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CRM in 2009: The experts' view

4th Dec 2009
Share this content speaks with leading experts from the field of CRM, including Paul Greenberg and Shaun Smith, to discuss their views on the events of 2009.

Following last week’s feature looking at the seven CRM lessons we learned from 2009, spoke with some of the leading experts from the wide world of customer relationship management to discuss their assessment of this critical time for CRM. 2009 has borne witness to the worst economic recession for several generations, and has truly tested the mettle of customer strategies. Meanwhile the basic tenets of these strategies, such as trust and values, have become more critical than ever. But at the centre of all of this, of course, is the customer him/herself. The pressures, challenges, opportunities and technologies that we experienced in 2009 have altered us all as customers – and changed our expectations of the relationship we have with organisations.
“Prior to the recession, there was much talk about the social customer’s expectations for transparency, authenticity and emotional participation. When the recession hit, organisations thought that people would just revert back to wanting cheap deals. But the social customer didn’t go away – he just added new demands,” says Paul Greenberg, author of ‘CRM at the Speed of Light’ and owner of The 56 Group, LLC. “Ultimately, the new customer now expected to be treated as a partner, which means that if there was a good deal from the company, they expected to be cut in on it. And the customer also expected that the company would be sensitive to their financial situation – because if not then they can just go somewhere else. So expectations haven’t necessarily changed – they have just increased.”
Shaun Smith, leading customer experience consultant and founder of Smith+co, believes that the average customer has become more discriminating. “If they have made a decision to buy on price, then they don’t mind trading off the experience. So by choosing Ryanair, they are quite clearly deciding that they don’t mind what the experience is like providing it is at the lower price point. But at the same time, those who are prepared to pay money expect to really get something of value,” he suggests.
Upping the ante
These increasing demands have had significant implications for customer relationship management processes, and no department has been under more pressure to deliver than customer services. Evidence from the Institute of Customer Service (ICS), however, indicates that the majority of customer service departments have upped the ante, and have met expectations. “We research an index of customer service (the UKCSI) twice a year, and the overall perception in the UK has been that customer service has improved and continues to improve across all industry sectors,” says Jo Causon, CEO of the ICS. “The top performer this year was actually the leisure and tourism sector, and that is interesting when you consider that against the background that there will be an extra five million Britons holidaying at home this year.”
Smith believes that some of this performance could be attributable to a more intelligent approach to multichannel customer experiences and the blend of technologies and people. “Call centres aren’t just a one-size-fits-all approach – it is not just about IVR to take down costs, or just live agents to improve the customer service. It is about providing the right kind of value when it is needed. There are times when customers are happy to deal with automated responses when it is a simple transaction. But if they have a problem they want to deal with someone knowledgeable who will give them a particular experience. So there is a degree of subtlety which is now coming to call centres and also customer experience which is embracing different technologies and different channels at different times to meet the customers’ requirements.” 
He continues: “There is also a realisation that the agent is an integral part of the experience and a fundamental part of your brand and that you need to be much more sophisticated in the communication and training you give them, and the way that you measure them. If you simply measure them on call handling time for example then you are going to get a very transactional brusque approach to customer experience which isn’t going to drive customer loyalty and retention. So you may be measuring call handling time and measuring first call resolution but you are also measuring the customer experience and the likelihood to repurchase or the likelihood to refer others, and rewarding people accordingly. But there is also an understanding that organisations need to allow the agent to be a lot smarter with the customer, replacing the old complicated legacy systems that require toggling between screens with systems that provide information to the agent just in time, that is focused around the customer, that they may find of value.”
Single view of the customer
This single view of the customer is something that Luke McKeever, CEO of Portrait Software, even suggests has emerged as another customer expectation. "10 years ago when you would visit a website, at best the recommendations it made were based upon what you viewed last time you visited. That has become a mininum expectation now, not a luxury, and that now counts for other channels as well," he explains. "There are enough consumer-facing organisations doing it reasonably well that if you don’t do it, it is incredibly noticeable. I had a conversation recently with a group of CEOs from some fairly large B2B organisations and we demonstrated a 'Portrait' customer experience as a ficticious customer goes through multiple channels: First she visits the website, viewing content that is unique to her, she updates some personal information; the next time she calls into the contact centre the agent is aware of that and instigates a different conversation with her; and when she goes to a branch they understand the conversations that took place in the contact centre and on the website and know there is a service they can offer her at that point that is valuable to her. It is a joined-up relationship.
