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The pen is mightier than the sword when it comes to changing the way things are done. So why splatter wooden words all over the place when trying to convince organisations to change the way they manage customers. Here is the hot list of jargon terms to declare war on if you want to really influence others. If others use them to you - clarify:
If you fall into the following categories then this list is especially for you:
- A supplier of services or technology
- A manager responsible for getting approval and agreement to customer related initiatives
- A trainer, educator or advisor in customer relationship management (note to self)
"Best Practice" – Avoid
There is no such thing as 'best practice'. There are good practices, but no practice is best for everyone all of the time. What people mean when they 'benchmark themselves against best practice', is average practice. Just because everyone else has a similar practice does that mean it's the one your key customers will value the most? Is it the customers who say it's the best? And what about differentiation, if everyone adopts 'best practice' then aren't we all back to a world of commodity pricing? 'Best' is the enemy of curiosity and growth.
"Collaboration" – Use with care
Collaboration is a word that slides off the pen easily and it's an important aim for companies who want to pool their customer information and present a united front. But, collaboration is more than co-operative teamitis. Real collaboration means getting over two big hurdles:
1) willingly sharing knowledge with others, instead of taking the ‘knowledge is power stance’ and;
2) uniting goals and objectives – still a dream for many.
The majority of companies are a long way from collaboration, so don't fool others into underestimating what it takes to get there – help them understand the hurdles.
"Customer Strategy" – Use with care
This really is an over used, tired and misunderstood term –yet rarely do you find a company that has this vital piece of the CRM puzzle. A customer strategy is the plan for turning company 'capabilities', its skills and resources, into value propositions for the customer segments that offer potential value. It is not just a plan to build capabilities – although that is important - it's a plan to use them. And yes, it's part of the marketing strategy - if there is one!!!
"End to End Processes" - Avoid
A wonderful, all encompassing term; but just what is an end to end process and how do you know when you have got both ends? In customer terms this phrase is completely wrong in its imagery. Many customer processes tend not to be a linear set of tasks that follow one after the other, but networks of interlinked tasks that are used at the appropriate time. That's how personal service is defined and delivered and why six sigma is not robust enough for customer process quality control.
"Single Customer View/360 Degree View" – Avoid
Two popular shorthand terms for amalgamating customer information. Yet can a single view be the same as a 360 degree view? A single view is misleading; it suggests that everyone in the organisation wants the same type of customer data - they don't. Take an address for example – the mortgage department will want the property address, whilst the marketing department may want the correspondence address, not by any means always the same. As for a 360 degree view, this could mean data from all angles (is that even possible?), or data that includes customer feedback on the company.
"Customer Satisfaction" – Use with care
This makes the list because it's wrongly used to gauge customer commitment to an organization – not the same thing at all. Commitment is about emotional links, how customers feel about services, rather than how satisfied they are with what is delivered. In customer satisfaction you ask about using the service again, with commitment research you want to know about recommendations and price elasticity. After all people can be perfectly satisfied but never use your service again because their commitment is elsewhere - another one night stand!!
"Customer Experience" – Use with care
A 'hot' term of the moment in great danger of being hijacked by suppliers in the same way that CRM was. Customer experience is the operational part of customer relationship management. It is
- planned as part of the customer strategy e.g. when we answer an enquiry we want to create a feeling of confidence;
- delivered in each customer interaction
- monitored through feedback and complaints.
It is an extremely useful concept that links customer strategy to business process management. But is not the whole scope of what companies need to do to manager their customers better.
"Customer Journey" - Avoid
Somewhere there will be 'a roadmap of the customer journey'! It's a seductive term that is very vague in meaning. Does it mean the stages a customer goes through from awareness, to sale, to development, to winback? Or does it mean the stages of an interaction eg a car purchase, or a railway journey. Or is it the journey from non-customer to advocate. Beware its impreciseness for it will cause confusion; define what the journey is if you want to use it.
