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By Bob Trevelyan, Founder of Trevelyan Group, LLC.
So what don’t CRM vendors, middle management and many consultants understand?
A Bank Executive from a very large International bank tells the story about, when he first started in Banking 35 years ago, his Branch Manager was going to visit with a customer. He requested that our Bank Executive – Bob - go to the
vault and write down every check that had been written by the customer, to whom the check was paid and for how much. He was also to compare the checks written to the daily balances in the customer’s personal and business checking accounts. In addition the outstanding balance on a business loan, the remaining balance on his home mortgage, and the balance on is savings account was to be noted. In depth knowledge of the customer’s banking business plus knowledge gained from the community – the Branch Manager and the customer knew each other well from clubs, service organizations and mutual friends -- created an intimacy beyond the customer/bank relationship. So armed, the Branch Manager went to the meeting – fully prepared to discuss any aspect of the customer’s personal
and business activities. He was also armed with integrity, a sense of trust, a broad historical view of the customer, and the capability to listen to the customer’s needs, goals, and dreams
Our Bank Executive – Bob – has spent millions of dollars on technology and training to attempt to re-capture the sense of intimacy that he had seen 35 years before. He had worked with leading vendors to understand behavior (analytics and pattern matching), invested millions in targeted marketing and contact management (SFA), automated the functional aspects of the business (ERP), invested in ‘intelligent’ technology at some customer touchpoints, and continues to spend millions on training people.
So what is wrong? Why can’t he capture the relationship that ‘had been’? Sheer volume of customers and transactions create issues – but he has also spent millions on data warehousing to capture and manage the details. Employee turnover continues as the Bank continues to treat customer-facing personnel as fodder in the everyday wars of business – but the training is good. His marketing, sales, and business managers are all are highly paid professionals. He has spent money on consultants but has not seen the expected return on his investment. The ‘value’ of the relationship is fleeting. Why?
Everyone talks about relationship value! Relationship value and how to create it, how to manage it, and how to enhance it. Yet few companies really understand value from the customer’s perspective. They have an internal view of value, one that is focused on optimizing short-term value for the company and supported by applications, analysis and training focused on channel, product, segmentation strategies, or technology. Solutions in the marketplace stress the creation, capture, and retention of more valuable customers, but they approach the issue from a single perspective – what is good for the company. The word “value” and the supporting applications, consultative approaches, and training rarely address the creation, enhancement, and maintenance of communication that will create value over time -- leading to genuine long-lasting customer relationships.
Real customer relationships, those that result in the customer feeling a sense of loyalty, are predicated on a series of satisfying experiences and communications. Relationships are not developed overnight. Until the customer senses that both he and the company have effective and meaningful communication, then no relationship can be said to exist. Today, with all of the commercial “CRM” products on the market, we are creating a product-push environment where only one side of the customer/company relationship is acknowledged – the company. At best we create satisfying encounters where the customer spends money on our products or services, which, possibly, could become the foundation for a relationship. Relationships are created through open and honest communication over time. What, then, are we doing about the customer’s side of the equation? Will we continue to create value for the company or will we establish value in the mind of the customer through communications?
The customer’s must come first
The creation of value from the customer’s perspective must lie at the heart of any relationship strategy. Yet, it is easier to focus on the company because we have ‘solutions’ that address some of the company side of the relationship. I meet with companies that talk about creating customer value, but what they are really addressing is the creation of their value - one side of a communication. The old sales adage that states that “while the salesman is speaking, the customer isn’t” is very true. They are so focused on their side of the relationship that they never listen to the other half. That is, they are trying to make customers more valuable to the firm by selling them more products and services, by increasing their frequency of purchase, or their share of wallet. While there is nothing inherently wrong with the approach, it may have little to do with the creation of lasting customer relationships. Understanding value from the customer’s perspective is missing.
