Feature story from CMO.com

Don't Use CRM To Automate Bad Behaviors

Here’s the good news about the state of CRM today: Most companies recognize the financial value resulting from improving their customer experience (CX) and are spending the necessary dollars to acquire CRM technology and build preference centers.

Now the bad news: Many companies are focusing so heavily on their CRM technology that they are losing focus on why they embarked on CRM and preference-center initiatives in the first place--to deliver improved customer experiences.

Two quotes from recent conversations my firm, Ernan Roman Direct Marketing, had with CMOs say it all:

• “I’ve come to the realization that we are using new technology to automate our existing bad behaviors. We will be simply be increasing our ability to do more brand damaging ‘spray and pray’ due to installing the latest high-capacity CRM technology.”

• “We’ve invested millions in new customer engagement technology and just realized that we never actually asked our customers how they define more relevant communications and experiences.”

In the course of working with many Fortune leaders on CX initiatives, we have learned that their major problems have little to do with inadequate CRM or preference-center technology.
Their major problem is; not having an in-depth understanding of how their customers define meaningful customer experiences.

Therefore, we recommend that CRM and preference-center initiatives should be based on understanding how your customers define the customer experiences they want to have with your specific brand and products.

Our recommendation is based on more than 10,000 hours of Voice of the Customer (VoC) research for clients including MassMutual, Norton AntiVirus, NBC Universal, IBM, QVC, and Microsoft. 

Research findings from in-depth interviews with B2B and B2C decision makers indicate that the following six points comprise a competitively differentiating customer experience:

1. Improve the customer experience across every point of contact with your organization. Mike Rude, managing director of customer experience at FedEx Corporate Services, provided this important insight: “Too often CRM and preference-center initiatives focus on technology and process. We work hard to first understand the needs of the customer. This enables us to ensure that technology deployment will focus on delivering the optimal customer experience at every point of contact and every channel important to our customers.” 

2. "Improve the customer experience" applies to all elements of the media mix and all departments in your organization. CRM success truly hinges on effective change management. According to Forrester Research, the top "people" challenges when implementing a CRM solution include cultural resistance to adopting new ways of working (45 percent), difficulties in achieving user adoption (44 percent), insufficient planning and attention given to change management (42 percent), and inadequate leadership (38 percent).

3. High-quality experiences must be maintained throughout the relationship--not just when you are selling. “We need to think in terms of engaging customers at every stage of the customer life cycle. This causes a shift from one-way communications to conversations and thinking about content differently,” said Eric Nystrom, director of Dell’s Social Media Services Group. “Customers expect to engage with subject-matter experts and empowered employees, not corporate spokespeople. Therefore, content needs to be relevant, interesting engaging, and always on.”

4. Customer experiences must be driven by individual preferences regarding message, timing, frequency, and media mix. Said Jennifer Downes, director of direct response marketing at Lenovo NA, “For customers, the preference center is the mechanism to voice how they wish to interact with a brand. For marketers, it allows them to develop a deeper understanding of their customers. That said, the reality is that marketers as business people have metrics to meet, which may be at odds with providing the best customer experience. The key to success is for the marketer to find creative ways to meet these metrics without creating a conflict with the customer's desire for relevant engagement.”

5. Preferences must drive high-quality personalization of communications and experiences. "Based on the learnings from the VoC research, we have fundamentally redesigned the way we look at relationships with customers,” said Kris Gates, vice president of customer experience at MassMutual Retirement Services, who is driving profound changes in customer experience. “Taking a learn-pilot-scale approach to our marketing efforts, we already have several VoC research-based initiatives under way. These range from redefining how we view the customer-focused value of CRM platforms and our data, to campaign targeting and preference based communications. 

6. Privacy of preference information is essential. “Start with the end in mind,” advised Scott Frey, president and CEO of PossibleNOW. “Creating a plan for how the information is collected through the preference center and safeguarded will impact marketing campaigns and customer correspondence.”

Key Takeaways

Jeff Howell, director, subscriber communications and engagement/CRM, at SiriusXM, offered four important takeaways regarding technology, preferences centers, and delivering an improved customer experience:

• Many marketers are missing the full value of a preference center. They are viewing it as a means of fulfilling compliance requirements and capturing simplistic preferences, such as email versus mail, or Product A versus Product B.

