced an Any Answers section where you can ask for help from other members of the CRM-Forum, as well as the CRM-Forum team itself. This new function will eventually replace the Bulletin Board which we have been running up till now. The new feature is far more closely integrated into the site and works in a similar way to our news story comments. We hope you'll find it easier to use and more effective.

The stories we currently publish which are read the most and attract the most comments tend to be these editorials, so we've raised their profile on the homepage as well. As previously, you can get to the current editorial by clicking on the link in the left-hand-corner of the body of the homepage, but under that link there are three further links which allow you to see the editorials which have been most popular and most read, and those which have been most commented on, as well as the most recent editorials. We hope this will help you catch up with the editorials of most interest to you.

In addition to these specific changes, we have also added further links down the left-hand side of the front page to some of the more popular parts of the site. All with a view to making the site more accessible to you.

CMR:

And now, back to the subject at hand: customer-managed relationships (CMR). Actually, of course, the previous paragraphs have been quite relevant to the subject of CMR. Nearly all the changes we've introduced have been implemented with a view to making it easier for you to find your way around the site, in order to get more value from your self-service relationship with the CRM-Forum.

Nevertheless, I'd like to develop my thoughts a bit further on the subject of CMR. Firstly, there is a danger from last week's editorial that we confuse CMR with the e-community channel. The two are related, but different, and to make this clear I want to talk about them separately. This week's editorial will focus on CMR and later editorials on the e-community channel.

Let me re-iterate from last week that CMR is not only about the self-service channel of the Internet. Perhaps a term from Ralph Harrison's contribution on CMR will help. Ralph talks of "customer-driven relationship management". This covers far more than self-service. The customer can use any two-way channel to communicate what they want from us. Most companies are very good at offering their products and services to potential customers, but how many of them are good at responding for requests for products and services from potential customers? When was the last time you requested details of a particular product from a company, and they failed to supply it? I had a recent experience with Insurance companies when I asked three companies to provide details of the rules they used to select companies for their ethical investment portfolio. Only one of the three managed to provide those details. So you can invest ethically with any of the three, provided you don't ask what that means. The point is, of course, that companies need to be responsive to customers' (and potential customers') requests for information (and service) regardless of channel.

Actually this may be a more significant problem that we often think it is. As I am sure you're all aware, the growth in Direct Marketing, and the reducing cost of e-channel communications for Direct Marketing purposes is rapidly filling our mailboxes (physical and electronic) with communications we're not interested in. This is not a minor annoyance, but is likely to lead to a situation where important communications are ignored because of the 'noise' created by poorly targeted offers. How many letters have you seen this week, marked on the outside "This is not a circular. Please open"? A recent editorial in one of the magazines I read proposed the use of sophisticated e-mail filtering software to remove the noise of unwanted communication from our inboxes, but whilst that solves the problem from an individual perspective, it leaves an awful lot of bandwidth and email servers doing a lot of work to make sure we don't get something. A more pro-active approach might be to start to move to a situation where we only receive the communications that we want to receive, by handling ad-hoc requests for information better, and allowing users to provide more detailed definitions of the communications they want to receive.

Nevertheless, there can be little doubt that the self-service channel of the Internet is one of the key challenges for CMR, and I've spent some time this week trying to think through what sort of methodology we need to use a CMR approach effectively on the web. It's too early for a fully thought-out methodology, but I have come to a slightly clearer view of the challenge we have to address in this area - and key to any successful development is making sure we're asking the right questions. So let's focus on the characteristics of the e-channel compared with conventional channels and see if that helps us identify the differences, and hence the challenges, any methodology will have to address.

If we compare sales and marketing activity in the Internet channel with sales and marketing in conventional channels, a couple of distinguishing characteristics immediately become obvious, and the important ones are outlined below:

  • The number of steps between 'suspect' and 'customer' become much larger, but each individual step is much smaller. In a conventional sales and marketing process, the potential customer is seen to go through three steps from suspect to prospect to customer, with perhaps the prospect stage being broken down by some rating of probability (say 10% - 50% - 90% likelihood of becoming a customer). In the Internet channel however, there are significantly more steps (e.g. anonymous 1st-time visitor - repeat anonymous visitor - contactable visitor - profiled member - subscriber - customer - advocate). This increase in detail arises because so much more of the process happens within the company's environment, as the potential customer explores the sales opportunity(-ies) through the use of the website.
  • The number of roles which the potential customer can adopt with the organisation is much larger. Frequently the e-channel includes club facilities, discussion forums etc, in which customers can contribute (positively or negatively) and have a much more complex relationship with the organisation than as a mere consumer of the organisation's products and/or services. Not only are there more of these roles, but different individuals may take different 'routes' through these different roles over a period of time. Many of these roles may also offer significant value to the organisation, so the valuation of a customer has to take into account not only the products and services that the customer has purchased, but the 'value added' by the customer in the e-channel. We need a clear understanding of what the 'value proposition' is of each of these roles, both to the organisation and to the customer (or participant).

If these two (and there may be more) characteristics are important, than the first challenge of sales and marketing in the e-channel has to be to identify, for each customer, what 'next role' a customer is ready to adopt, and which step in adopting that process the customer is ready to take next.

We must also remember that we are still in a self-service environment, and so the customer may not be able to find the role or the step to take next (why can I never find where they stock my favourite goods in the local supermarket?). So the second challenge of CMR has to be to know how to offer the customer help in finding that next role/step in a non-intrusive way in the self-service environment of the e-channel.

Perhaps that's enough challenges for today, and perhaps we can leave solving them till later. Before solving them, I'd like to check if there are any other challenges relating to CMR in the Internet which I haven't touched on yet, so 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].

Regards,

Richard Forsyth
The CRM-Forum
The independent resource centre for CRM

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