Six CRM lessons to take from 2010

13th Dec 2010 looks back at some of the major developments of the last 12 months and outlines what the CRM industry has learned in 2010.

As the curtain falls on another year, we take a look back at some of the news and stories that we've covered in the past 12 months, and consider what we've learned.

1. Engagement is more challenging than ever

As we entered 2010, customer engagement was high on the agenda for many organisations, with firms planning to tap into the likes of engagement marketing and social media to drive this.
There are many excellent reasons for the focus on engagement, with the Annual Customer Engagement Report revealing some of the most important to be ‘increasing customer value’, ‘gaining customer insights’, and ‘increasing value delivered to the customer’.
However, organisations were facing some stiff opposition to engagement. And earlier this year Richard Sedley outlined the four challenges facing firms in their quest for customer engagement. These were:
  1. Our customers are increasingly distracted - We are currently living in the most information rich, attention demanding, message laden, multi-channel time that has ever existed. So the first major challenge any customer engagement strategy must take is cutting through this distraction to convey the value of our business.
  2. Our customers have increased expectations - Switching products and suppliers has never been so easy for our customers. While the importance of post-sales support has also increased dramatically as the ability to amplify discontent is now just one click and a Facebook group away.
  3. Our customers are listening to new models of authority - Trust in old forms of authority have continued to decline and in their place new models of authority have arisen. Encyclopaedias are replaced by Wikipedia, Bank Managers are replaced by MoneySavingExperts and Travel Agents are replaced by Trip Advisors.
  4. Our customers are establishing new communities - With the new sources of authority come new ways of connecting. How do we join the discussions within new social communities without coming across as outsiders wishing to disrupt the conversation? The language of customer-to-customer exchange is often difficult to learn and even harder to articulate business needs through.

2. But new engagement tactics are emerging as a result

Fortunately, Sedley also had advice on how to tackle these four challenges.
  1. The primary tactics to embrace to meet the challenge of customer distraction are simplicity and persuasion. Simplicity is achieved by focusing our efforts on our customers’ scarcest resource. For one customer segment that might be time, for another it might be mental effort. Based on an understanding of customer psychology, persuasion recognises that our customers navigate all the distractions they face by looking for short cuts to establish if something is valuable – for example: If other customers are using using/buying a product it must be useful. Highlighting things that help our customers take these short cuts means a customer is less likely to pass over us and our product.
  2. Expectations can be met by increasing the relevance of our product, service and communications. While time spent on gaining a deeper understanding of you audience doesn’t always pay dividends, using that understanding to develop a framework for personalisation does. Focus on establishing what the right-channel is, the right-timing and right-messaging for each customer segment as a first step.
  3. Become a new model of authority for your area of business. Provide free expert advice. Seth Godin describes this as becoming a leader of a tribe. Godin also suggests that to set up a tribe firms must remember to be ‘human’ (“People don’t want to follow a committee. They want to follow a person.”); that the tribe doesn’t have to be big to be successful (“If you have 1,000 true fans, 1,000 people who will drive across the country to see you perform, 1,000 people who will tell their friends, that is enough to make an impact."); and that you have to understand that not everyone will want to be in your tribe (“Tribes succeed because there are outsiders. You can’t have insiders if you don’t have outsiders.")
  4. The key to participating in the new communities is to add value. While supporting or hosting a customer community can be an excellent way of establishing a community (which Lithium CEO Lyle Fong has discussed and provided advice on) the best way to engage community participants is usually to open channels back into your business. Providing access to the product developers or the company decision-makers that can offer insights into how and why things work the way they do and is often deeply engaging for customers.