"Segmentation" – Use with care
Segmentation, like customer journey, covers a myriad of different types used for different purposes – but too many people have hung their hat on a single segmentation because that's the way the term is used. Segmentation sounds like a science, well you need statistics to do it properly, but is actually an art as well. It's the clever mix of needs, attitude, value, and valuable segmentations that finds the profitable gaps in the markets.
"Sales, Service and Marketing" – Avoid
This is not and never was the whole scope of customer relationship management. Everyone in the company is involved.
"Partners" – Use with Care
In real life there is a growing and annoying tendency to call everyone from a girlfriend to a long term spouse a "partner". So too in the business world. It's much better for clarity to divide supply chain relationships into the different types e.g. supplier, alliance, partner and treat accordingly.
It is quite refreshing to hear the different names companies call their customer relationship management initiatives – it means they have taken the concept and made it their own. The same should be done with these terms to really get the right ideas across and accepted.
But what is your view and what other terms would you add to the list?
Take part in our poll and/or add your comments to this story by click on the 'Add your own comment' link below.
Jennifer Kirkby
Strategy & Business Analyst, CMC
[email protected]
Find out more about Jennifer Kirkby
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Replies (10)
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Jennifer, here's some of my own thoughts on the subject:
Benchmarking
While we are on the subject of benchmarking, why do companies do it at all? If the benchmarking is favourable they congratulate themselves on how well they are doing. If not, they explain that they do it differently any way and it is not a valid comparison.
Customer Relationship Management
If CRM really is dead, then it was probably the ‘R’ that killed it. We people are generally poor at managing relationships so do companies really think they have discovered the secret of how to make customers feel special at every engagement just by using propensity analysis and targeted campaigns? Apparently they do. That’s like expecting loyalty cards to increase customer loyalty!
Customer Insight
I think what this really means is the insights can we derive from transaction data. I live in a balh blah house with my blah blah and my interests are blah blah. These are key pieces of information that would shape the sale of any products and services to me. But this information does not reside on the database of my bank, my insurance company, my utlitiy company and so on. Yet they claim to really understand my needs!
Customer value calculation
Here’s another minefield. How does each function within the business value customers? Is it based on historical activity as technical support might detemrine it, or is it based on current orders as sales would see it? Marketing might perhaps base it on future or lifetime value and customer service might base it on how many times they contact the company. If they are all making operational decisions on different notions of value is it any wonder that the customer experience is less than consistent?
Customer Strategy
I’ve heard the term many times but I’ve never actually found a company that has one. They have a marketing strategy, a sales strategy, a customer service strategy and even a risk and collections strategy. But do these functional strategies join up to define a customer strategy that everyone who engages with the customer understands?
End to End Process
From the customer perspective this is simply all the activites involved in a customer event. For example from the time I decide to buy a service until it is operational to my satisfaction. Or from the time I advise a company that I have a problem until the time it is resolved – again to my satisfaction. As a customer I am not remotely interested in all the functional pieces of the jig-saw that are required to make up the complete picture
Customer Satisfaction
There’s also a danger that asking the right questions will get the answers you want. A colleague had the uncomfortable experience of having to explain to his board why the company had 98% customer satisfaction and 35% customer churn. In reality it was a combination of asking the right questions and avoiding the difficult ones (not unlike benchmarking) and a total focus on customer acquisition which meant that new customers were offered a better deal than existing ones
Kind regards
David
Thanks (0)I agree with David Ranche that Cusromer Relationship Management (CRM) is a dangerous word that should probably be avioded where possible, but I do not think it is "dead", only in a process of migrating from one generation to the next.
I see many organisations that are not sure what CRM means to them. Of course they have read the books, attended the conferences, asked the analysts, but deep down they are not sure what type of business they are in. Yes, we want to build customer relationships, but first we have to save some money and outsource all our customer facing activities to India. At least that is this week's strategy. Yes, we want to cross-sell and up-sell, but actually we are not sure what or to whom, because we fundamentally do not understand how we add value to our customers' lives. Leadership is missing in many organisations who have been following a "me-too" strategy for far too long.
