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CRM technology and the customer experience: Sweethearts or strangers?by
14th Jul 2010
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Two recent articles by Esteban Kolsky and Lior Arussy have crystallised an important question that often gets lost amid the excitement about new suites of tools. Namely, what role does CRM technology play in delivering the customer experience? Or more specifically, how much does CRM technology contribute to the delivery of great (i.e. genuinely differentiating) customer experiences?
Tempting as it is for me to throw yet another customer experience framework into the mix, I will refrain and restrict myself to some painfully won observations from my own experience of being part of the strategy/business consulting team of a consultancy that in its various guises has been implementing CRM systems since Siebel was a start-up.
1. Customer experiences are typically asymmetric
From a customer’s perspective, a delivery not arriving on time, the wrong product being sent or a telephone call going unreturned all cause dissatisfaction. But a delivery arriving when expected with everything that was ordered or having a call returned promptly will not stimulate whoops of delight.
Delight is only created by strong emotional engagement – feeling that the company has gone above and beyond the call of duty in serving you; that you are recognised as an individual, your time is respected and you are being treated empathetically; in short, that you are genuinely cared for. Delight, not satisfaction, is a differentiator. And delighting customers is particularly powerful at moments of truth – when they have a significant amount of emotion invested in a successful outcome; for example, a major problem needs to be rectified quickly (and the customer may lose his job if it isn’t) or something special is being planned so stress levels are unusually high.
Getting the basics right will lead a customer to a state of satisfaction (or perhaps, more accurately, prevent a state of dissatisfaction), but it will not delight. Conversely, having all the delighters in place will be of little value if basic hygiene criteria are not being met. Occasional lapses may be forgiven by customers if emotional engagement is high. But if orders are regularly late or incomplete, no amount of empathetic treatment will compensate for the inconvenience caused.
2. CRM systems help businesses satisfy customers through getting customer experience basics right
Well designed customer-facing processes enabled by CRM systems help businesses get the customer experience basics right. Any business that can’t even get the basics right – and there are many that fall into that category – is operating with a massive drag on their performance. To use Lior’s expression, they are not even at parity with customer’s expectations. And parity, both with customers expectations and what competitors are offering, has to be the first step.
In CRM terms, this means that however the customer chooses to contact your company – field sales manager, service centre, instant messenger, social media, etc. – the person they interact with in real time has all the relevant information about the customer to hand so her request can be dealt with and the account information updated accordingly. It also means that there are processes in place, automated as far as possible and with controls enforced by a CRM system, to ensure that queries or complaints are dealt with on a timely basis.
3. Getting the customer experience basics right is sufficient for many businesses
Not every business can or should aspire to differentiate on the experience it delivers to customers. Some businesses seek to differentiate by achieving a lower cost base than their competitors and selling at a lower price. Others differentiate by offering superior products: faster, more accurate, more reliable, more flexible, wider choice – however product superiority is defined in their particular industry. In both these instances, getting the basics right and achieving parity with expectations is sufficient as differentiation comes from other dimensions.
Of course, expectations with regard to customer experience will rise over time, so maintaining parity will require constant improvement. But the most important factor when designing the customer experience is ensuring that it is appropriate to the business’ overall strategy. Trying to differentiate on too many dimensions typically results in failure – either to execute successfully or to achieve the desired profitability, the cost base having been inflated by more than the premium which customers are prepared to pay.
4. CRM systems also enable customer intimacy, helping businesses be more proactive and more customised in their offerings to customers
Customer intimacy enables a business to offer a customised solution or solve a broader business problem. Achieving it requires capturing data from transactions, analysing it to identify regular patterns or latent needs, combining it with insights collated from non-transactional interactions (sales visits, service queries or requests and complaints), then combining this with information from external sources. Analysing this data will show where intimacy will create the greatest value, both for the business and customers. Finally, these insights can be translated into decision support rules so a proactive and/or customised service can be provided.
Offering a customised service obviously provides a superior experience to one that isn’t customised. However there is a caveat. While it may continue to be better than competitor offerings, the risk is customisation becomes the ‘new normal’ as far as customers are concerned. Careful management of expectations remains crucial for it to continue to be a differentiator.
Offering a proactive service also delivers a superior experience in the form of increased convenience and reduced risk of stock-outs for customers; so long as it is timely, relevant and desired (unwanted attention is otherwise known as stalking). In addition, proactivity is in the interest of the business – in the form of securing the next order – which leads us to the next point.
5. Typically the benefits of CRM implementations accrue more to companies than their customers
Any investment in customer-facing capability should support either the creation of value for customers (through supporting the delivery of a superior experience) or the creation of value for the business (through helping it acquire, grow, retain customers or improve customer profitability) or ideally both.
