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Seven CRM lessons to take from 2009

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27th Nov 2009
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MyCustomer.com looks back at some of the major developments of the last 12 months and outlines what the CRM industry has learned in 2009.

Phew. It has been a tough year. Still, there have been some major lessons learned this year – and if we really are seeing the green shoots of recovery then these lessons are sure to stand us in good stead for the year to come. So let’s take the time to deliberate over some of the main talking points and emerging trends and digest their implications for the future.

1. Analytics is at the top of the agenda

Business intelligence and analytics moved to the top of the agenda for CIOs in 2009 as they looked to gain competitive advantage and improve decision-making. A study by IBM, ‘The New Voice of the CIO’, revealed that four out of five (83%) respondents identified business intelligence and analytics as the best way to enhance organisational competitiveness. This shift was reflected by the growth in the analytics sector. According to IDC research the sector grew 10% this year, while sales in the business analytics space are predicted to rise at a compound annual growth rate of 7.2%.
Elsewhere, data-driven companies were forecast to recover from the recession earliest. Informatica CEO Sohaib Abbasi joined the chorus praising the virtues of analytics, by suggesting that companies who have a focus on data integration will reap an early benefit.
However, he also fired a warning that data-driven enterprise organisations would still face three daunting challenges. "First, business users often cannot rely on IT alone for the most business relevant information," he said. "Second, business users frequently do not regard the data to be trustworthy for their purposes, and third, business users do not have timely access to data in the appropriate forum. Until now, these formidable challenges have marginalised the value of IT, and compromise the most business critical strategies."
The proliferation of data sources, and the boom in user generated content, also added a further challenge. In the contact centre, speech analytics continued its steady adoption, as businesses increasingly clue in to the volume of the unstructured data that goes wasted in the average call centre. Forecasting big things for speech analytics, Donna Fluss, president of DMG Consulting, highlighted many reasons for its growing popularity including the fact that it can tell you what your customers want, it can improve productivity, it can identify revenue opportunities and it’s becoming increasingly affordable. "I was at a conference the other day and for the first time I saw somebody with a card that said 'speech analytics manager', and I thought that was really cool,” she said. “Speech analytics is the sexiest thing to enter the contact centre since the automatic call distributor.”
Organisations hoping to glean priceless customer insight from their analytics efforts need to be wary, however. And Leslie Ament, co-founder and research vice president of Hypatia Research LLC, warned of the fundamental barriers that businesses must overcome if they are to have insight success as we move into 2010. As well as the aforementioned volume of data, Ament also warned that many larger retailers can have upwards of 10 different databases, each with different scheme for collecting customer data; that despite the importance of data quality, less than 40% of organisations had deployed data quality tools enterprise-wide; and that often firms lack a set of goals of objectives determined upfront to underpin their analytics efforts.
“Companies are generally moving along the maturity grid, from mass customisation to true customer intimacy but they have yet to reach that visionary level in which they are effectively using this insight,” she explained.
2. Giving your company a lean CRM makeover can help you survive – and thrive
Lean times call for lean operations, and lean CRM offers a way to reduce costs and increase profitability. Although 'lean' was made famous by Toyota, it doesn't just apply to the manufacturing industry. Companies like life insurance firm Jefferson Pilot Financial, and Tesco and Vodafone have all used lean to increase their responsiveness to customers, to decrease their costs and to increase their profitability. Even at Toyota, lean is applied just as much in its downstream business of marketing, selling and customer service, as it is in their Toyota production system.
Having implemented lean CRM at Toyota, few have as much wisdom about the topic as Graham Hill, so he was kind enough to share the basic principles of this dark art:
  • Understand what customers really value - Using a combination of qualitative interviews and observing how customers undertake jobs, followed by a quantitative survey to validate the jobs and desired outcomes with a larger group of customers, you can discover what customers really value and how satisfied they are with your value delivery.
  • Map the value delivery process - Once you understand what customers value, you should follow the value stream from the customer through your company and map the value delivery process. This is different from the process mapping that you are used to. Rather than just look at the processes, value stream mapping looks at them from the perspective of whether and how they create value for customers - and if not, whether they enable other processes to create value for them.
  • Let value flow direct to customers - Once you understand what customers value and how value is delivered, you should restructure your CRM processes so that value flows without interruption to customers. This means removing any process, decision point or other bottlenecks that unnecessarily hinders the flow of value to customers. Often, this is as simple as taking responsibility for standardised decisions away from staff and embedding them in system business rules.
  • Let customers pull value themselves - Once you understand what customers value and have improved how it is delivered so that value flows, you should empower customers to pull value directly, as and when they need it. Once you know what customers value, it isn't too difficult to give customers tools to pull - e.g. product information or even a configured product - from you, on demand.
