CRM: a boon or a have?

Those who have experienced some dissonance between the theory and the practice of looking after ones customers with the help of technology would have taken some heart from the scepticism of Jim Rosenfield.

Those who have experienced some dissonance between the theory and the practice of looking after ones customers with the help of technology would have taken some heart from the scepticism of Jim Rosenfield.

It’s commercial common sense, if such a thing exists, that retaining customers is good because in the long-term you may make a lot of money out of them, and finding new customers is a hugely expensive option.

Your call centres should please customers, not force them off the phone; your phone jockeys should be idea-gatherers rather than gatekeepers, the best of whom should be groomed for management as they have such a good understanding of customer needs.

All recent conclusions are in the Harvard Business Review. But haven’t we known this for years? At least 15 years, says Rosenfield, a San-Diego-based consultant and author.

The fact that they have yet to be taken up in any serious way is testimony to corporate resistance to cultural change, he says. Fortune 500 companies, for whom Rosenfield claims to work exclusively, don’t listen to his advice, yet they still make lots of money, he notes. Thus there may be no clear-cut link between good customer service and profitability, Rosenfield suggested to a Direct Marketing Association seminar in Auckland early this month, though your customers may actually like you.

The companies that use technology best in customer relationship management (CRM) are the ones with best data integrity — that is, correct and consistent customer details — he says, yet sprawling multinational companies often can’t manage this. Rosenfield offered plenty of examples of personalised marketing letters that had been sent out with the wrong honorific or to an inappropriate recipient. Marriages have ended and jobs have been lost, he says.

Customer satisfaction ratings have gone down year after year, he says, usually because too many companies hate their customers. Rosenfield singled out Qantas, as only a multimillion-mile frequent flier can, saying they treat their customers badly “because they can” — they control 80% of the Australian market. He says the other giants are no better, and admits to admiring the US’s cheap and cheerful Southwest Airlines. But he doesn’t fly them. “It’s a zoo,” he has said elsewhere, yet they do what they do extraordinarily well.

CRM is a mix of long-term value, technology and psychology, he says. It values loyalty, but only in some circumstances.

“One of the biggest disasters in the history of the business world,” he says of loyalty and frequent flier schemes. There are three or more for every person in the US, so are a huge business infrastructure cost that have nothing to do with loyalty or even frequency, he says. “No one knows the difference between loyalty, bribery, necessity or inertia.”

He accepts that CRM and conventional corporate culture are at odds. Shareholder pressure demands immediate returns, so investment in customer-focused infrastructure that research suggests will pay off in the longer term is not encouraged. He accepts that it costs money to please your top customers, sometimes too much. Yet it costs in this small country perhaps more than ten times more to get a new customer than keep a current good one, he says. CRM’s function at the moment is to reduce expenditures on “bad” customers, he believes.

Trouble is, in the digital age, rather than the traditional 15 people that are told about a bad customer experience the figure may be a hundred or thousand times as many, he says. Whereas good resolution of problems creates customer advocates.

All of us have had versions of Rosenfield’s experience at the Melbourne Grand Hyatt, being stuck in a lift and not being impressed with the post-trauma service. But few of us get his opportunity, almost exactly 10 years later, to dump on his hosts at a conference on customer service in — you guessed it — the Melbourne Grand Hyatt’s own Great Ballroom.

Rosenfield’s online tips

Online sales have the potential for huge customer irritation, he says.

  • Don’t make customers go through “infinitely regressive” hoops.

  • Don’t use obtuse language (for example, “application” implies potential rejection).

  • Respond to online queries quickly.

  • Don’t use too much technology. He cites the online wallet used to some degree in the US: “A typical technology solution for which there is no problem.”

  • Be sensitive to privacy concerns. New Zealand is the model of the world, he believes.

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