3. Engaged customers care about the brand – so don’t forget to include them in the dialogue!

As per our last point, providing access to the company decision-makers that can offer insights into how and why things work the way they do is often deeply engaging for customers. But, conversely, the same engaged customers can also be angered if they feel they’ve been left out of important decisions. This has, of course, always been the case. The change to New Coke being the best example of leaving customers out of the loop. However, with the new empowered customer, it is more important than ever to include them in the conversation.
The best example of that this year was when Gap was forced to perform a very public u-turn on its new company logo after its launch prompted a massive wave of discontent from customers. Replacing its classic logo of 20 years with a revamped version, the clothes retailer found itself the target of an astonishing volley of abuse.
"Gap should have invested more time in open dialogue with its audience," said Iain MacMillan, director at RMM. "This is not to say Gap should have used its customers to literally design the brand's logo. Rather, Gap should have listened to existing conversations about their brand as well as directly engaging its audience using its existing social media channels. Doing this would have helped Gap derive insights that would have proved invaluable during the rebranding process."
Joe Hughes, insight and research manager at Yomego, added: "Much of Gap’s heartache - and cost - could have been avoided simply by doing some basic research with core customers. It wouldn't have taken much to know the new logo wasn't going to fly. It could even be worth throwing out some early rough drafts of logos onto selected social media sites as potential fakes, or unofficial versions, to see what the reaction is to each. As they're not the final version, any negativity doesn't really reflect badly on the brand, and the brand gets a great chance to listen to feedback that could help drive development of the brand's identity."
But the way that Gap responded wasn’t all wrong, and it was also lauded for some of its actions. Monica Shaw at Market Sentinel gave Gap plaudits for the following:
  • Listening to the conversation and paying attention – "Gap knew that the new logo would generate buzz, and had their ear on the conversation as soon as the logo went live," says Shaw. "But they didn't limit their range to their customers – they listened to people speaking on all aspects of the topic. This was especially important when it came to contexts of conversation around design. Although the designers were not necessarily fans of their brand, their voices were strong in the overall conversation. Gap recognised that, and knew it had to appease the designers if they were going to overcome this PR crisis."
  • Participating in the debate – "Press releases will get you nowhere – you need to get in on the debate WHERE it is happening. Gap primarily used its Facebook page, with more than 720,000 fans, to post updates and responses to criticism."
  • Identifying the influencers – "Who are your promoters and detractors? Find out who they are and engage with them as necessary – be personal if you have to, but don't be pushy. By listening, [Gap was] able to address those sore points specifically, which no doubt aided the positive reception of their decision to scrap the new logo."
  • Acting swiftly – "The procrastinator's approach to dealing with crises – ignore it until it goes away – is no longer viable thanks to the internet. As the Gap logo illustrates, a story can spiral out of control within hours, and the sooner you respond, the better you’ll be able to manage it."
A pity that Nestle didn’t adopt a similar approach when targeted by hostile customers. Faced with uproar on its Facebook page it showed no interest in engaging the users in dialogue and instead used heavy handed tactics that only served to stoke the fire.

4. Customer engagement can be measurable

Customer engagement may have appeared on business agendas, but with the economic climate still extremely fragile, the bean counters were keen to ensure that there would be financial accountability. This was potentially problematic, as ‘engagement’ is a bit like ‘brand awareness’ in that it’s a highly desirable but rather nebulous concept to measure. 
Because engagement can be defined in more ways than one it stands to reason that there is no set formula for measuring it. However, in the world of web analytics some have been getting to grips with engagement measurement.
With the introduction of more sophisticated conversion goals for measuring engagement, Google Analytics can be readily configured to report engagement. Dave Chaffey outlined suggested the following five categories of measurement of online customer engagement in comparison with other brands:
  • Reach. You can compare aggregate audience interactions on your own site against competitors using Google Trends or the Google Ad Planner. You can also review how many you reach offsite through blogs or social presence such as Facebook, LinkedIn or Twitter communities.
  • Engagement with site. This is where the new Google Analytics capabilities help. You can set hurdle rates for % of visits > 10 seconds, 5 pages or simply use the bounce rate as a basic measure.
  • Activate to business goals. Activation is where you generate real business value such as a lead or a sale. Ultralase is a good example a site designed to maximise engagement to lead. All of the options on the left-hand side of the page such as call-me-backs and use of the forum can be setup as conversion goals in Google Analytics. Through setting up filters for social network presences you can see how customers originating from SNs generate sales and how engaged these audiences are.
  • Participating to add value for your brand. Conversion goals can also be set upto show how many visitors bookmark, rate or share content.
  • Loyalty. Tre engagement is about long-term loyalty, not a brief encounter with a website on a first visit. These repeated interactions are more difficult to measure in Google Analytics with other web analytics solutions such as Coremetrics offering more tools for analysis of Recency-Frequency and Monetary value through time for different customer segments.
Of course, measuring customer engagement doesn’t just apply to activity on a website. As Hugh Gage outlined earlier this year, a customer by definition has already purchased and therefore already been through the purchase process and no doubt formed an opinion based on ease of purchase together with the pre and post sale experience. As a result, a customer will subsequently engage with a brand in other areas, possibly by word of mouth in conversation with others or possibly through social networking or product review sites.
These are just two of many areas in which a customer may be considered to re-engage with a brand without necessarily accessing the website and because of that measurement using web analytics data, as with visitor engagement, becomes only part of the wider process, according to Gage.
At this point, he suggested, assessing engagement becomes more qualitative. Web analytics doesn’t just have to be a quantitative discipline and in fact in order to get a more rounded picture of behaviour it helps to draw from as many sources as possible. And so it is when measuring customer engagement, additional sources such as buzz monitoring, on-site and after-sale customer surveys, after-sale customer support feedback, lifetime purchasing history and so on all become relevant to the assessment of customer engagement.
The difficulty really comes in tying them all together! But, while in some cases it can be nearly impossible to do, the more sophisticated marketers are increasingly finding ways of joining up the various data points so that, for example, raw quantitative customer engagement data from a web analytics package can be wedded to qualitative survey data so that answers can at least be matched back to on site visitor behaviour.

