Customer Relationship “Management”: The Invisible Paradox
News Article -- February 09, 2011
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In the world today, there isn’t a single company, regardless of its size, that can afford to neglect its customer relationship management – except perhaps in the suburbs of Pyongyang. It must be said that the promise offered by CRM is bewitching. Creating a loyal customer is 5, 7, or even 10 times less costly than securing a new one. Loyal customers consume more. They choose for offerings with greater added value, thus with better margins.
Loyal customers are so happy to be loyal that they communicate in a natural and productive manner with the company, which would need little further encouragement to simply put the entire marketing apparatus in their hands.
Even in 1516, Thomas Moore didn’t describe such an ideal and utopian world! In all fairness, the marketing concerns of the trading world were not the same then as those that preoccupy us today.
Redefining strategic objectives
Veteran marketers thus have to “manage” the relationships they have with their customers, with the goal of realizing a hypothetical ROI. Paradoxical? No. But often hampered both by poorly defined strategic objectives and frequently seriously flawed implementation. In 2002, Frederick Reichheld and his colleagues identified the four primary causes of failure for CRM projects. Designing the CRM system before developing the customer strategy. Launching a CRM programme before adapting the business organisation correspondingly. Assuming that the best approach is a surfeit of CRM technology. Stalking customers instead of seducing them.
Recreating a balanced relationship
The invisible paradox is born of the concept itself: “customer relationship management”. A relationship can’t be “managed”, and certainly not unilaterally. Applied literally, the concept leads inexorably to a dead end as postulated by Reichheld, and the pitfall of assuming the passive and docile acceptance of the other party essential to this process of “management”: the customer. A result that is further amplified if the customer already has a history of half a century of modern consumerism.
Furthermore, the customer acts and reacts in an economic environment in which supply is myriad and demand scarce in an austere macroeconomic climate. So the advantage is without a doubt on the customer’s side. Clearly it’s indispensable for the company to acquire the tools and techniques that will help it better understand customers and anticipate their needs. But this is not “managing” the relationship – it risks reducing it to something mechanical, automatic and thus far less valuable. Such tools should only support a crucial strategy for securing the loyalty, freely given, of the customer – a customer that cannot be distilled into a simple line of code.
Satisfying customers to make them loyal
No-one disputes the economic advantages of having customers that decide on their own initiative to purchase repeatedly from the same brand or store, or that sing its praises. Loyalty is indeed a source of potential riches. But if trying to secure the loyalty of customers comes down to favoring them, such that they want to be loyal, it remains to be understood what exactly favoring means. Behind this action are four strategic questions. Favor whom? Why? When? And above all, how to favor them? If there has to be “management”, it should be of the techniques that enable answers to be found to these questions. For a long time now these techniques have been used to create loyalty among satisfied customers, whereas they should have been used to totally and continuously satisfy loyal customers.
Alter Eco adds a carbon footprint compensation indicator to its products, so its customers are totally satisfied. Sysco is committed to continuous training (in management, cooking, marketing, etc.) of its restaurant management clients, enabling them to continuously adapt to the social and economic environment, thus allowing them to see the benefit of their loyalty to this American leader in the sector.
About the author
Jean-Marc Lehu is a research professor and communication director at Université Paris I- Panthéon-Sorbonne, and is also a consultant. He contributes among others to the branding strategies of Etiome. Jean-Marc Lehu has published numerous works, among which Stratégie de Fidélisation, published in 2003 by Eyrolles.