crm customer driven innovation generating knowledge not just metrics


“Companies’ interaction with customers has expanded, transaction costs have been reduced and enormous customer data has been amassed. But to achieve greater customer loyalty and profitability, firms will need to adopt new approaches to managing customer relationships. They must also learn how to exploit customer knowledge to drive innovation. The use of analytics and networking tools will be central to these efforts.” Corporate adoption of customer-relationship management (CRM) technologies has advanced far and wide over the past profiles of target customers for the service. Within months of the launch, Tesco became one of the U.K.’s leading credit decade. But for most companies, the desired benefits in the form of increased customer loyalty, retention and card issuers by volume. Slowly but surely, recognition is growing that customer profitability remain elusive. Many firms have used CRM to improve customer servicing efficiency and reduce relationships offer value to firms beyond direct sales revenue, and that capturing it requires more than efficient customer transaction costs, amassing substantial data about customers in the process. Few, however, have moved to the next level to service. In other words, customers have a role to play in innovation: indirectly through the capture of high-quality implement truly customer-focused business strategies. Among the select few are companies such as online information about their preferences, and directly through inputs to product and service design. retailer Amaz.com, which unlike many firms, has endeavored to fit the organization to the customer and not the other way around. “We start with the customer and work Advances in data analytics will help make this possible. So will adoption of IP networking. Voice over IP, hosted CRM and multi-channel contact management, for example, back,” says Greg Berman, the firm’s director of platform and communications. Amazon has also made a virtue of will help firms transform contact center operations. Secure networking technologies, such as IP virtual private networks, generating knowledge from customer data and—with the help of technology—systematically tailoring product will also enable direct customer involvement in the innovation process. Take the manufacturing sector: three out of four respondents to a recent survey conducted by the offerings based on it. Another is Tesco, the U.K.-based food retailer and the Economist Intelligence Unit and Sun Microsystems say that, within the next three years, they will begin to use IT to world’s largest online grocery store. Tesco has built on the sophisticated analysis of existing customer data to launch involve key customers directly in product design. Manufacturers will extend network access to integrate successful products far beyond its core portfolio. For example, when the company launched a credit card, thorough analysis of loyalty card data allowed it to build customers into internal feedback loops to obtain their input intohow products should be built.
Generating Knowledge, Not Just Metrics “All customer interaction drives profitability,” says Cristina Zanchi, CRM director for the Dutch airline KLM. “You get more information about the Paul Greenberg, executive vice-president of the U.S.-based CRM Association, sees a transformation under way in how firms view customer relationships: “The most significant shift that’s occurring is a ‘right-brain’ customer, and give it back to make the experience a better one.” For KLM, cabin staff are at the front line of CRM. Before each flight, a central one. The behavioral side has been under-funded in comparison with the ‘left-side’—covering customer metrics. There’s an increased focus on customer database now delivers to pursers, via a secure IP network, a list with each passenger’s frequent flyer status. Since initiating this practice, providing the optimal experience for the customer.” Part of the shift involves supplying customer service in the channel ‘personal recognition interactions’ with its most valuable frequent flyers has increased markedly. Among the results: in 2004, KLM’s known closest to what the customer prefers. “Customers have to be able to craft the experience they want,” says Greenberg. This is ‘whole-brain’ CRM. For a start, international firms have to be alert as to which channel the customer wants to communicate through, be it texting on mobile phones customer base grew by roughly 20%; its database of frequent flyer email addresses tripled in size; and most importantly, revenue from known customers increased by 5% during a rough year for the airline industry. or web interaction. “We’ve had metrics for a long time,” adds Greenberg. “The new part is mapping the customer experience.” Analytics: Mining for Gold Power to the Customer Most companies remain weak on identifying their most profitable customers. Here is where data analytics will make a difference, once the applications and tools become more advanced and easier to use. But analytics are already playing a role for some firms. As we’ve already noted, Customers are becoming ever more demanding and are gaining the power to make their demands heard, in a the U.K.’s Tesco relies on its core CRM tool, a loyalty card, to supply a wealth of data on customer behavior. Tesco’s marketing manager, Tim number of ways: Mason, has gone on record to say “We couldn’t run our business without Clubcard.” One more example: through the use of web-based analytics,
• Firms’ ability to differentiate themselves through their products and services alone is diminishing fast, and Tesco found that newcomers to its online shopping service were giving up halfway through filling their ‘baskets’, having become frustrated wading customers know it.The quality of their relationship with the supplier is becoming as or more important through thousands of product lines. Its solution was to present first-time visitors a ‘favorite list’ drawn from their Clubcard data, which came from than the quality of the product itself. the customers’ own off-line buying behavior. Adroit use of analytics can also help companies to optimize