  • Continuously improve value delivery - Once you have got lean CRM up and running, the final step is to continuously improve how it operates using Kaizen. Kaizen is a simple structured step process that looks at potential improvements to your business, sets targets for their improvement and trials them.
If lean CRM can help companies to improve the efficiency of their processes from an organisation-centric approach, then what about the outside-in view? Ian Henderson has suggested that while the lean ethos needs to drive the measure-improve-remeasure cycle, customer experience management can be employed at the same time to shed new light on how to enact the improvement in a more complex multi-channel world.
If organisations can truly understand the customer’s needs and desires then they can become more efficient by meeting those expectations, reducing complaints, churn, contacts and so on, along the way. With assisted channels such as the call centre, the process the agent guides the customer through can be adjusted to optimise the ratio of cost to value – spend a little more time on high value customers and a little less on budget consumers. Who are the key customers an organisation is willing to invest a little extra in to keep them loyal or to move them up in value? Real-time context can help flex the business process to fit each situation.
Organisations must assemble their insight and business priorities from a customer experience perspective but use the operational metrics to mould the tactics they’ll use to achieve their goals. For example, an organisation’s customer satisfaction is low and customers are complaining about long call queues. The inside-out lean view would be to answer the phone quicker, reducing average call handling time so agents can handle more calls. An organisation applying CEM to the situation will look at both average speed of answer plus the website abandon rate to see if one leads to the other.
3. Businesses must engage with the tribal customer
The proliferation of social networking has heralded a eureka moment in the world of advertising – consumers don’t live in isolation, they interact and share thoughts and opinions. More than this, consumers actively seek out likeminded people to build communities with. This has given way to the rise in popularity of the tribal view of the consumer, with Seth Godin acknowledging the trend with his latest book, Tribes.
What does this mean for marketing? Godin suggests that marketers need to lead these tribes. Others have proposed that it is the role of organisations to provide the platform for the tribes to collaborate and supporting the link between customers. “Creating a platform – an online place that is user-friendly and promotes democratic interactions – is where I think things are going,” said Dr Marie Taillard, assistant professor of marketing at ESCP Europe business school,. “Sometimes these things will happen on the actual official site, but sometimes they will happen on another site and brand communities often will branch outside from the official website. Even then they should be encouraged. But I do think it is probably preferable to host them on the corporate website and to let them be as transparent as possible, meaning accepting negative comments about the brand.
“If we as marketers try to leverage these communities too aggressively and try to manipulate them in any way then the risk of backlash is absolutely huge. So I see our role as marketers as being purely one of facilitators and very hands-off - just creating a platform and possibly creating a set of rules for consumers to be able to engage on that platform, ultimately letting the communication flow between the customers.”
A further view is that businesses should be providing the stories for tribes to share. “Time and time again, when I look at the really successful transformational modern marketing campaigns like Lynx and Dove, you’ll find that they have a couple of things in common,” said Michael Bayler, co-author of ‘Promiscuous Customers: Invisible Brands - Delivering Value in Digital Markets’.. “One is that the brand is taking ownership of the dialogue around a particular subject area – for example, in the Dove Campaign for Real Beauty. They are also very pragmatic and a lot of them are about utility more than they are about entertainment.”
Bayler points to Nike+, a successful ambassador for the Nike brand in the passionate running community, which is focused on users sharing stories about their feats. Also, high street adult chain Anne Summers with its Anne Summers Parties that also bring people together to share their experiences.
“It doesn’t sell a whole lot - the average sales at an Anne Summers party is a few quid - but think about this as enabling people to tell stories about themselves and to redefine their identity under the umbrella of a brand,” said Bayler. “So for me, it is not just about conversation or facilitating conversation. It is about enabling people to tell stories about themselves and about each other. And I think that is an immensely potent vehicle for brand engagement.”
4.  Commercial marketers can learn a trick or two from social marketing
Social marketing moved up a notch or two in profile in 2009. Like social media (although the two should never be confused), social marketing is about entering into a dialogue with your 'customer'. Nedra Kline Weinreich, author of Hands-On Social Marketing: A Step-by-Step Guide, outlined what the socila marketing mix looked like earlier in the year, and explained how it differs from the four p's that commercial marketers use.
As CIM’s Mark Stuart highlighted, social marketers have become experts in behaviour change because they often deal with people whose behaviours are the hardest of all to change – whose norms are influenced by their cultural and situational surroundings and the attitudes of their peers. Often they have near-insurmountable barriers to change or are simply not motivated to change. The fact that social marketers are so successful in creating behavioural change in difficult areas like obesity, drug abuse and anti-social behaviour, is testament to their mastery of building relationships, innovating effective marketing practices and developing a true understanding of psychology and decision-making; both at individual and broader segment levels.
