The three-legged stool of CRM and how we can improve it
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CRM is about using technology to support the people approach to building customer relationships, not to replace it, says Richard Gerson.

CRM is more than great customer service, more than satisfaction, and more than customer retention programs. CRM is about establishing a true relationship with customers so that they feel loyal, committed and dedicated to your company.

Think of CRM as a three-legged stool. This view allows us to account for the company (leg one) itself and the service delivery environment (leg two), but now we add the customer’s personal characteristics (leg three).

Boost and bust
The issue of CRM in organizations has been both a boost and a bust. While many senior managers and marketing professionals extol its virtues and the potential benefits the organization will accrue from an effective customer relationship management program, such as increased sales productivity and greater customer retention, many of the line managers and employees in a company never get to see it work.

In fact, some managers, supervisors and employees don’t even know their company has a customer relationship management program in place. Do a survey in your own company. Ask managers about your own customer relationship management program and listen to what they say. They will most likely tell you that the sales process IS the customer relationship management system. Some may even suggest that the marketing and advertising the company does constitutes your company’s customer relationship management system.

While we know that this is not correct, because customer relationship management is much more than this, the brief survey will be very instructive and enlightening to you.

Working in the dark
Companies say they have trained their managers on the concepts and principles of customer relationship management. In reality, they were trained in customer service skills more so than CRM skills. That’s because, since most CRM efforts are technology based, they are left to the IT or Marketing departments rather than the ‘line or department managers’. In other companies, managers have never been trained on the concepts and procedures of true customer relationship management, so they are basically functioning in the dark.

These are just some of the reasons companies are not getting the results they desire and expect from their customer relationship management programs. I believe there are more reasons for these failures and they have to do with the traditional focus of customer relationship management programs.

Current, comprehensive CRM programs focus on using technology to track customer demographics, purchase behaviors, revenue generation, and customization of marketing communications. And they should! No one doubts the importance of these factors in fitting the right message to the right customer and hopefully getting that person to make more purchases and stay with the company. But, there is still something missing from this approach, and it is the cause for the less than desirable results of customer relationship management.

Have another look
Take a look again at the list of things most companies include in their CRM programs:
• technology
• repurchase rates
• incentive programs
• demographics.
Yet, while these factors are important, and they include activities and processes that are very customer-focused, they still provide companies with very few end results.

Have you figured out yet what’s missing?
What the typical approach leaves out is attention to the PERSON, the Individual, the CUSTOMER. In order for customer relationship management to truly work and be totally effective, we must first focus on the person. Instead of sending out customized messages, tracking purchase behaviors, or providing incentives to stay with the company, we must look closely at what the customer needs, wants and expects from a relationship with a service provider.

After all, how can you create a relationship with someone by trying to influence and change everything around the customer without working directly on or with the person?

We must pay attention to everything the person brings to the situation:
• motivations
• emotions
• desires
• interests
• intentions
• knowledge
• behaviors
• attitudes.

It is all these things that will determine how well every customer relationship management program truly works. When you look at it this way, the traditional approach to CRM (ie, technology focused) seems somewhat lacking, doesn’t it? It also seems somewhat mechanical and company oriented, even thought it’s supposed to be about the customer.

Identify the customer
Think about what is traditionally looked at as part of your company’s customer relationship management program or system. It begins with the data capture process. You identify a customer who makes a purchase, gather as much information as possible about that customer, develop a purchase or behavior history, link the customer’s various accounts or interactions with your company through your CRM system, and send out tailored communications to that customer. All this is done in the name of good customer relations, and to develop your customer relationship management system.

If customer relationship management is supposed to help companies get to know their customers better and to establish a true relationship with them, then we must first focus on the customer instead of all the corporate and environmental entities that we now include in the program or system.

We must take our lessons from the personal relationships we establish as individuals.
• What is it we want in a relationship with someone?
• How do we know when we have truly established a relationship?
• What makes a relationship continue on a positive growth path
• What makes it break apart?

Unfortunately, most companies never ask these questions with regards to the CRM efforts and then they wonder why, despite their heavy investment in technology and marketing, they are still losing customers.

In each personal relationship that we have, both participants bring a set of behaviors, attitudes, beliefs, values and emotions to the relationship. When those factors are compatible, and we agree on mutual goals for the relationship, it starts to grow. Over time, we make adjustments to the relationship based on our needs at the time. The relationship continues to grow as long as we do the following:
• Trust each other
• Communicate openly with each other
• Give each other what we truly want and leave out what we don’t want
• Support each other
• Listen to each other
• Empathize with each other
• Grow with each other.

