Common CRM Pitfalls and Misconceptions about Customers

Common CRM Pitfalls and Misconceptions about Customers

Scott Rogersthinkjar@[email protected]

“CRM is a complete system that (1) provides a means and method to enhance the experience of the individual customers so that they will remain customers for life, (2) provides both technological and functional means of identifying, capturing, and retaining customers, and (3) provides a unified view of the customer across an enterprise.”

Paul Greenberg, CRM at the Speed of Light, 2001

“CRM is a philosophy and a business strategy, supported by a system and a technology, designed to improve human interactions in a business environment” …”a continuous business initiative, aimed at providing mutually beneficial value”... “what distinguishes CRM and its strategy from all other business strategies is that it starts with the voice of the customer and is determined by the customer value provided and derived.”

Paul Greenberg, CRM at the Speed of Light, 3rd Edition, 2004

What is CRM?

Pitfalls• Training• Strategy• Data Management• Change Management• Process• Leadership• Metrics/Analytics• Voice of Customer• Satisfaction• Experience

Best Practices• Process• Strategy• Experience• Voice of Customer• Data Management• Metrics/Analytics• Leadership• Engagement• Change Management• Training

Source: Scott Rogers, thinkjar, Review of posts from keyword search of CRM pitfalls and best practices – non-technical and non-implementation focused – 2010-12

0%

20%

40%

60%

80%

100%

54%

46%

B2CB2B

Source: Scott Rogers, thinkjar, Review of job descriptions for Director and VP level jobs (non-IT) with CRM in job title -2011 to 2012 , n=743

Line Responsibility0%

20%

40%

60%

80%

100%

120%

33%

16%

15%

55%

MarkeingSalesServiceOther

* Multiple categorizations permitted

Nearly 50/50 split between Marketing and all other responsibilities – Sales, Service, Operations/Support, Analytics, etc…

“CRM” Jobs today

Strategy

Analytics

Data Mgmt

Retention

Behavioral Insights

Loyalty

Training

Voice of Customer

Process Improvements

Competitive Analysis

Experience

Lifetime Value

Satisfaction

Engagement

Customer Centricity

Change Mgmt

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Responsibility Support

Source: Scott Rogers, thinkjar, Review of job descriptions for Director and VP level jobs (non-IT) with CRM in job title -2011 to 2012 , n=743

Key activities and responsibilities

Despite the plethora of advice about pitfalls and best practices,• the vast majority of companies are not using the words that

show they are focused on the end-results of their strategies• those that are using these words are using company-centric

words (retention – 35%, loyalty – 27% and lifetime value -17%) more often than customer centric words (experience -17%, satisfaction – 12%, customer centricity – 6%)

• In terms of insights, more are focused on the company centric aspect of customer research – behaviors (30%) versus voice of customer/customer research (23%)

Conclusions about “CRM” Jobs today

“The problem is that for the first 15 or so years of the CRM market people approached CRM in a technology-centric way and an extremely inside out way.”

Laurence Buchanan, 7/2/12, The Customer Revolution

Have we been looking through the wrong end of the binoculars?

CRM

Apparently, yes….

More than ¾ of companies have some form of customer

feedback mechanismLess than 10% think their efforts

are stellar

Source: thinkjar VOC Report, 2011

80 percent of organizations think their customer experiences are good8% of customers agree

source: Bain and Company, Closing the Delivery Gap Report

“Competitiveness is far more about doing what your customers value than doing what you think you are good at” Clayton Christiensen, The Innovator’s Solution

“Competitiveness is far more about doing what your customers value than doing what you think

you are good at” Clayton Christensen

it starts with the voice of the customer…

Paul Greenberg, CRM at the Speed of Light, 3rd Edition, 2004

Customer Mindsets

What the average American thought a minute of their time was worth US Yankelovich Monitor 2005

the average American’s per capita income= 4.5x

Feedback is Invaluable

PS: (this also explains thinking behind low churn rates…time-onomics over economics)

Hearing is a physical capability we are born with. Listening and understanding are skills developed throughout a person’s life.

80014,000

17

the average number of words people use on a regular basis

the number of meanings these words have

the average number of meanings per word

Source: Martin Hill-Wilson, Brainfood Extra, The Art & Skill of Customer Listening

Context Matters

“Humans and Thinking are like Cats and Swimming – they can do

it if they have to, but it’s very, very hard”

Daniel Kahneman, Nobel Laureate in Economics

System 1 Thinking• Fast, intuitive, emotional, sometimes irrational, impulsive• Operates automatically, with little or no effort• Unconscious, often behavior precedes attitudes• Can generate surprisingly complex pattern of ideas• Comprises the majority of human thoughts

System 2 Thinking• Slow, deliberate, logical, rational• Operates automatically, with little or no effort• Conscious, focused

Source: Daniel Kahneman, Thinking Fast and Slow, 2011

Human Thought Patterns

• Familiarity – preferring things you’ve heard about it

• Framing – being overly influenced by the context in which information is presented

• Priming – look for things you’ve been ‘told’ to look for

• Loss aversion – losing £1 hurts more than gaining £1.50

• Hyperbolic discounting – a bird in the hand…

• Salience – being overly influenced by the last piece of information you came across

• Norms and peer pressure – liking what others like

• Obedience – doing what an authority tells you

• Inertia – letting the initial cost of doing something outweigh bigger, longer-term benefits

How we process information

Source: Alan Mitchell, Reinventing Marketing blog, Market’s Very Own Climate Change

With it…. Without it…

• a sense of loss (when we forgo the benefits of the option not chosen. This leads many people to procrastinate)

• decision anxiety (fear of making the wrong decision)

• decision regret (“Damn! I did make wrong decision!”)

