Successful customer relations require a fine balance of being close enough to the customer to understand them and being sufficiently distant so that they don't think they're simply a source of easy money for the supplier.
There are many 'principles' and 'rules', which are said to be fundamental to the process of business. One of these is sometimes known as 'The Golden Rule'. What is the Golden Rule?
Put simply, it states that 'he who has the gold, makes the rules'.
Businesses are set up to produce money in the form of profit from their commercial activities. The money produced is for the benefit of the shareholders or owners, who have risked their investment of time and money, and also for the benefit of the workforce in the form of payment for the necessary work that they do. Businesses produce money by selling goods or services to customers who seek resolutions to problems and the satisfaction of their desires. Customers have the money which businesses seek, and are therefore the life-blood of every business, The attitude and relationship between a customer and supplier is therefore fundamental to the prosperity of any business.
During the past ten years there has be a growth in what is generally known as customer relationship management (CRM). CRM systems are used to compile as much information as possible about customers, in order to tailor product and service offers more precisely to their perceived needs and aspirations, resulting in a great increase in personalised selling. Customer information is collected in various ways, especially in the retail consumer sector. Supermarkets use analysis of store cards and credit purchases to establish the profile of every customer, their buying preferences, frequency of purchase, size of orders and other information. Similarly, customers of on-line purchases are analysed for their searching and purchase patterns, so that “tailored” offers may be presented before they are requested. Amazon uses customer analysis to present other products “which may be of interest”.
Personalised selling messages are then delivered in an increasing variety of ways to the individual potential customer via e-mail, direct mail, telephone, and other social media.
Many customers might be surprised on the scope and detail of the information that is held about them, if they were to see the type of data held about them by the stores and suppliers that they frequent.
But is this increasing personalisation of presentation becoming counterproductive? As more businesses take up the fashion of personalised selling, the potential customer, becomes subjected to an increasing barrage of unsolicited offers based on the collection of personal information. How is this information collected? While a lot of market information may be collected via anonymous surveys and traditional market research methods, there is an increasing trend to collect information that is specific to the individual, in a manner that the customer is often unaware. The danger for businesses using personalized selling is that used injudiciously, they may reveal that they know more about their customers than their customers would like them to know. Customers may become resentful if they feel that they are being manipulated by those businesses in a cynical manner in order to increase their sales.
CRM is a one way system about a business managing its relationship with its customers. In principle that can be a good thing, as it appears to put the customer at the centre of the business. Businesses that use CRM claim that they want to develop a relationship with their customers, in order to anticipate and satisfy their requirements.
However, despite a business apparently wanting to forge a close relationship with its customers, the question is how far do customers want to develop a relationship with their suppliers? Trying to anticipate a customer’s every need may appear to indicate the closeness of the customer relationship, as perceived by the supplier, but customers may not want that level of “closeness”. Reminders to the customer to place what is normally their regular order may be helpful to the customer, but if the reminders are too frequent and have not been requested, they may quickly become a source of irritation.
Advertising, with the exception of direct response advertising, does not create sales, but does raise awareness of the existence of a product or service to potential customers. That awareness may then encourage further enquiry via a shop or web-site that results in a wish to buy. Making potential customers aware of products and services and thus encouraging them to come and buy. However, personalised advertising and selling has the potential danger of being intrusive and alienating the customer.
Successful customer relations require a fine balance of judgement of being close enough to the customer to understand and anticipate their requirements and being sufficiently distant so that the customer is not drawn to think that simply a source of easy money for the supplier.
Commercial executives responsible for producing profitable income for the long term should remember that customers are not cash cows for the convenience of the supplier, but are the very life blood of business, and therefore need to be respected and nurtured. In a competitive market the Golden Rule applies, and if the customer feels taken for granted, they can always go elsewhere.
Nicholas Watkis is the founder of Contract Marketing Service, established in 1981. He is a fellow of the Chartered Institute of Marketing and a certified management consultant of the Institute of Business Consultancy. For more articles from Nicholas, click here.