Does CRM Waste Customers' Time?

Carol Smalley
Managing Editor, CRMGuru
Member

Posted 18-Mar-2003 08:13 AM
A recent article by MarketingProfs.com caught my eye today and I wanted to share it with the CRMGuru community and hear your reactions to it.

The article is titled:
"Why CRM Wastes Customers' Time"

It can be found at
http://www.marketingprofs.com/3/mccasland5.asp

What do you think? Is CRM just another business buzz?

Edwin Setzpfand
Member Council
Member

Posted 24-Mar-2003 07:59 AM
Although informing customers better should be part of any sound CRM approach, it seems a rather narrow view to consider CRM as the "belief that if you have enough information about your customer and her behavior, you can use database technology to develop a more personalized, targeted and effective marketing effort."

Not only because there are quite a few brick & mortar shops that have a very effective CRM-strategy without any database at all. The shop owner just "knows" all of his top customers, their families, their needs, the transaction history and -most important- how he has to make them come back for profitable and mutually satisfactory purchases again and again.

In addition to that, it is argued that "many consultants and business executives have ignored the 'relationship' portion of CRM" and that their approach is "the right message, at the right time, to the right person." Further down then is a number of guidelines to "optimize CRM messaging".

CRM, however, in my view is more than targeting the right audience with the right message. If a large portion of the customers/prospects does not close a deal after having received a message, we have a choice of going after the defectors, the prospects or both. A McKinsey/ePerformance report shows [Lowenstein, 2001] that 98.7 % of the online visitors do not become repeat customers and most sites lose 60% of first-time customers in six weeks. Bad targeted messages were not among the main causes for these defections.

It is easier to expand the business with existing and loyal customers than to win back defectors. So we must try to increase the customer retention rate. We must better satisfy the needs of these customers. For this to happen one must make sure that they feel themselves treated with respect and trust [McKean, 2002]. When they buy the right product (service) at a fair price we may get and keep loyal customers [Kramer, 2002].

The author is right in his criticism of the trial-and-error approach to Email messages. However, when considering CRM as a mere method to write and send better messages to the right people, the focus is too narrow. That way one cannot conclude that CRM is "wasting customers' time".

Furthermore, customers' time most probably is much more wasted by spam of all sorts and by other messages that do not originate from CRM programs.

The presented "guidelines", however, are valuable advices to be incorporated in a marketing programme.

It is very hard to measure "waste of time", for what now seems a waste later may result in new leads. Generating mistargeted messages to the wrong people is wasting YOUR time too. A typical business may loose money on half or even on a larger portion [Seybold, 1998] of its customers, so identifying and targeting the top tier of your customers may become very profitable.

As for the risk involved in CRM, this is a "natural" ingredient of the entrepreneurial risk. Of course, CRM may not work out as planned, and a large portion of the presentations and discussions about CRM at these web sites deal with just that. But even with the best fine-tuned programme and pre-development research, there still remain factors beyond one's control. For instance, suppose that you had intended to launch a multi-million dollar marketing campaign on 9/12/01 or on 22/3/03, counting on substantial media coverage with TV ads, etc...

"CRM a waste of customers' time"? I don't think so. In the end it is up to your customers whether your product or service is worth their attention. If the answer is "No", no message will be able to turn that around. If, on the other hand, their experience is positive and satisfactory and if they want your product, they may want it again, which may lead to referrals. So, let's not waste any time ...

Edwin Setzpfand
The Netherlands

References:

[Eisenberg, 2003] Bryan Eisenberg, "How Are You Measuring Customers?", http://www.clickz.com/sales/traffic/print.php/1580891

[Kramer, 2002] Mitchell I. Kramer, "What Is CRM?", p12, in: Patricia B. Seybold et. al., "An Executive's Guide to CRM", Patricia Seybold Group (March 2002), http://www.psgroup.com/vm/crm

[Lowenstein, 2001] "Customer Win-Back: How to Recapture Lost Customers—And Keep Them Loyal", Wiley & Sons (2001), http://www.refresher.com/!winback

[McKean, 2002] John McKean, "Customers are People—The Human Touch", Wiley & Sons (2002), http://www.informationmasters.com

[Seybold, 1998] Patricia B. Seybold, Ronni T. Marshak, "Customers.com", Random House (1998), http://www.psgroup.com

[This message was edited by Edwin Setzpfand on 28-May-2003 at 02:15 AM.]