But given the costs associated with technology implementations, the company’s interest tends to be paramount – a rationale predicated simply on improving the customer experience will receive short shrift, especially in these straightened times when CFOs are calling the shots.
Also, as highlighted above, the power of technology-enabled processes to create value through improving the experience is limited to reaching the satisfaction threshold. The pay-off that the company obtains through improved efficiency and effectiveness is much clearer. Some modules – account management, service management and customer analytics for example – obviously directly impact the customer experience. But the business case for their implementation needs to reflect how they will improve customer retention and grow existing customer relationships through increasing cross- or up-selling.
The objective of campaign management is generating more leads, for sales force automation it is about improving the conversion rate at all stages of the sales funnel. These modules – and any that help reduce costs to serve and improve customer profitability – are clearly implemented with the business’ interests in mind. Rather than improve the customer experience, the risk is that they degrade it – the unwanted cross-selling of warranties, credit cards and spamming that Wim Rampen describes.
These problems are not caused by the modules themselves, but by the mindset of those that are using them. Anyone in a customer-facing role needs to continually balance the interests of the customer with the interests of the business. If egocentricity – purely seeing the world from the business’ perspective – runs unchecked, the customer experience will obviously suffer. In terms of customer experience, more important than the processes and tools is a company’s culture and the attitude of the people it employs.
6. Customer delight is created more by the ‘softer’ elements of a business' operating model – culture, organisation design, competencies of its staff – than the ‘harder’ elements of process, technology and metrics
The capabilities that a business has are derived from a number of sources, both ‘hard’ and ‘soft’. The hard sources are those that have been described above – the processes that have been designed and procedures that have been documented; the automation and control of those processes by IT systems; and how performance in the execution of those processes is measured and managed – the KPIs and metrics in place. The softer sources are the corporate culture, the organisational design and the competencies of the people.
Emotional engagement arises from human interaction – not the successful completion of a process. More importantly, the points where emotional investment in the outcome is high, the so-called moments of truth, often arise when a process has broken down, or no process exists. In such cases, when there is no playbook to go by, the attitudes of staff, their beliefs and motivations, the values the organisation espouses all contribute hugely to the experience a customer has. In the same way that an egocentric culture delivers a poor customer experience, a customer-centric one is probably the most important factor in delivering a differentiating one.
Organisational design – particularly whether service teams are organised around customers or customer segments or by process – impacts whether customers speak to the same individual or team or to a different person each time. Roles and responsibilities define how much latitude a customer service rep or sales manager has to rectify a problem or arrange for a gift to be despatched as an apology. The competencies that employees have – the training they have received – also play a huge part in how well they deal with difficult situations.
If the desire is to differentiate by offering a superior customer experience, it is these softer elements of the operating model that a business needs to get right.
7. Social media changes very little of this
In terms of customer experience, social media is just another channel by which customers can interact with a business. It will be the channel of choice for some people, but it only changes the means by which the experience is delivered, not the experience itself. Yes it offers opportunity for dialogue, but then so does calling the service centre or exchanging emails or visiting a branch. If customers feel that a business doesn’t really care about them, an additional channel is not going to change that.
Indirectly, of course, it will have an impact if fear about how social media sites amplify negative messages spurs businesses to improve the customer experience they offer. Monitoring blogs or social media sites will allow businesses to eavesdrop on conversations about them that otherwise they would have missed and respond, if that is appropriate. But customers only tend to let off steam this way if they have tried and failed to get their issue resolved by talking to the company. If a business is not that interested in listening to its customers, social media will just provide another channel for it not to listen to customers. New tools plus old mindsets equals no change.
This brings us back to the criticality of corporate culture and staff attitudes to delivering differentiating customer experiences; and specifically the need to change from the company-centric norm to the customer-centric necessity if delighting customers is the objective.
What impact social media eventually has on the customer experience will most likely depend on whether it is owned by the customer experience team or the marketing team. If it is the latter – and the wealth of seminars offering to show how social media marketing will deliver qualified leads suggests that is where advisers and providers see the opportunity – the risk is it becomes yet another way to bombard potential customers with brand messages or introductory offers in yet another corner of their lives.
A key criterion for successful customer experience management is managing expectations. CRM systems help businesses get the customer experience basics right and enable customer-facing processes to be executed more efficiently and more effectively as far as the business is concerned. In those respects they offer very significant value. But if positioned as more than that – specifically as the critical component in delivering a differentiated customer experience and that the latest suite of tools will deliver companies to the sunlit uplands of everlasting customer delight – then we risk mismanaging the expectations of those we are seeking to persuade. We will have fallen victim to what we advise others not to do.
Jack Springman is head of corporate advisory group at consulting and systems integration firm Business & Decision.
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