When I look at the companies across the service sector, I realize that most of these companies in businesses like telecom, banking, insurance, retail etc. have made considerable investments in Customer Relationship Management (CRM) software and continue to do so as I write. When I think of it, I realize that most CRM applications capture and report what a company knows about its customers. It monitors transaction data, market research data, website click-throughs etc. to give inputs on cross-selling and bundling of products with those with lower demand. It tells you to place diapers next to the beer rack in a retail store. It tells you that a particular mobile phone subscriber is not sending enough SMS messages and rolls out an offer to him to incentivize or create triggers for using this service more frequently. It tells a bank that a ULIP-based insurance buyer might also be interested in mutual funds. So much for number crunching and data-mining. But, I still feel that this is a reactive approach and is a lagging indicator of future business performance.
What companies need to work on is Customer Experience Management or CEM, which I believe is a more cost-effective and transformational approach. Put simply, Customer Experience is the response customers have to any direct/indirect contact with a company i.e. customer touch-points like stores, branches, website etc. Interactions with the touchpoints shape the perceptions about what a customer thinks about the company. CEM borrows from ‘voice of customer’ research to come up with insights about how the company performs on each customer touch-point. Since CEM focuses on how customers feel about the company and captures ‘emotions’ rather than ‘rationality’, it is a potential leading indicator of business performance. After all, the ‘economic man’ or the ‘rational consumer’ is resting in a grave. Purchaing decisions are increasingly governed by emotions. For instance, how many customers can discern the difference between Nike and Adidas shoes or why does a customer pay a premium to shop at a particular departmental store. CEM can throw up interesting insights about how is the company performing on each touch-point and what fine-tuning is required. And if you are able to slice the data by channels/locations/branches/stores, you have all the information about how the touch-points need to be refined at a local level apart from the enterprise level process changes. This surely is the next phase of managing customer relationships and creating advocates for the brand.
Of course, companies will take time migrating to this new approach because of the huge investments that they have already made in expensive CRM stuff and they need to show the return on it. But, the smarter ones will transition and start using CEM in combination to deliver value and create positive relationships with customers.