Vishal Sarkar
Member Council
Member

Posted 31-Mar-2003 01:23 AM
A well-written article with an eye-catching title! I would say that the piece does not put down the importance of going in for a CRM strategy but rather proposes another facet to look at things when planning for a CRM initiative.

The concern about ineffective communication being modelled as a "CRM strategy message" is very real and can distort the entire purpose. The content of such a message cannot be a factor to disqualify CRM and treat it as a time waster. There is much more to a customer-centric approach and initiative.

The idea of pre—development research is great, shouldn't that already be a part of the CRM definition? I guess the author is trying to bring focus back to the idea and recommends some good pointers.
Before preparing for such an initiative, shouldn't an organization ask questions like—

—‘Why' are they going in for a CRM initiative? (Mission and goals)

—‘What' are the processes through which they going to do to achieve the goals?

—‘How' are they going to implement these processes? (Touch points, messages, etc.)

If they do so, the above exercise should get some clarity on how the organization would like to approach the customer and what is the ‘feeling' they would like to pass across through their message. This ‘feeling' should be in congruence to the ‘feeling' that the customer expects (that which addresses the customer need).

This is where the pre-development research should come in. ‘Listen', ‘Tune In', ‘Understand', ‘See from the customers' eyes' are all the terms that come up about identifying customer needs.

If the research on identifying the customers' needs is done systematically and extensively, then can the processes designed for catering to them, be successful. Many organizations work on assumptions of what ‘they' think the customer wants. This is one event that may lead to misplaced marketing campaigns and messages....decrying CRM as a time waster!

Vishal Sarkar

Graham Hill
Guru
Member

Posted 04-Apr-2003 06:56 AM
Vishal

I read through the article too and came to roughly the same conclusion as you; that the author was promoting the use of better customer insight as a precursor to outbound (and inbound too in principle) communications.

I can easily buy the idea that better customer insight should lead to better CRM, all other factors being equal. What I find harder to buy is the suggestion that just doing a bit more observational research wil give companies a step-change in insight. Sadly, in most cases it won't.

As new research in the neurosciences is starting to find out, getting to understand what customers really think is a very tough proposition indeed. Asking them what they need won't take you very far as over 95% of decisions are thought to be made automatically through non-conscious mental processes (that customers are not capable of knowing about in normal circumstances). Even the other 5% are heavily influenced by non-conscious processes and their biases.

And observing customers won't take you much further as customers invariably base their current actions on a combination of previous experience, the current situation and expectations of some future benefit. Common actions are usually carried out to cognitive scripts heavily biased by previous experiences. It is hard to identify what the impact of a future innovation will be from looking at what customers do today.

Other techniques based upon metaphor elicitation can reach much deeper into customer's non-conscious minds, but they are difficult methods to apply and time consuming. Having said that, there are well established cases (GM, P&G, etc) of the additional insight from these techniques really paying off.

I think we have to accept a that no matter what research techniques we use to think like the customer, we will never know but a small part of what really drives their behaviour. And that will potentially change over time with every new or similar experience. We can combine this deeper insight with real transactional data, but that is still heavily biased by past buying behaviour. So if we can't accurately predict future behaviour, that implies we will still have to experiment to see what really works for customers and then tune our offers continuously over time. And that means we will still be off target quite a lot and waste customers time in the process. But we will certainly be off target a lot less than we are today. As far as I'm concerned, that's progress.

Graham Hill
Independent CRM Consultant

And a warning to all readers of CRM articles in general

On checking, it turns out that many authors of seemingly independent articles are in the business of selling just such useful services. It reminds me of the old saying. "If the only tool you have is a hammer, it's amazing how suddenly everyhing starts to look like a nail".

We should all be careful of accepting at face value what may seem like balanced opinion or research in print, when all it may turn out to be on closer examination is a biased sales message hammered out cleverly to us nails. Now that is a waste of time.