• The real value of a preference center is to serve as a portal to engage the customer and capture information regarding issues of importance to the customer.

• Opt-in preference information should enable a customer to define his relationship with the company across multiple devices, channels, and key points in the customer's life cycle.

• “Marketers have to become smarter about using technology not as a silver bullet, but simply an enabler to deliver on a competitively differentiating customer experience,” Howell said. “Too often marketers lose focus on the customer and get distracted by the operational requirements and capabilities of the technology.”

Another takeaway, courtesy of FedEx’s Rude, is to avoid the mistake of becoming enamored by technology’s promise. Focus on understanding what the customer wants and how to use technology to deliver on those expectations, he told us.

We’d like to add one final takeaway: Internal decisions about technology need to be guided by external customer insights. Installing CRM technology without understanding how customers define relevance, engagement, and preferences will simply result in getting the latest technology to automate existing bad behaviors.

Why Isn’t Your Customer Service Better?

Challenge: At a time when good customer service would be assumed to be a core competency, why are so many companies still not delivering good to excellent customer service? What needs to be done differently?

Here’s how things went in my own recent experience with a major online movie-viewing service;

Abrupt email from the company:
What is the problem and how would you rate our customer service? 

My Reply:
I entered my credit card information into my account several weeks ago. I still cannot charge a movie.

My original request was on February 25. Today is March 15. No one ever responded to my repeated emails and voice mail messages.

Given the above, how would you rate your customer service?

They never replied.

Based on similar instances we have all experienced, following is a question every company should consistently ask themselves; “Why isn’t our customer service better?”

According to a Forrester study, “Top Trends For Customer Service In 2014” the following are high-value areas for customer service improvement;

• Anticipate the what, when, where and how for customers, and prioritize information and functionality to speed customer time-to-completion.

• Investigate methods to recommend “next-best actions” during the service resolution process to offer service tailored to the customer’s unique needs.

• Make experiences consistent. Forrester observes that 60% of companies gather feedback about their interactions with a company; however only 33% analyze customer insight across organizational boundaries.

According to a Tempkin Study, What Happens After a Good or Bad Experience, 2014, it was noted that:

• More than half of the customers who encountered a bad experience… either decreased their spending with the company or stopped altogether.

• Data shows that a good service recovery effort can help mitigate a bad experience. Unfortunately, many firms…aren’t very good at service recovery.

• After a bad experience, 60% tell a friend directly, 31% share on Facebook, and 20% write a review.

5 Takeaways

1. Understand what customers want in a good customer service experience. How do our customers define good customer service? If you do not fully comprehend what customers want from you, it is impossible to deliver a good experience.

2. Regularly monitor practices to be sure that they are in line with current customer demands. Are your customer service policies outdated? Set a regular interval to monitor your company policies and employee practices to be certain they meet the expectations of customers.

3. Get buy in at all levels for your customer service initiatives. It does not matter how many policies are put in place if these policies are not put into everyday practice at every level and every point of contact within your company. Consistency in customer experience is key.

4. Develop a “listening” strategy to monitor customer conversations. If you do not know what customers are saying about your company it will hurt you. If you do not have a social media team now is the time to start one. Active listening will allow you understand the challenges that customers face and respond quickly.

5. Make contact easy. Are customers able to contact you for service related matters across all channels? If not, then expand your accessibility. Customers do not want to work to find solutions to their problems or get their questions answered.

Walgreens: Tips for Transforming the Customer Experience

“Never in my 31 years with this company have I ever seen customer satisfaction jump like it does in these [Well] Experience stores. Customers keep telling [us] they want to stay in those stores longer, which is music to a retailer's ears.”

This quote is from Gregory D. Wasson, President and CEO of Walgreens. The company ranked 89th on this year’s InformationWeek 500, a list of the top technology innovators in the U.S and also listed as the highest-ranked company in the retail category.

Walgreens is moving away from a product-based approach and towards a fully encompassing consumer experience they call, “the Well Experience.” This new approach seeks to transform the customer experience across all of the company’s touch points, channels and formats.

“We are taking a multi-pronged approach to delivering the Well Experience. We increased engagement [between] team members and customers, and an omni-channel approach that blends our brick-and-mortar stores with e-commerce and mobile commerce. We are deliberately blurring many retail channels to fit how consumers shop today.”