"Meanwhile, each of the CEOs I was with was able to come up with an example of how their banks would just try and sell to them every time they tried to conduct a standard activity such as a balance transfer. Their banks weren’t respectful of their customer preferences and were trying to run things from a product-centric position - trying to meet internal product cross-sell quotas. As a result, two of these CEOs have now pulled all of their investments from these offending high street banks. The irony is that these banks probably think that they are customer-centric because they are talking to their customers – yet the fact is that they are still stuck in a pure product-centric sales-only mode. So consumer expectation has been incremental, but now everybody expects to be understood, and for companies and banks to be well informed about their needs, preferences and interests.”
Banking on troubled times
Ah, the banks. They, of course, have proven to be the whipping boys of 2009. Even as recently as last week a new survey conducted by Ctrl-Shift and Lightspeed Research revealed that 46% of consumers agree with the statement "Banks are far more interested in their own convenience/profits than they are in their customers", with another 33% agreeing with the statement "Banks talk about being customer friendly but it’s much more talk than action.” Only 9% agree with the statement "Banks really try hard to treat their customers well, and it shows".
Financial institutions the world over have had to tackle the backlash from the credit crunch and work to restore customer trust. No mean feat. Annette Mitchell, head of customer experience at Nationwide Building Society, suggests that the events of the past 12 months demonstrated some major shortcomings in the customer arena.
“You need a level of agility so that when things are going wrong you can react quickly and my sense is that in our sector, there must have been signs that things were going wrong, but either people didn’t see it or they didn’t act on it quickly enough," she suggests. "There is a message around agility in terms of solution and being close enough in terms of the business context and the people that are there to deliver to your brand, to be as agile as you possibly can be and to be as close to the customer as you possibly can be. Customer-centricity shouldn’t just be a label that you use.”
Mitchell is also under no illusion about the task at hand for the industry. “The level of trust has fallen over in the financial services industry and the level of mobility has risen, all of those things combining it to make it very difficult to hold on to customers, so it has sharpened the agenda for those that are savvy to it to make sure that they are much closer to the customer. If you look at the advertising there is much more of a focus about how the organisations are going to look after their customers, and how they’re not big and bad, and won’t just try to flog you products, which they know they’ve been bad at. Organisations are making a conscious shift to become more customer-centric.”
Customers seeking reassurance
And the changes that have taken place in the way that brand have marketed themselves this year has not merely been confined to the financial institutions. Mark Stuart, head of research at the Chartered Institute of Marketing, emphasises that many brands have been alert to the fact that as a result of the credit crunch, consumers will be fearful about the unpredictable times, and so will gravitate towards brands that are reliable, trustworthy and reassuring.
“Companies like Persil and Sainsbury’s have worked to accentuate their longevity in their campaigns this year. Sainsbury’s has emphasised its reliability by highlighting that it has been doing the same thing for 125 years, for instance. Persil has been running old adverts in parallel with new ones to show that it can be trusted in difficult and uncertain times," says Stuart. "In times of recession a retro appeal also starts to come to the fore, as people look back to a mythical golden and happier age. For example, Marks & Spencer has introduced jam sandwiches recently, which is something it has never done before, and it is creating a sense of comfort.”
In fact, Stuart believes that one of the myths that has been laid to rest during 2009 is that marketing should be cut back on during a recession. “The instinct might be to pull the drawbridge up and reduce your marketing spend, but that can bring about the very situation that you’re fearing, partly because if you stop marketing and stop communicating then the customers who are still going to spend don’t know what you have to offer and don’t know to come to you rather than somebody else. The companies that remember what previous recessions were like know that it is by robustly maintaining your marketing strategy that you are actually more likely to survive and thrive during the recession, but also be quicker back on your feet once the economy recovers. Large companies like Unilever and Procter & Gamble are happy to go on record to say that they are not going to reduce their marketing spend and have ringfenced it. But the big difference between this recession and previous ones is that the technology is very different, so if you are trying to save costs, then there are ways of being just as visible and effective through digital marketing and the use of social networks, which obviously we didn’t have previously.”
Cutting out the costs
But in lean times, costs have had to come out of somewhere. Research by the ICS revealed that customer service training was axed by a third of organisations as they looked to survive the recession. Striking a balance between cutting costs and keeping customers happy proved a huge challenge. Few sectors felt this as much as the auto industry, one of the first to enter the recession last year.
As head of customer at Honda UK, Matt Gibson was well aware of the damage that could be done by cutting customer expenditure. “We were in a difficult position because we were facing around a 25% drop in volume as the marketplace plummeted, so this time last year when I was doing budgets there was pressure to avoid unnecessary spend," he explains. "We run a customer satisfaction programme for our dealers, and that was under pressure. Last year we surveyed 80,000 customers about their customer experiences and this had to drop to about 45,000 because of budget restrictions, although our research told us that even at 45,000 we would have a robust figure.