Some customers who buy a great deal from a firm may not have anything approaching a genuine relationship. In many companies today, particularly those that are publicly traded, this has come to mean a focus on the short-term relationship objectives. But what is the connection between the company’s short-term value and customer value? Over time, it is impossible to create sustained short-term and long-term value unless value is being created for its customers. Yet, today many firms embrace value strategies that are focused on the reduction of costs, the reduction of employees, and the wholesale embracing of technology. The efficiency and cost reduction goals are to deliver customer service at a lower cost, thereby increasing short-term profits and company value.
Such a short-term strategy is antithetical to the establishment of customer relationships. The focus on the company value often leads to a reduction of customer value as service levels deteriorate, leaving to opening the company to competitive threats.
Relationship value
Some firms suggest service has been enhanced because, through the use of technology, the customer can now deal with the firm in a much more convenient way. Access is available through several channels and is guaranteed 24 hours a day, seven days a week. What kind of customer value has been created? Is the availability of a company’s product at all hours of the day of value to the customer? Perhaps we should ask the customer – establish the customer side to the relationship.
Value can be created for customers in many different ways, some of which are important in the creation of lasting customer relationships. The current one-sided view of value creation is often limited to the creation of value for money and not sustainable relationships. Companies add new features to their products while maintaining or reducing price or “bundle” together a number of products and services and offer them to the customer at a price that is lower than the sum of their individual prices. However without customer input (his side of the relationship) the approach does not lead to the creation of lasting customer relationships. A price advantage and the customer patronage or “loyalty” that results generally last only as long as it takes for the competition to respond. Value for money represents, therefore, the simplest and most easily copied form of functional value. Relationships are different. A relationship is based on communication between both parties that creates a sense of understanding that is much more difficult to break.
Unfortunately, competitors can most easily duplicate the company’s value equation. They can match your price; stay open just as long as you can; and install the same technologies. Creating company focused value offers a fleeting competitive advantage.
Communication is the foundation of relationships
The much more lasting form of value is based on sustainable relationships. Value is created every time a customer is made to feel welcome, important, valued and heard.
Genuine customer relationships cannot be formed on the basis of the company’s equation value alone. Customer relationships require a connection. As we implement CRM programs and activities we have not asked ourselves whether we are really creating a relationship with our customers. A reliance on technology, “CRM” solutions, product-push approaches, and one-sided conversations with customers has done little to meet the customer’s view of the relationship. Listening is as important as talking – especially in relationships. Communication is key.
Few companies approach the company/customer relationship with the customer view in mind. Leading executives worldwide have told me that, while they have invested millions in applications, approaches, and training, the return has not been as great as if one could sit down and in conversation change the company through comprehensive knowledge of the customer’s wants, needs and future directions. They all indicate the need to deliver appropriate information to the employee and customer at all touchpoints so that a sustainable ‘conversation’ can be established – with capture of information as important as delivery of information. Their requirements are clearly different from the product approaches companies have been taking to date.
We have a wealth of information and technology to create a relationship foundation – now we need to start listening and capturing the customer’s side of the conversation. That’s how relationships are built. Relationships are the direct result of communication. So the next time you hear some company discuss their “CRM: solution – remember -- it the customer isn’t talking there is no relationship. Just look at who is ‘doing CRM” – everybody from Siebel, PeopleSoft, Oracle and e-phiphay, to component manufacturers. Everybody says
they are ‘doing CRM”. However what does the customer think? The lead word in Customer relationship Management is “customer”, after all.
Ask the customer if the ‘solutions’ you are implementing enhance their view of the relationship they have with you. You might be surprised at the answer.
Bob Trevelyan is the founder and
managing director of Trevelyan Group,
LLC, an independent CRM Consulting organization specializing in creating sustainable relationship
strategies for Global 1000 companies. Mr. Trevelyan is an authority on the role of CRM for airlines, financial
institutions, retailers, hotel, and telecommunications companies. He is the founder of two new businesses
specializing in the delivery and management of appropriate information for customer relationship communications:
Intify, LLC. - delivering on the promise of CRM; and DataDrawer, LLC - enabling competitive advantage for small
and medium business.
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