» Walgreens is expanding across channels to combine physical locations with superior online experiences such as the company's acquisition of Drugstore.com which advances meeting that objective.

» They have added mobile device capabilities in the past year to include prescription refills and transfers by scanning the pill bottle; QuickPrints, an application that enables users to print photos directly from their devices to any Walgreens store; and in-store maps that allow customers to use a digital shopping list to map and locate items in a store.

» The company’s Balance Rewards loyalty program has seen more than 50 million people enroll since its introduction.

This shift is in line with ERDM findings regarding how consumers, (BtoB and BtoC) define the customer experience:

» Preferences must drive high quality personalization of communications and experiences.

» Consumers have shifted from being passive recipients of ‘push’ marketing, to selecting companies which engage, listen to, and act on, input from customers and prospects.

» Satisfaction with a product is now a given, engagement is what counts.

5 Key Takeaways

• Give customers what they want... and they will want to do business with you.
As a result of preference-based interactions, consumers are more willing to respond to communications and offers.

• Customers expect a multichannel experience.
Marketers must deliver on the expectations of improved customer experiences with consistency across every channel and point of contact.

• Be Flexible and open to change
Make customer listening part of every functional area, not just marketing. And, be flexible about acting on what you learn from customers.

• Continually monitor how your company interactions impact every customer experience
Be sure your policies and communications are in line with customer preferences… across every channel and every company department.

• Designate a Team
Establish a dedicated customer experience team to develop and execute an enterprise-wide plan to set customer experience standards and set milestones for adoption by every employee and department.

Delta; Preference-based Offers for Friendlier Flying

The Challenge: The airline industry has been fighting passenger negativity regarding a barrage of fees for services that were once free and taken for granted. Now airlines are following the path of retailers and using consumer preference data to create brand new personalized (fee-based) upgrades.

Airlines are learning what Voice of Customer research has shown time and time again—traditional transaction-based data is not sufficient to drive the level of truly personalized, preference-based, experiences and offers that consumers (BtoB and BtoC) now view as valuable and competitively differentiating.

Listening based on customer signals is key. Companies need to utilize information from analytics, customer-volunteered preferences, behavioral-inferred preferences, and triggers in order to develop personalized product/service offerings.

ERDM research indicates in order to offer consumers a valuable preference-based experience companies need to fully understand:

» Customer’s preferences
» BtoB and BtoC customer usage of products and services
» Customer purchase intent and decision behaviors

» Where a customer is in their BtoB or BtoC lifecycle relative to the product/service
» Appropriateness and acceptability of upsells/cross sells.

Delta Airlines has made a big push toward preference-based services. Delta CEO Richard Anderson noted that they have massive amounts of data, "We know who you are. We know what your history has been on the airline. We can customize our offerings."

Flight attendants will use on-board mobile devices to improve the customer experience:

» Offers per customer's preferences.
» Near real-time credit card processing for on-board purchases, including upgrades.
» Convenient eReceipts that can be emailed to customers.
» Customer's use of pre-paid credit cards for on-board purchases.
» Quicker transaction processing times.
» In the near future, the ability to read coupons displayed on a customer's mobile device.

Three Takeaways

1. Who are your customers? Categorize customers by groups based on when, why, and how they interact with your company and use your products. Understand unique group preferences and develop customer service, product suggestions, and communications based on their buying habits, perceived acceptable price points, and desired product upgrades/suggestions.

2. What kind of relationship do your customers want? Develop personalization data capture techniques via surveys, order-taker questions, and customer service calls in order to define customer preferences. Code the collected data by group segment so you have the actual answers needed to develop relationships, product offerings, and sales strategies based on customer requirements.

3. What is the actual customer experience your customers have now--and are they happy with it? If you do not have a real life view of what it is truly like to do business with your company from the customer perspective you will never know what to improve—or, how much more effectively you could be meeting their needs. Customers want be heard— so listen to their requests, suggestions, and comments. Monitor patterns in purchasing. Know what your “push back” points are from customers and know what they are willing to accept for a perceived value or benefit.

Social Media Crises: 3 Tips for Calming the Storm

The Challenge: No company is immune to the possibility of damaging comments, posts and tweets. So how do businesses prepare for unwanted attention on far-reaching social channels? Here, we look at a few companies that have weathered the storm and provided some valuable lessons.