• fear of decision-regret (sometimes, we’re so worried about making the wrong decision that we end up making no decision at all. Tragically, the bigger the decision the more likely this is to happen

Choice is good, but has its costs

Source: Barry Schwartz, The Paradox of Choice

• Buy the one I know I like (decisions based on experience)• Buy what I bought last time (reduce research costs and risk)• Buy the one I always buy (habit + research and risk reduction)• Buy the one I’ve heard of (risk reduction)• Buy the ones my friends recommend (research and risk reduction +

peer pressure)• Buy the cheapest (value and/or necessity)• Buy the most expensive (quality, status seeking, special occasion)• Buy somewhere in between (‘hedge my bets’)• Buy the one that’s easiest to buy (convenience, hassle reduction)• Buy the one with the biggest discount (value, bargain hunting)• Buy the one I like the look of (impulse, aesthetics)

Coping with Choice

Source: Alan Mitchell, Reinventing Marketing blog, Market’s Very Own Climate Change

Beliefs & Values

Hurdles (time, resources, space…)

Constraints(expectations, memories, fears, perceptions…)

Influences, Impulses…

CONTEXT

Consideration Sets

MemoryMemory

Prior Experiences / Events /

Conversations

Post Experiences / Events / Conversations

TIME

EVENT

Perceptions

Source: Value-in-use and exchange value: Irene Ng

Value Perception

Customer lens Company lens

Rational loyalty• Rewards/Perks

Irrational loyalty• Habit/inertia• Convenience• Familiarity• Lack of Alternatives• Fear of change• Risk Aversion

Affinity loyalty• Belonging• Connectedness• Emotional bond

• Locked-in• Repeat purchases driven

by:• Something• Product preference• Brand preference• Incentives• Strong emotional

bond• Increased interaction

with the brand

Loyalty


• Willingness to share or invest precious resources (time, information, attention) in exchange for preferential treatment

• Emotional bond with brand/company

• 4 types: mutually beneficial, parasitic, predator/prey and competitive

• Series of interactions or transactions over time

• Preferential commitment to a brand/company

• Strong emotional bond with brand/company

• Building step to lifetime value

• Willingness to share or invest precious resources (time, information, attention)

Relationship


• Result of outcome of perceived performance versus expectations (of

product/service/interaction, etc), filtered by time,

memory and post-experience environmental

factors• System 1 thinking• Static point in time

assessment

• A silver bullet metric• Key building block for

loyalty• Emotional measure of

outcome of experience with touchpoints

Satisfaction


• My perception of the experience is my

reality• Perceptions are

unique• Perceptions are

influenced by other pre-and post

experience factors, some of which have

nothing to do with the experience

• Perceptions are influenced by expectations

• Sum of every touchpoint• Sensory stimuli and

emotions generated while using product/service

• Impact of touchpoints on rational and emotional needs and expectations of customer

Experience


• Defined by the customer

• Influenced by company, friends,

family, peers, reviews, etc…• Sum of all perceptions,

associations and attitudes held by

customer

• Differentiator• Market asset created

by marketing• Reputation• Emotional bond with

customer• Sum of all perceptions,

associations and attitudes held by customer

• Measure of NPV of future revenues

• Premium pricing potential

Brand

Bond

Advantage

Performance

Relevance

Presence

Emotions

Interaction w/Org

Tech. Performance

Process/Support

Core

Brand Pyramid

Customer Satisfaction Pyramid

Company lens versus Customer lens

Emotions

Interaction w/Org

Tech. Performance

Process/Support

Core

Customer Satisfaction Pyramid

the essence of what we offer

the infrastructure that supports and enhances the core

how well we perform on product and process promises

how people are served and treated

how we make them feel

Source: James Barnes, Secrets of Customer Relationship Management, 2001

“Things that the company and its employees provide and do at each level take on progressively more importance in terms of their influence on customer satisfaction…addressing progressively higher-order customer needs, similar to human needs in general as described by Maslow…and adding progressively more value for the customer.”

Job(s) to be done

Value in use

Investigation Awareness Intent Purchase Support

Customer Shopping/Experience Journey

Customer Value Journey

Value Journey

“CRM is a philosophy and a business strategy, supported by a system….

• which starts with the voice of the customer• Provides a means and method to enhance the experience• Aimed at providing mutually beneficial value

Paul Greenberg, CRM at the Speed of Light

What is CRM?

“..a Customer does not value a relationship with the company, but mostly values the outcome generated from the experience of using your product or service…”

Wim Rampen, Social CRM – What Relationships Shoud You Care For and Why, 2/2/10

What is CRM?

Understanding what customers value / want / need

• Understanding the customer’s needs and values is critical to success - it’s their successful outcomes that matter

• “Your product/service is a means to an end, and thus, they are creating value WITH the product, not FROM the product” (Wim Rampen)

• Understanding the customer’s mindsets and perceptions are critical to crafting strategies and processes to improve the experience from their standpoint

• Attitude (or sentiment) does not always equal behavior. Identify when they do and don’t and develop strategies and tactics accordingly.

• There are NO single, silver bullet metrics for satisfaction (CSAT, NPS, etc) or loyalty (or customer effort) that will help you grow and improve your business. Why customers do what they do is not that simple!

• Measure what is important to the customer (outcomes, etc), not just what is important to you. Measure what you can take actions on, and those that have true cause and effect relationships.

• “Your customer may not always be right, but your customer is always your customer, and therefore, should be cherished.”

Liz Kislik,what your customer should and shouldn’t have to do for you

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Documents

Common CRM Pitfalls and Misconceptions about Customers