Two business ventures were launched. Both sold the same products at a comparable price. Both spent considerably on packaging and advertising. Both developed strong retail distribution locations as well as a considerable share of sales over the Internet. Both appeared to be on an aggressive growth trajectory, initially garnering considerable marketplace attention and activity. A year later, one was still growing, while the other was forced to liquidate.
The difference?
The business that succeeded realized the vital importance of strategically attracting and managing a customer base, and maintaining its trust; the other did not. The business that succeeded realized its ability to attract and influence customer behavior would determine its success; the other did not.
True story? Yes, many times over. Take a look around — the reality is played out daily in our commercial world.
Enron's downfall ultimately was due to violating the trust of its customers and the general public.
Arthur Andersen slipped by losing public perception and then its customer relationships almost overnight. Their competitors won by maintaining client trust.
The Wall Street Journal writes “…value today is increasingly derived from intangible assets — intellectual property, innovative technology, financial services or reputation…the value of such assets can erode with shocking speed if customers find something better.”
Intangible assets are becoming the drivers of business value.
Indeed, the customer base has become the key to success in a competitive business climate. Customer relationships are making it closer to the top-of-asset entries on corporate balance sheets.
Realizing this, many organizations have pursued formal customer relationship management initiatives over the last three to five years. But unfortunately the basis for many of these initiatives was flawed. A few critical issues arose:
Rather than being focused on customers, these initiatives were very much focused on improving sales, service and marketing operations.
These companies readily dived into very tactical “better customer service” and “improved sales process” efforts. While they're important, they quickly turned customer focus away from business strategy and almost lessened the attention the campaigns should have received.
Most such plans were short on measurement and lacked clarity when it came to the relationship between customers and profitable business.
Customer strategy integration is essentially the next generation of CRM. It targets the challenges that turned a good concept into a difficult reality for many organizations.
Essentially, customer strategy integration addresses how to drive business value by very deliberately attracting a customer base and driving profitable customer behavior, and aligning customer and company goals and objectives. A few things to consider:
Bottom-line focus
We are essentially talking about driving measurable business value (measurable by increased revenue, decreased costs and greater value of assets). As shown in the chart on this page, intangible assets are where the game is being played these days. When we're looking at customer strategy integration, we're looking at “having customers on our side” by maintaining their trust and loyalty.
Strategic direction
Focus on strategically attracting a customer base. Most businesses fall woefully short when it comes to strategic acquisition. The focus of most growth has been on speed and aggressively attracting customers. Strategic customer acquisition essentially involves adopting a recruiter's mindset, defining who you expect your customers to be and what they'll do over time, and then using that intelligence as a means of finding those most likely to follow along. It will require more resources, time and effort, but it'll be worth it when you realize you have a fit rather than a “misfit.”
Influencing behavior through intelligence
Many have questioned the extent to which you can really manage customers. But managing customers was never really CRM's intent — managing relationships with them was. The goal is to influence their behavior.
To have any effect on today's marketplace requires a comprehensive, dynamic, data-driven understanding of customers' motivations and attitudes as well as their characteristics and behavior. Customer profiling, segmentation, value analysis, life-cycle analysis and loyalty analysis should be used to drive customer strategies. And these should not be considered one-time research projects. Rather, it all should become a continual, dynamic process of gaining customer understanding.
Organizational alignment
Aligning customer and company goals and objectives is critical. Customer strategy integration eventually results in a common set of goals and objectives that lead to a win-win situation: Customers win by gaining value from your company; you win by getting their ongoing business.
A customer-centric business model involves an internal transformation that extends well beyond the tools and technologies typically viewed as CRM solutions. A true CRM solution is an organization built around customers. Success is based on your ability to enroll customers in this promise.
Melinda Nykamp is vice president of strategy integration services at Fair, Isaac and Co., Oakbrook Terrace, IL.
