Gartner CRM Summit 2008 report

19th Mar 2008

Customer experience dominated proceedings at the Gartner CRM Summit - and attendees were told that technology innovation has a big part to play.

By Neil Davey, editor

The Gartner Customer Relationship Management Summit 2008 saw a series of speakers emphasise the role of technological innovation in improving customer experience. But there were also warnings that existing technology applications are still massively underused and that any innovation shouldn't compromise management excellence.

Attendess to the ninth annual Summit, held at the Royal Lancaster Hotel in London, were told how many CRM programmes that have been established to improve the customer experience are often uncoordinated and actually have the reverse effect, negatively impacting the experience of the brand.

As such, it was suggested that CIOs need to work with sales, marketing and customer service to improve customer experience and build consumer trust - and speakers including Don Peppers shared their expertise on how this could be successfully achieved.

The opening keynote from Gartner VP Mark Raskino set the scene, demonstrating how customer relationship management is now a top priority in boardrooms around the world, with a survey of CEOs rating 'retaining customers and enhancing relationships with customers' as their most important goal, with 'attracting new customers' second.

"Existing technology opportunities, the ones already staring you in the face, are relatively underutilised. Some of our opportunities lie with the stuff we have already got, done properly."

Mark Raskino, Gartner

"If I had done this survey five years ago," said Raskino, "cost cutting would have been at the top. If I had done it 10 years ago, something to do with selling would have been at the top - and managing existing customer relationships would not have been anywhere near the top."

A study of CIOs echoed the results, with 'attracting/retaining customers' listed as the second highest priority. Nevertheless, existing applications were still being underused in the customer space according to Raskino, and the opportunity for innovation is being overlooked.

"Existing technology opportunities, the ones already staring you in the face, are relatively underutilised," he suggested. "Do we really understand electronic service and experience design? We don't yet know how to get some of these things right and so some of our opportunities lie with the stuff we have already got, done properly."

Raskino proceeded to provide attendees with the example of Norwich Union's pay-as-you-drive insurance service, which employs existing mature technology such as satellite navigation to create an innovative model that tracks the customers' cars and charges them according to where they drive.

"It breaks the mould of driver's insurance," he said. "They can access marginalised markets, like people who don't drive very far in a year. And they add value."

Emerging technologies

But at the same time, he also stressed that firms must keep a close eye on emerging technologies. Whilst businesses had to resist the temptation to act like "kids in a gadget shop", if they mistime the adoption of new technologies they could damage CRM.

Highlighting the Gartner hype cycle, he demonstrated that whilst technologies moving along the cycle are most visible during the 'peak of inflated expectation' in their early days and the 'plateau of productivity' when they start providing returns, there exists a huge corporate blindspot in between, which represents a stealth competition opportunity to build competency in the technology.

"The only way to succeed in the world of social networking is to create a climate around your company; you have to build and maintain a reputation for trustworthiness."

Don Peppers, Peppers & Rogers

Web 2.0, he suggested, is now in that blindspot and firms should start taking it seriously, examining its applications and developing expertise. In particular, Web 2.0 represents a great customer experience opportunity, attendees were told, to present a human face to the organisation. "Companies need to start experimenting with far more open models of interaction," Raskino stressed.

Don Peppers placed similar emphasis on the influence of Web 2.0 in his keynote address. With customers now communicating with eachother through social networks, customer experience would be more crucial than ever, he explained.

Contemplating the critical importance of trust in the customer relationship ("Why does the customer choose you? Because they trust you"), Peppers said that Web 2.0 magnifies the importance of trust still further because of its unpredictable nature.

Referencing situations where members of social networks attack companies, he explained: "The only way to succeed in the world of social networking is to create a climate around your company; you have to build and maintain a reputation for trustworthiness. If you do that, then although that you can't fend off the irrationally cranky [customer], the other [customers] may come to your defence."

Peppers referenced the example of JetBlue (examined by Lior Arussy here), which found itself the target of angry customers on blogs after bad weather grounded a number of its flights. Because of its honesty in admitting culpability, its efforts to address the problem and its creation of a customer bill of rights, however, many loyal customers leapt to the company's defence.

When it comes to trust, "customers will forgive incompetence, they won't forgive dishonesty".

The defining problem

But there are possible problems ahead for firms that are trying to balance innnovation with management excellence in their customer management quest, warned Peppers. Discussing what he described as "the inherent conflict between excellence in management and creativity in innovation", Peppers told the conference: "It is our belief that it is going to be one of the defining problems of business as we go forward and the pace of change continues to accelerate with rising technology."

Peppers presented 3M as an example of this conflict. A consistently innovative company, 3M's costs were out of control in the 1990s, he explained, so it brought in a new CEO to introduce six sigma processes and improve margins. Whilst this worked, creativity and innovation suffered.

"It is our belief that the conflict between excellence in management and creativity in innovation is going to be one of the defining problems of business as we go forward and the pace of change continues to accelerate with rising technology."

Don Peppers, Peppers & Rogers

And the innovation levels only started to return, it was suggested, when in 2005 a new CEO was installed who understood that innovation was by its very nature a disorderly process. "You can't put six sigma process into that area and say 'I'm getting behind in inventions so I'm going to schedule myself three new inventions on Thursday and two on Friday'. That's not how creativity works."

Peppers concluded that firms need to harness the collective power of customers and employees if they are to enjoy both management excellence and innovation - referencing again the power of Web 2.0 in communicating with customers, as well as company cultures that empower employees to be 'self organised knowledge workers'. And the best thing for this culture? Consumer trust.

Meanwhile, Gartner VP Ed Thompson offered seven fundamental initiatives that he posited would improve customer experience.

  • Act on feedback, deploy changes and communicate actions to employees and customers - companies should view every contact with customers as an opportunity to deliver brand values and standardise on the business feedback management tool across the organisation and for all communication channels.
  • Design processes from the outside in - most process redesign is done with the objective of improving operational efficiencies rather than to improve the customer experience; which requires the organisation to identify which processes matter most to customers then set about identifying what to improve: an outside-in approach.
  • Act as one organisation to ensure consistency - the customer may interact with many parties as part of his or her business with a company. The challenge for the company is to ensure that information gleaned at one interaction is not forgotten in the next channel.
  • Be open - organisations that want to improve the customer experience often become more open. Being more open may just mean opening up more channels or opening hours but it can mean much more. For example, some firms establish an environment where customers can support, promote, defend or refer their products and services through an online community.
  • Personalise products and experiences - some personalisation options are simple, such as a website that enables customers to monogram products, while others are more complex, such as tailoring and personal pricing.
  • Alter attitudes and employee behaviour - employees’ actions are often the most powerful improvements in a customer’s experience. Companies can alter employee behaviour in three primary ways: recruit the right types of employees, ensure standards such as policies, procedures and governance structures, and create training programmes and incentives that can modify employee behaviour patterns.
  • Design the complete customer experience - many organisations have no plan or design for the customer experience. Companies with a focus on selling experiences focus on designing experiences. Customers of Disney, for instance, told it that difficulties in leaving the amusement parks often spoilt the experience, so the firm has worked to improve parking and traffic at its facilities.

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