Step 1: Create a social media crisis plan before a crisis erupts. That way, you can address damaging comments and reactions swiftly and professionally. By having a plan in place, you hit the ground running -- a critical step when a social media firestorm ignites. In April 2010, BP had no plan when it found itself in the midst of a crisis when oil spilled into to the Gulf of Mexico. Sadly, the company made several missteps. It failed to own up to what happened, it made statements that didn't align with the truth, and it lacked follow-through with solutions.

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Step 2: It is a given that customers will share service snafus and other experiences online, so it's imperative that companies monitor what is being said. KFC learned this the hard way when a disgruntled customer posted unsightly pictures of an unusual-looking substance in his chicken. The fast food chain did little to address the questionable photograph. Instead, it continued to post its regular stream of marketing messages, making it appear as if the company was trying to ignore the situation at hand. Monitor messages, evaluate and adjust your plan as needed.

KitchenAid faced a similar crisis when an employee accidentally sent an insensitive tweet during a presidential debate using the company's twitter handle. KitchenAid responded quickly and with sincerity, effectively lessening backlash. Specifically, the company acknowledged the mistake, took responsibility for what happened and apologized to President Barack Obama and other Twitter followers.

Key Takeaways for Marketers:

1. Monitor your presence online. Follow online conversations so you know when potentially damaging situations are developing/have occurred. Gatorade uses a sophisticated social media command center to keep tabs on social media activity. Other companies choose to designate a point person to monitor online conversations and do periodic searches relevant to the company's brand.

2. Act quickly. When it comes to social media, you don't have days or weeks to come up with a plan. An offensive tweet can go viral in the span of a few hours. Don't sit on your response. Instead, address situations as quickly as you can -- preferably within 24 hours.

3. Remember that transparency is vital. In most cases, you don't want to delete damaging posts and pictures. Instead, you want to respond quickly and with tact. Apologize, and focus on solutions. If emotionally-charged discussions get out of hand, direct the conversation offline. For example; “We'd be happy to discuss this with you to find the best solution. What number can we reach you?”.

Strong Customer Relationships: More Powerful than Satisfaction for Retention

The Challenge: As companies grow, relationships with customers usually suffer. Larger customer files, heavier account loads, and less available time, often contribute to a decrease in engagement with customers. This begins the cycle of increasing losses of customers.

Findings from research conducted by our company ERDM indicate that engaging and forming strong relationships with customers has 12 times more influence on retention and repeat purchases than customer satisfaction. Satisfaction is now a minimum expectation.

As DMG Consulting says in their Microsoft-sponsored white paper, “In an era of intense competition, the customer experience is often the main differentiator between commoditized products and services.” In today’s consumer-centric business world, customers dictate the rise and fall of companies, and your business is completely dependent on keeping your customer relationships strong.

The key starting point for retention is understanding the state of customer relationships. Luca Paderni, VP and principal analyst at Forrester Research, says, “CMO’s and their peers...must understand what customers represent for the whole organization to help shape the strategy for the overall business.”

Once understanding is achieved, the next step, according to Walker, is closing the loop. This begins with setting alerts that indicate low customer loyalty or negative behavior, usually in the form of survey questions. After alerts are designed, a feedback system is created to ensure the information gets to someone who can act on it. There should also be follow-up protocols in place that allow staff to act on customer concerns, complaints, and opportunities accordingly. Finally, results should be documented, so the company can understand what works best and fine-tune accordingly.

This correlates with our findings, as well as the strategy used by Microsoft in the aforementioned white paper, that changing from relationships based on customer satisfaction to relationships with deeper levels of engagement - based on more in-depth understanding of their needs - increases customer retention drastically over the course of the customer lifecycle.

Key Takeaways for Marketers

1. Assess the state of current customer relationships.
Learn if you’re doing enough to meet customer expectations, and form deeper relationships with customers across multiple channels. Customers don’t just want to be satisfied, they want to be engaged.

2. Develop strategies for following up.
Create a system that will seek out red flags, notify appropriate staff members at the right time, acquire customer feedback, and use that feedback to enrich and improve customer experience.

Burberry: 3 Powerful Ways To Engage Consumers Online

The Challenge: According to a study conducted by Martini Media, luxury brands have been gradually dropping TV from their multichannel marketing mix in favor of digital media. But will the move pay off in the end? Digital darling Burberry seems to think so, quickly taking the throne of luxury online marketing by creating entirely new levels of customer engagement.