Not on the list
I’m sure there are other things you can think of to add to this list about how relationships grow and prosper. Yet, nowhere on this list is a computer, software, a technology-based system, unsolicited communications, special offers, or anything like companies do to customers with their CRM programs and systems.

Yet, this opposite approach to relationship development is what we’re currently doing in business. In business, there is often a tendency to focus on the technical and data-based aspects of customer relationships and neglect its emotional aspects and behavioral tendencies. Yet, we all know that it is the attitude and motivation a person brings to the company they choose to do business with that is one determinant of how satisfied they will be with the interaction.

Other things that affect that satisfaction include their contact with employees (or the website), the delivery of the product or service as promised and on time, the utility of the product or service, and how they are made to feel about the interaction. In fact, I will go so far as to say that it is how the customer feels more than anything else that determines satisfaction and the intention to do future business with a company.

If you accept that premise, then:
• Why aren’t companies spending more time on developing true relationships with customers?
• Why are they spending so much money and time on the CRM technology and systems that should SUPPORT, not vanguard the CRM process?
• Why do the larger companies that have invested so much capital in CRM technology change providers, abandon their efforts all together, or simply relegate CRM to a lower level of importance when they know customer relationships are the backbone of their business?

The reason is because the CRM technology and marketing it supports can never take the place of getting inside the customer’s head and heart.

First things first
Companies must first understand what customers are thinking and feeling, and then work with those thoughts and feelings to build relationships. To coin an old cliché, customers don’t care how much you know (even about them) until they know how much you care. If you want your CRM efforts to be extremely successful, and generate the returns on investment you were promised and so wholeheartedly believed in when you started the process, then you must get back in touch with the customer, personally.

Companies must pay attention to the emotions and beliefs of a customer that motivates them to engage in a relationship with a company. When we focus on these factors, we can account for repurchase behaviors and lack of loyalty. We can identify why they continue to come back and why they may go away. We can also work to strengthen the emotional bonds we have with customers so that they stay with us longer.

We must know the following about the customer with whom we want to establish a long-term, mutually beneficial relationship:
• Initial mindset related to the initial purchase
• Desired levels of customer service and future communications
• Behavioral preferences, beliefs and values of the customer
• Motivation of the customer regarding future purchases and referrals
• Information requested by the customer, how it is sent and when
• Level of relationship the customer desires with the service provider
• Performance gaps between expected service and service received
• Relationship between the customer’s goals and the company’s goals regarding future contact and interactions
• Emotional and motivational fit between the customer’s needs and the company’s abilities to fulfill those needs
• Measurement systems that will be used to inform the company of the customer’s behaviors and used to support future customer contacts.

When we have this information, we can expand the standard models of customer relationship management being used today. Think of customer relationship management as a three-legged stool. This expanded view still allows us to account for the company (leg one) itself and the service delivery environment (leg two), but now we add the customer’s personal characteristics (leg three).

These characteristics include the customer’s emotions, beliefs, values, behaviors, desired level of service, and how close a relationship they truly want with a company.

This enables us to better match the company’s CRM efforts to the outcomes customers truly want and expect to receive. It also allows us to place the third leg on the three-legged stool, so now our CRM system will be totally balanced.

Here is an approach to follow when you next analyze your customer relationship management program or system, and how well it is working.

Focus on the system
Review the focus of the system, its performance requirements and measurement standards. If they are mostly company focused, then they are focused wrong. You will hear many companies say that they have captured a tremendous amount of data on their customers, yet they still have difficulty getting these same customers to increase their frequency of purchases or volume of purchases. All the data in the world is meaningless if it can’t be used to help build a better relationship with your customers.

Focus on the customer

Give them what they want
And finally, CRM is about giving customers exactly what they want in a relationship. Sometimes, it is a close, tight, long-lasting relationship and sometimes it is a relationship that is at arm’s distance. It requires you to use your CRM technology right, in the right way, for the right reasons. You must use it from the customer’s perspective, not the company’s perspective.

Then, and only then, will you be on your way to truly establishing relationships with customers and to making your CRM program work the way it was supposed to work.

Richard F. Gerson PhD, is president of Gerson Goodson, Inc., which helps clients use a variety of innovative and non-traditional marketing, sales and service techniques to acquire and retain more profitable customers and more talented employees. GGI also runs training and coaching programs in sales, marketing, customer service, motivational management, emotional competence, employee selection, team building and leadership skills. GGI’s clients include American Express, General Electric, DuPont, Raymond James, Dun & Bradstreet, Morton Plant Mease Healthcare and many others. The company has consulted in over 100 different industries and trained 350,000 people. Gerson has authored 16 books and over 350 articles. He is also a professional speaker who presents to up to 100 corporate and association audiences a year.

Richard Gerson


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