5. When things go wrong – get it right!

BP and Toyota had a year to forget, just the latest to join a long list of organisations who have suffered potentially terminal brand damage. BP’s brand equity has suffered hugelydue to the Gulf leak, but it still fared better than Toyota when it came to its crisis communications.
Toyota’s stuttering, stilted responses to the growing crisis it confronted was shocking. Facing damage to the brand, corporate reputation and consumer trust, while all the time the safety of its customers was at risk, its crisis mismanagement was torn to shreds by critics
However, as emphasised by Paul Robertson, head of crisis management, risk and business continuity services at PricewaterhouseCoopers, while product recalls can be extremely challenging, a well thought through approach can actually positively impact future growth prospects – an excellent example of which is Johnson & Johnson’s Tylenol recall, arguably the most effective crisis management on record and something that “made a hero” of the company, according to the New York Times.
"Decisions can be made well in advance of any recall about how it will be dealt with, how communication channels will be used and who needs to be involved and engaged," said Robertson. "These will combine to ensure a faster, more detailed and more successful response in comparison to those organisations that react only after an incident has occurred."
The five-step approach recommended by PwC comprises the following:
  1. Dealing with product recall is an aspect of corporate crisis management which should be a key part of an organisation’s business continuity programme and regularly tested. Too often the focus of such programmes is on traditional risks such as fire or flood but reputational damage can be far more harmful to relationships with customers, consumers and business partners and should be addressed with appropriate vigour and pre-planning.
  2. Mitigating the impact of a product recall is not just about the response, but arguably more a question of preparation, so companies need to ensure roles, responsibilities, response structures and logistics channels are in place in advance so that management can communicate and take action the instant a product problem arises.
  3. When an incident occurs, it must be escalated quickly. The company needs to confront the situation immediately, understand the legal position, see things from the customer’s point of view, not just that of their organisation and ensure that all stakeholder concerns are identified and addressed.
  4. Ensure that the precise technical nature of the problem is understood so that what has occurred and how the recall will be dealt with can be explained clearly. This may involve considerable research and the engagement of third parties, which needs to be factored in to advance preparations.
  5. There must be communication from the most senior level of the business, and this must be honest, show concern for those affected and express a strong commitment towards solving the problem. The communication should be used to reaffirm the company’s core beliefs and values around quality and customer focus.