Earlier in the year, MyCustomer.com highlighted some major social marketing successes in the charity field - Bullying UK's Poster Creator campaign for instance has seen users create 23,500 posters all for free and each one helping to spread the message.
Historically, social marketing has tended to take its cue from commercial marketing, but the discipline is now developing to the point that commercial marketers can look to social marketing for inspiration. Marketers want to know how customers think and how to best influence them to make one set of choices over another. That’s not necessarily to drive up consumption or for manipulative purposes but to identify where a choice is going to be made, the customer can choose your product or service over a competitor’s.
The fact that social marketers are so successful in creating behavioural change in difficult areas like obesity, drug abuse and anti-social behaviour, is testament to their mastery of building relationships, innovating effective marketing practices and developing a true understanding of psychology and decision-making; both at individual and broader segment levels.
Interest is sure to grow in this area in 2010.
5. CSR 2.0 has arrived - and transparency is a competitive differentiator
Some may have questioned the future of CSR as the recession bit, but those in the know insisted the issue would only become more pressing. Described by Business Week as "a dean of the corporate responsibility movement for three decades", John Elkington explained to MyCustomer.com: “In an increasingly transparent world, even if it tends towards multi-polar forms of globalisation, the way in which business behaves in relation to environmental, social and governance challenges will be seen to be a key reputational issue – in some cases translating into significant market pressures. As issues like climate change, water availability, poverty and pandemic risks press in, business will have to get involved – if nothing else to ensure that government-led responses are reasonably business-friendly.”
From a branding perspective, organisations have long used social purpose as a marketing imperative to provide differentiation, increase global consumer appeal and build deeper customer relationships. But the modern digitally-enabled consumer has become both increasingly empowered and also increasingly well-educated about issues relating to the likes of global warming and fair trade - not to mention ultra-sensitive to those organisations suspected of 'greenwashing' their message.
If the initial wave of CSR was an attempt to drive social responsibility from the outside-in, a new model emerging sees organisations working from the inside-out, via operational transparency. While businesses have traditionally sought to draw a veil over their operations, if these are becoming geared towards sustainability and social activity, then there are obvious advantages to becoming ‘translucent’.
This translucency has seen product packaging transformed into richly-labelled information sources covered in data about nutrition, carbon footprints, supply-chain practices, environmental achievements and so on. And as Tim Kitchin and James Thellusson highlighted in their paper ‘Living with Translucency, Preparing for Transparency’, the backstory of products are much harder for competitors to replicate than recipes and ad campaigns.
Tim Kitchin, co-founder of The Glasshouse Partnership expects this trend to continue. “Consumers do have more information, more choice, more channels and increasingly what will happen is that we’ll seek to tie up supply chain information with CRM so that we will make richer and richer decisions about procurement,” he explains. “For organisations, their opportunity is to take information which is buried in the supply chain at the moment, and create value from it. So it is about campaigning around provenance, about showing social impact, about building a relationship between the customer and the production process.
"And that will become ever more important as the resources at the back end of the supply chain become more constrained, as we want to know how much rain forest was destroyed to make a particular table, and we want to know how my food decisions actually impact on people growing things in Africa. All of that is ultimately information-driven and it is story-driven. That is, if you like, the information infrastructure of the future. It will be a matter of how firms package and deploy the information from supply chains into equity.”
Meanwhile, with the social networking revolution having driven a number of collaborative efforts between company and customer, experts are forecasting that that the future will herald socially-focused coalitions. For the organisations themselves, this may demand a certain leap of faith – being confident enough to communicate areas of inefficiency or waste before working with coalitions to address these problems. But this kind of open-door discussion would be an appropriate way to engage with influential, empowered social networkers - a demographic characterised as being suspicious of tokenistic corporate social activity. Indeed, as Kitchin and Thellusson suggested, this really would see organisations putting the social back into CSR.
6. Twitter isn’t just hype!
Twitter became a bona fine phenomenon in 2009. For the uninitiated, you could do worse than read our beginner’s guide to Twitter, which outlines all the basics about Twitter registration, responding to others, retweeting, and who to follow.
As its popularity soared, so new applications only served to feed the Twitter craze. To avoid wasting time writing a blog or updating your website and then having to manually post a link on Twitter, you could use services like Twitterfeed to automatically post the content as tweets. To ensure you know when someone is talking about your business and have a chance to respond if necessary, you can use a service like Twitalert which will send you an email when your Twitter ID is mentioned. Several tools exist which allow you to check how influential you are on Twitter. You can also compare yourself to tweeters in your area. which also means you can track down local people who could be useful. Examples are Twitter Graderand Twitterholic.