More fundamentally, people are struggling to make the mental transition from the first to the second generation of CRM. To me, CRM1 was all about transactions while CRM2 is all about dialogue. Most vendors are stuck in CRM1, as are most analysts. In the first generation, people felt that they could buy CRM: "if only we implement Siebel, Clarify, ..., then we have CRM". And as long as you only focus on transactional efficiency then there is some merit to that argument even if it doesn't completely hold water.
In contrast, CRM2 is not something you can just buy off the shelf. It really is about a different way of doing business: a different set of values and therefore different processes and capabilities. Yes, you can buy software elements but many of them are not labelled as CRM. Predictive analytics and real-time marketing are in the CRM box, but what about blogs, wikis, customer portals and other social software? You won't find them in the CRM section of your local PC World.
And even if you did, CRM2 has to be a value-driven change, which is new. You can't buy a new set of values, you have to develop them from within. It is not something most companies have much experience in doing, and it is certainly not something they associate with CRM.
So we do need a new name.
Thanks (0)I am very glad to see that you have ‘segmentation’ on the list. It is my pet hate.
I would add to your comments:
Segmentation tends to be in one dimension and as such doesn’t reflect that as humans and customers we have many dimensions. It is this multi-faceted view that we can take action on as an organisation, and create an individual experience for each customer in the time that meets their requirements. Needs based and demographic segmentation is often too hard to attribute to the database as there is little correlation between transaction data and research data. Therefore, it doesn’t help you deploy your CRM Strategy or help define your experiences.
Projects get hung up with segmentation and miss the point that knowledge is not power – action is. Spend time understanding all the dimensions and then what is actionable within that.
Aly Richards
Head of CRM Strategy and Architecture
O2
Thanks (0)"Obsession with doing things rather than doing the right things".
I will also add, obsession with doing the latest things. There is a strong tie between this and Allen's comments on the different levels of CRM maturity.
A good example is in Stuart's latest articles on call centers.
Jennifer
Thanks (0)Prof Stone
I agree with you that the marketing fraternity (read, the larger business community) are in constant state of flux.
Management often finds it easier to pull individual business levers under their control, e.g. a Sales Director simply buying a sales force automation system and implementing it, rather than understand how their business really works and which of their colleagues they need to collaborate with to pull the various levers that are required to drive the business forward.
As far as segmentation is concerned, it clearly has not delivered the magic CRM bullet that so many companies had expected it to. For every Capital One with their thousands of sometimes fleeting micro-segments and tens of thousands of marketing experiments, there are countless companies who simply do not have the CRM capabilities to make even basic segmentation work effectively for them.
I am not so sure that the real challenge for business today lies is in making segmentation work, or in any other CRM activities per se. I believe it is more likely to be in knowing their customers' needs, wants and expectations, in knowing how they can use their business cababilities to deliver what customers want at low cost and in knowing how doing that will generate profitable growth.
As both you and Barwise & Meehan in their new book, 'Simply Better' suggest, there is lots of mileage to be had in doing business basics better. The trick is in knowing exactly what basics to do simply better...
Graham Hill
Independent Management Consultant
Thanks (0)Thank you to everyone who has contributed to the poll so far. Here are some of the most favoured additional nominations for the jargon hit list:-
Wish List
Customer Insight
Institutional Memory
Customer Touchpoint
Solution - sounds good in practice but cynically overused.Esp in the service industry
Optimization - avoid! Something which is optim cannot be further improved... If it is a relative optimum, then a change of the situation (worse) has to occur before reaching another optimum (wave-shaped curve)
Customer Equity -use by many but few either have either the data or the understand to calculate it and then track it over time - adjusting value propositions and communication approaches based on changes in the value of customer equity.
Feel Good Factor
Customer Lifetime Value - Usually poorly thought through and improperly calculated. Often used to justify inappropriate decisions by customer managers
and one I've never come across
SQLable - looks like you might have to be careful how you say it !!