While luxury marketers have traditionally trailed mass marketers in digital marketing spend, digital media has skyrocketed among luxury agencies over the past year. Context and targeting are quickly becoming the most important criteria for luxury brands, and luxury marketers are finding a need to achieve reach through the use of niche, passion-based sites.

Digital media is perceived to be more effective than offline marketing in driving favorability, as well as online and brick-and-mortar traffic. It appeals to affluent audiences on the go, who often have more money than time. And because luxury brands must deal with an extremely niche audience that is more privacy-sensitive and difficult to reach, these customers expect an engagement experience that mass marketers aren’t capable of delivering.

With its highly successful push into digital media earlier this year, Burberry has become luxury online marketing's champion. Creative officer Christopher Bailey claims it’s become “as much a media-content company as a design company.” As proof, the company has launched its recent AW(Autumn/Winter) 2012 collection across 10 different social platforms, tailoring the presentations to best leverage the advantages of each site.

Key Takeaways from Burberry

1. Use co-creation to drive brand awareness and engagement through
user-generated content.
Taking a cue from Threadless, Burberry’s Art of the Trench photo-sharing site allows consumers and fashion photographers to document how they wear the brand’s iconic trenchcoat. This unique use of user-generated content and customer engagement has generated a massive amount of brand awareness for the company.

2. Make your consumers feel exclusive by showing them exclusive content.
In its recent “Tweetwalk” event, Burberry partnered with Twitter to post backstage pictures of every look before models were sent out onto the runway, which meant that Burberry followers were seeing looks before most members of the fashion show audience.

3. Design your content to help guide your customers down the purchase path.
In a fresh twist on direct sales, Burberry live-streamed its London Fashion Week catwalk to 25 main stores as a “living catalog,” allowing existing customers to place immediate orders on upcoming collections before the looks became available to the public. Burberry also made it possible for consumers to directly purchase items by clicking through any of the image or video galleries on their social media posts.

Facebook, Twitter, and Google: Too Big To Care?

The Challenge: Major Internet companies like Google, Facebook, and Twitter have decided that customer service call centers are obsolete. Many customers disagree.

Last week, The New York Times reported on the fact that nearly all major Internet and social media sites, including Google, Facebook and LinkedIn, have done away with call centers altogether. "The companies argue that with millions of users every day, they cannot possibly pick up the phone."

Facebook's automatic phone message explains that they cannot provide phone support because they are an "Internet-based company." This claim neglects a crucial fact: there are no "Internet" companies. All companies must be multichannel.

The key to successful multichannel service and marketing is not just to deliver "the right message to the right person at the right time”, but to do it per that customer's media preferences. As we've repeatedly emphasized, "If you focus on a single channel at the expense of others, you're neglecting a significant portion of your customer base."

Single channel service and support is based on the assumption that most customers prefer email. As The Times wrote, " Voice calls have been falling out of fashion with teenagers and people in their 20s for some time (text only, please)." This assumption neglects a huge percentage of customers―and it's false.

As ExactTarget reported in their 2012 Channel Preference Survey, "consumers still do prefer the phone under certain circumstances. ... 37% of US online consumers told us that they’ll call a company when they have an issue with its product or service."

If Facebook, Twitter, Google, and LinkedIn keep their phones off the hook, they'll be neglecting over a third of their customers.

These companies were brilliant enough to create transformational services. If they cared enough, they would figure out how to provide high quality, affordable, live customer service.

KEY TAKEAWAYS FOR MARKETERS

» Multichannel businesses provide value to all customers.
Effective businesses serve all their customers, and that's not possible without multichannel service. Give customers a full range of options, including email, live chat, social media, F.A.Q.'s―and phone support.

» Phone support is an investment, not a sunk cost.
American Express has repeatedly demonstrated the tremendous value of engaging customers on the phone., For businesses to argue that they cannot "afford" to speak with millions of customers is to miss an opportunity to grow engagement and revenue.

» Support quality directly impacts customer perceptions and brand equity.
Studies and statistics aside, one customer The New York Times spoke with made the essential point. After failing to reach Twitter via phone for two days, he said, "The plain and simple fact is that they’re too busy or too important to talk to us." Brand perception doesn't get much worse.