Organisations like BT and Southwest Airlines won plaudits for their use of Twitter as part of their customer service mix, and the interest of vendors was also piqued. Salesforce.com struck a deal to allow users of its cloud-based CRM application to link directly to Twitter users to monitor customer feedback, experiences and complaints, with the idea that linking the two cloud-based applications would improve communications between businesses and users, and lead to greater levels of customer service and customer satisfaction.
More recently, WeCanDo.Biz launched a social CRM addition to its online new business network, to help small business owners turn their social networking contacts into customers. TheTwitter sales leads tool matches users to people using Twitter to look for specific products or services. Using a combination of keywords for their businesses, users get a condensed view of ‘tweets’ containing those keywords along with a specific need, providing a new source of potential opportunities.
Still believe it’s just a fad?
7. There's no time like the recession to innovate
One of the myths that the current recession has hopefully put to rest is the notion that a difficult climate is not the time to innovate. Conventional wisdom has it that in recession, organisations should exercise caution and wait for better times to invest in new products, services and processes. In fact, the evidence is that the companies which maintain investment in innovation, and market that innovation appropriately, are the ones more likely to survive in turbulent times and grow again once the economy recovers. More than half the companies in the Dow Jones index started up in a recession.
McKinsey followed over 1,000 US companies over an 18-year period, including during the last two recessions, and found that companies that came out in the top-quartile after the previous recessions were over significantly increased their spending on innovation, marketing and sales during the recession - in innovation’s case, by 22% more than less successful companies. The payoff from this and related investments was a 25% higher market-to-book ratio in the post-recession period.
However, Mark Stuart has urged that firms must strike a balance of playing to their strengths and doing what they do well for their existing customers, combined with a continued focus on innovation where appropriate. However, the devil is in the detail: an ‘appropriate’ level of innovation means innovation that bears in mind the different purchasing habits of customers, and adjusts to different behaviour patterns.
Meanwhile, Graham Hill argued that innovation's real challenge is in understanding what customers really want. Traditional approaches hardly involve customers in the innovation process at all. Instead, new product ideas are developed in darkened labs and then rolled out to customers with a marketing fanfare. It is no wonder that so many of these products fall flat on their faces. Remember the ill-fated Ford Edsel introduced in the late 1950s? The vehicle missed customers' needs by a mile and eventually was written off by Ford at a cost of US$400m!           
The only way to really understand what customers want is to talk to them about what they are trying to do and to watch them doing it. Innovation guru Tony Ulwick of Strategyn has advised companies to look in detail at the jobs customers are trying to do and the outcomes they are trying to achieve from doing them.
Through a process of interviewing and observation of a small sample of representative customers, Ulwick reckons most companies can develop a detailed understanding of customers' core jobs and their desired outcomes in only a few weeks. And jobs and outcomes are stable over time too. This is the starting point for understanding what customers really need, of how well current products meet them, and to provide a solid foundation for developing products that hit the innovation sweet spot: customers' needs that are currently unmet.
The next step is to understand how important individual outcomes are and how satisfied customers are with them. By surveying a few hundred representative customers, statistically analysing the results and mapping importance and satisfaction against each other on a simple opportunity landscape, you can methodically spot the best opportunities for targeted innovation.
Knowing where the best innovation opportunities lie isn't of much use of you if can’t take advantage of them by taking them to market. Fortunately, you can identify the best way to go to market by looking at a combination of the jobs customers are trying to do, what platform they use to do the job and who actually does the job.
Sometimes this is as simple as adding missing functionality to help customers get a core job done better. Bosch used detailed knowledge of the job of sawing wood to redesign their home circular saw and turn it into an industry best seller. The next way to go to market is to add related jobs to the core job that customers are trying to do. Colgate added tongue and cheek cleaners to their toothbrushes to create the Colgate 360 Degree toothbrush.
As a final warning, however, Nicholas Watkis reminds us all that the CMO should ask some important questions to test the concept before investment is committed to an innovation.
  • Is the purpose of the concept clear?
  • Can potential users be persuaded of the product’s benefits? 
  • Does the product or service meet a need? 
  • What is the specific nature of potential users’ requirements? 
  • How are existing products or services used, i.e. for how long, how frequently, for what precise purpose? 
  • What difficulties do people face in using existing products and services?
  • What requirements are not being met? 
  • To what extent are users of current products and services satisfied with them and their suppliers?
  • Is the price reasonable in light of the concept’s perceived benefits?
  • How likely are potential users to buy the product or service?

What have you learned about CRM this year? Share your thoughts with the MyCustomer.com community by posting in the comments section below. 

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