Thanks (0)Jeremy
The trouble with cliches is that they are, well, cliches!
They are simplifications of how the world works that are generally accepted as being roughly correct. They are a 'brain-lite' alternative to thinking about things in more detail. And therein lies the problem.
Many of the CRM cliches mentioned by Jennifer & others were generally accepted as being correct at the time they were created. The best case in point being Reicheld's assertion that loyal, long-term customers are more valuable than dis-loyal, short-term customers.
As we have gathered experience in making CRM work and developed our understanding of why CRM works, many of the cliches are have been shown to be either incorrect or to be over-simplifications. So Reinartz & Kumar's research into customer loyalty have undermined some of Reicheld's earlier assertions. Loyal, long-term customers are not necessarily more valuable, have lower costs of sale, pay higher prices and recommend you more to others than disloyal, short-term customers.
The cliche is now too simplistic to be useful. Yet like so many other cliches, it persists.
Perhaps the only useful cliche in CRM is Einstein's suggestion, "Everything should be made as simple as possible, but not simpler."
Graham Hill
Independent CRM Consultant
Thanks (0)Graham you pedant! :)
Cliches serve as a starter for ten. I am not advocating them as the final answer, but as an entry point for discussion. Most of the people in small and medium businesses I serve, have never heard of CRM. The trouble with this industry, is that it becomes a hall of mirrors. We all think this is what everyone is talking about, but most of the MDs I speak with are more concerned with securing orders, growth and cashflow. CRM may well be a way of helping them, but to assume they all speak 'CRM' is nonsense.
As for Reicheld, he was broadly correct, however he should have qualified his assertion with the word 'right', as in ''keeping the right customers longer is more profitable''
Thanks (0)Jeremy
You know, rereading the points and counterpoints made in the thread of this dicussion, I think we largely agree.
We agree that...
Real business is difficult, particularly the bits that involve hard to pigeon-hole customers.
Big business is usually more complex as more interconnected bits are involved, that need to work together in a complementary way and often more sophisticated (as they can generally afford to spend more on more advanced customer management activities).
CRM has not reliably provided business with a competitive advantage, often not even temporarily. It has often increased its costs, sometimes considerably.
CRM cliches provide a starting point, but they are no substitute for really understanding how the business works and acting upon that insight.
So far so good...
What I am not so sure about is whether there is any 'big thing' in CRM, or any other business discipline come to that. Segmentation is a useful tool for inside-out customer management, but implementing it successfully depends upon some many complementary activities, it is no wonder that business has a hard time making it work.
My experience is that many levers usually have to be pulled to make things happen, not just individual ones like the segmentation lever. The key is knowing which ones to pull together and in getting the different parts of the organisation to pull them in unison. There is no big thing in business, just lots of smaller ones done well together.
As I suggested at the begining of this posting, I think we largely agree.
Best regards, Graham
Thanks (0)We agree. CRM is not a 'single silver bullet' - means many things to many people - hence the confusion.Involves pulling together several strands.
The way I tend to approach it - assuming the client is willing to think before leaping, is to :
triangulate on 3 things.
1. Top of mind issues/challenges - fix the obvious
2. Customer profit potential - customer selection
3. Customer perceptions of value and how you compare with alternatives - superior? Inferior? Parity?
Armed with these three things, you can figure out what must be fixed, when and what value it is to your business as well as to the customer.
Chances are that to keep this alive and as a 'trim-loop' to borrow a sailing term, you will need to pool customer information together. In lazy speak one might call this a 360 degree view!
Smaller firms will find this a lot easier to achieve than bigger businesses, and for a lot less money.
As for segmentation - it must be actionable. This means working with similarities and proxies rather than being too [***] about it. I'm sure it's no coincidence that 'analyst' contains the cause of its own downfall!
It helps to be pragmatic = code for doing things now rather than being paralysed by complexity.
My basic point in response to this debate is that these aspects of CRM thinking might be of more use, to those contemplating CRM, than criticising them over language.
Thanks (0)