6. Social CRM is more than just a buzzword


In 2009, ‘social CRM’ was a contentious phrase, disliked by some, dismissed by others. But 2010 was the year that it became firmly ensconced in business lexicon, as organisations began to acknowledge that it was no mere buzzword, and that if one could cut through the fog of hyperbole, there was an opportunity for customer engagement and mutual value.  But of course its development was also accompanied by the standard growing pains.
Gartner delivered its validation of the sector this year with the launch of its first Magic Quadrant report on social CRM - but its nominations left some bemused and underlined the fact that the perimeters of ‘social CRM’ remain fuzzy.
When choosing the right social CRM product for them, Gartner recommended, marketers should look for features such as the ability to integrate data or software into existing CRM systems, although such capabilities are rare at the moment. Indeed, when it came to naming the leading vendors in its Magic Quadrant, it nominated Jive Software, even though the social business software provider has a low sales and support presence outside of its domestic US market, and Lithium Technologies, which provides hosted private-label social networks. But with both lacking any operational capacity, Jive and Lithium’s nomination as social CRM leaders caused some raising of eyebrows.
Meanwhile, questions were also being raised about social CRM ROI, with Laurence Buchanan even suggesting that ROI had become a dirty word when used in the context of a social CRM initiative. Metrics are abundant, he suggested, but dollars were often harder to find, and while it is easy to point to a metric like number of followers, page impressions, percentage of positive sentiment, etc. ultimately all of these are just leading indicators – and every boardroom he had been in were asking the same tough questions:
  • How much is this going to cost me?
  • What cash flows will I get in return?
  • How will this enable me to achieve my strategic objectives?
  • What are the risks?
  • How does the proposed course of action compare against other (viable) alternatives that I have?
Laurence’s advice, however, was that while ROI of a social CRM initiative is mandatory, it should not be looked at in isolation, advising that a decision to invest in social CRM should be aligned to an organisation’s corporate objectives and needs to consider both short- and long-term value drivers.
As organisations searched for case studies of successful social CRM in action, businesses were left asking themselves who exactly was deploying a holistic social CRM strategy to learn from? Well, according to Paul Greenberg there is but one: P&G. His reasoning?
  • Customer communities - They are using their homegrown social networks such as Vocalpoint, a network of 600,000 mothers, who each have their own mom’s network of about 25 or more, to engage the moms in providing key customer feedback for products they are putting on the market. Each mom (theoretically) gets samples of the product that they give to their personal network in a natural environment, and then they get feedback. Benefits: customer engagement, marketing reach; product co-creation and feedback.
  • Social marketing - Case in point is their antiperspirant, Secret Sparklebody Spray, which was expressly designed for teens. Back in 2005, they released the product in an entirely non-traditional way, by building social websites that engaged the targeted customer base – 13-15 year old girls. Within two months of the website launch, they had 12,000 registered members, a.k.a. customers-in-the-wings, who spent an average of 25 minutes per visit on the site. That led to an 0.1% market share for the entire antiperspirant market within five months of product launch – $84 million US. Benefits: Direct revenue benefit attributable to cost-effective social marketing campaigns and locations.
  • Product co-creation - They have the Connect-and-Develop program which is a way for outsiders to both pitch new ideas to Procter and Gamble that might turn into products. Over 100 have successfully done that. Connect-and-Develop is also where P&G puts out its R&D issues that are then resolved by the community at large – in a major science and engineering crowdsourcing effort. Those who solve the problem are paid for their answers. Benefits: new product development and R&D problem solution at a fraction of the cost of an internal effort. Meeting KPI of 50% of all ideas coming from external sources by 2010.
  • Customer-centred supply chain – Several of the supply chain KPIs are oriented to the customer’s experience with P&G. For example, one of their most important is called pricing from the shelf back. That means that you don’t define the price of a product from the cost of the materials plus margin of some sort. It means that you find out from your customers what they would pay for the product and then engineer or re-engineer the product so that it meets the customer’s numbers. 
  • Customer experience – When he took over as CEO (he has since stepped down), A.G. Lafley made the following statement: "We have to create a great experience every time you touch the brand, and the design is a really big part of creating the experience and the emotion. We try to make a customer’s experience better, but better in her terms." In other words, the core for social CRM as well as CRM was, and is, the customer’s experience.
But the irony is that P&G doesn’t even call this 'social CRM'. There is indeed still a long road to travel for social CRM. Cue 2011!

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