"We hold the J.D.Power Customer Service Index (CSI) in very high esteem – we have a matrix that can prove that higher profit makers have better CSI - and we got back to number two in the rankings last year and it is our intention to be number one in 2010 so we have been putting a lot of focus on our dealers to support us in that through the CSI programme. We have been working together to move the customer satisfaction.
"As it happens we have ended up having a far better year than we expected we would. We have seen dealerships maybe cut back on their valeters or welcome staff because of what happened in 2008 and they haven’t yet invested back in all the staff they lost but if it carries on the way it is they are at least looking to reinvest. So customers certainly get affected sometimes first of all but they have tried to work their way around it by still offering attention and looking at processes to improve things and through the course of this year we have certainly moved forward and not gone backwards."
Insightful cuts and polarised strategies
Smith suggests that with many organisations forced to cut costs over the past 12 months or so, one of the skills that the leading-edge businesses will have developed is an ability to become insightful about where costs are taken out, and how they impact the customer experience. "Organisations can take costs out of the business where they really don’t matter, where the customer won’t get value from them, for example in many head office functions. There are places you can take costs out of which won’t hurt the customer experience and where they won’t notice. What organisations have learned is how to be much more strategic and much more insightful about how they align your business, keeping value in mind so that they are continuing to provide the value that the customer really wants."
But by and large, Smith believes that the recession has served to polarise customer experience strategies. "For those companies for whom the primary strategy is their brand and customer experience, it has taught them to differentiate the customer experience even more to justify price points and in order to get a better market share. On the other hand, some organisations whose strategy was primarily one of price have gone the other way, stripping out as many of the costs as possible," he says. "In the airline sector for example, Virgin has done reasonably well because it has differentiated and still has a lot of customer loyalty because Virgin differentiates its experience on the way to the airport. Meanwhile, Ryanair has driven out all of the costs and operates at a very low price, and so it is also doing very well. The organisations that are suffering are those that are squeezed in the middle like British Airways, which is offering a mediocre service that is not particularly best in class but is still at a higher price point than many others."
Grabbing the headlines
However, when it comes to CRM trends that have emerged from 2009, the headline grabber has been social media’s increasing involvement with CRM. Whether it was Radian6 integrating with the service cloud, InsideView integrating with the likes of NetSuite and Oracle, Lithium working with RightNow, RightNow itself buying HiveLive, or Oracle announcing Social CRM apps, there was feverish excitement surrounding the combination of CRM and social media.
“We are beginning to see the creation of actual social CRM, though it is not advanced yet and nobody has come out with a pure hardcore social CRM suite by any means,” notes Greenberg. “From a strategic standpoint, social CRM strategies are not entirely clear yet. You have CRM strategies and you have social strategies and people are attempting to meld them, but they are still treated somewhat separately.
“However, the social software world, and the social media software world, and the community software world are beginning to understand the value of capturing data and embedding workflow and business processes and understanding sentiment and so on. They are looking to integrate with traditional CRM systems for the most part, and this is the way that it is going to shape out. So you will see some pure social CRM systems over time, but right now the customers that need it are able to get the kind of integrated tools, functions, applications and services that they need to engage customers.
“Mobile social CRM has also just begun to show its face, and mobile CRM too – just traditional interface stuff and some marketing things, but because of Twitter primarily I would say that we are starting to see some customer service integration into mobile too, because people are able to access @comcastcares and other customer service channels via the Twitter client on their iPhone or Blackberry. These are two areas that were big this year – but will be even bigger next year.”
And we’ll be exploring predictions and forecasts for 2010 with our panel of experts in the companion article in a fortnight’s time.

Replies (2)

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By bearddd
10th Dec 2009 15:45

All -

I think Paul Greenberg expresses all our challenges well, when he says: "social CRM strategies are not entirely clear yet"

An investment in a CRM strategy is generally regarded as sensible. But without social media interaction, a business' can only "know" about the conversations had directly. What happens when those customers talk about a business in other forums - blogs, forums, social networking sites, etc ?

I think the rise of social media has thrown up interesting challenges, particularly around matching the statements of "we value your custom" commitments versus the ability to execute, in light of disconnected strategies.

Opening more & more "windows" for increasingly empowered (= socially vocal) customers means the execution needs to be done well & quickly.

-= David

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By Neil Davey
10th Dec 2009 16:11

Thanks for your comments, David.

There's been such a flurry of excitement around social CRM this year that inevitably the practicalities of it have often been crowded out by the hype. As you and Paul mention, social CRM strategies are still at the embryonic stage at best.

At the same time, because of CRM's baggage, there are those that are sharpening their knives when it comes to social CRM. If things don't become more tangible - and quickly - next year, then I fully expect some to turn nasty.

Patience and perspective are the order of the day.

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