• Customers are now more empowered with the ability to access services with numerous technologies.This customers’ channel use. Intimate Brands, which markets the Victoria’s Secret line of fragrances, analyzed its customer base to identify and profile expands opportunities for providing service but also makes customers more volatile. (They can even switch 100,000 recipients of a special direct mailing for a new fragrance, dubbed ‘Dream Angels’. The mailing, which invited customers to visit a Victoria’s brands ‘on the move’ via a mobile device.) Secret store to sample the new line, proved successful in moving catalog- only clients to the retail counter. Further analysis showed that customers
• Customers are more savvy than in the past. Using multiple technologies, for example, they are able to do who buy Victoria’s Secret products through all three channels—retail stores, the web and catalogs—spend three to five times more than price-matching on the web.They are also armed with far more information about the market—for instance customers who buy through only one. An emerging use of analytics is to identify when a customer is likely to via web sites like Epinio.com. lapse. “Discovering a lack of usage can be very useful,” says Richard Clarke, vice-president of products for European analytics specialist,
• These more sophisticated customers expect to be recognized when they contact a company, via Alterian. After all, keeping an existing customer is widely understood to cost significantly less than acquiring a new one. Discovery of a potential whatever channel they choose.They also demand that the information held about them is up to date and lapse may, for example, signal the offer of another trial service to get the customer back on board. accurate, and is consistent across all points of contact. Companies will need to have these CRM bases Toensure that customer data is acted upon, Clarke believes a crucial next step is to deliver the right tools to the computer screens of marketing departments in an easy-to-use, drop-down format—possibly via an covered to ensure a satisfactory customer experience, and a chance of keeping the customer in the fold. Application Service Provider model. Currently, analytics tools tend to remain in the hands of analysts or IT specialists, whereas it is non-technical marketing staff who will be able to make the most of them. Hybrid staff who understand both the marketing and the data analytics dimensions of CRM will emerge, but CRM Proves Just the Ticket for ebookers it will take time. Let’s Work Together As with so many business transformation initiatives, the effort to take customer servicing to the next level must start by getting different ebookers, a European online retail travel agency operating in 14 countries, started its CRM business transformation in September 2003. It specializes in high-margin, long- and mid-haul travel, and has 850 divisions to work in unison. Breaking down the departmental silos is thus essential in the European staff. Previously, CRM was “pretty well non-existent” in the company, says CRM director Giles Cuthbert .ebookers made quest for the ‘single customer view’, where all interactions are brought together. It is also the decision to re-structure the organization around customers, not products, he says, and the impact on customer loyalty has been critical if customer-driven innovation is to take root. “CRM requires very good departmental integration,” says Jason Chu, chairman of the Asia Pacific Customer Service Consortium. “It noticeable. In December 2003 repeat customers comprised 15% of the total; they have since risen to 26%. has to be there before even forming a customer relationship strategy. CRM doesn’t stop at the The firm has used CRM software to identify key customer segments, such as: parents with children who have left home; time-poor/cash-rich customer service department; it should expand to the entire organization.” Sometimes, though, earners; families; and wealthy people living in rural areas without travel agents.The software centralizes customer data and offers intelligence it gets mired for the simple reason that departments are unwilling to share and personalized recommendations to service agents during every customer interaction.The CRM tool also produces a single information. All but a few organizations have succeeded so far in achieving the ‘single customer view’ so fundamental to good customer relationship management across the enterprise value chain. communication for each customer segment, replacing the several different brochures that had been generated by the direct marketing Consistency across the organization— of customer data and customer service response—is the desired benefit of breaking department. A major effort under way now, according to Cuthbert, is “to move more offline customers online, to capture new customers on the web and to retain them.” down silos. “Pre-CRM, we had a problem with consistency of responses,” says Dennis Upton, CIO of Brother International, manufacturer of printers, faxes and other electronic machinery, which receives 1.8 million service calls per year. “Customers would get different responses from a person who’d been there two weeks and one who’d been there two years.” By using a means of capturing customer information. “It was a gold mine we weren’t getting,” says becoming nearly as important as ensuring a satisfactory customer experience. The ability to solutions database with detailed FAQs and answers, the aim is for the customer to get Upton. “Now there is scope to use the information to improve processes and products, and provide added services,” he says. field and respond to customer service requests through multiple communication channels the same response from each agent.
Although Brother sells through its distribution channels, customers contact it directly. Prior to In other words, Brother sees its upgraded CRM as a building block to achieving customer-driven innovation. For companies offers similar opportunities—along with the real risks of generating customer displeasure its implementation of CRM in 2001, the national service division had an ‘issue’ with and forfeiting customer knowledge if mishandled. In this context, the proficiency with which firms utilize IP networking like Brother, customer interaction at the contact center is a focal point in this effort, where the calls—people were not getting the required service, and Brother had only rudimentary ability to garner vital customer information is technologies to support customer interaction can make—or break—their efforts to take customer relationships to the next level.
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