Getting Real Results
Customer relationship management gurus have integrated billions of bytes of customer data from dozens of divergent databases — and spent hundreds of millions of dollars in the process.
On the surface, this may sound impressive. But the whole exercise has left many CEOs at a crossroads, wondering “What has this gotten me? Where are the real results?” Far too often, the answer is that little has really changed in the way companies communicate with customers, and tangible results are nowhere to be found.
How did we get to this point? CRM has faced some very common challenges. As with many great marketing concepts, it’s been implemented primarily by technology firms, and these CRM integrators have lost sight of the end zone: customer loyalty and retention.
What good are all those customer databases if they don’t produce measurably improved loyalty toward the company or brand? That’s the question that has CEOs scratching their heads and asking, “What should we do now?” Now is the time to focus on building customer loyalty and improving retention. Here are five things to consider when evaluating the results of your CRM efforts.
Forget Price, Quality and Service
No, we haven’t gone mad. Neither CRM nor customer loyalty will solve problems related to price, quality or service levels. Hopefully, you have teams of experts to handle critical customer issues.
Satisfaction Doesn’t Equal Loyalty
Customer satisfaction research is valuable. It helps companies focus on and measure how customers feel about products, services and brands. But many executives continue to make the incorrect assumption that customer satisfaction means customer loyalty. While it’s true that dissatisfied customers are not likely to be loyal, it can’t be inferred that satisfied customers are destined to be loyal. Loyalty involves different aspects of a customer’s relationship with a product or company. And although satisfaction and loyalty are related, don’t assume they’re the same thing.
Consider this: If you’re thirsty and I give you a Diet Pepsi, while it may “satisfy” your thirst, your true loyalty may still be to Diet Coke.
Know Your Best Customers
For a CRM system to be worth its cost, it must deliver a clear view of who your best customers are today, and who they will be in the future. This includes a system of scoring customers based on both current profitability and future growth potential. While it’s important to break these groups of valued customers into similar clusters or segments, it is critical for you to be able to identify customer potential where it counts at the individual customer level.
Treat Everyone Differently
Not all customers are created equal. Your airline knows this, hotels know this, car rental companies know this. But many companies refuse to acknowledge this crucial fact of business. I’ve just noted the importance of knowing who your best customers are and which ones have the greatest growth potential. You want to retain those customers who deliver the most profit today, and develop those with the greatest future potential.
This is the core philosophy of loyalty marketing. Different customer treatments may include the effective use of personalized communications, tangible rewards or unique recognition, services or benefits. An effective loyalty marketing program uses different treatments to create the “triggers” that drive the customer behavior you desire.
Understand and Use Marketing ROI
Even as the economy hints at a rebound, companies continue to feel pressure to cut costs. Unmeasurable mass advertising or promotional campaigns are facing unprecedented scrutiny. As other traditional marketing techniques and solutions are pared back or shut down, a new era of marketing is taking over ROI-based marketing programs. These programs center on highly targeted, measurable solutions that plainly show the gains they produce.
Today’s executives rightly demand measurable return on investment. How can you drive this ROI approach in your marketing programs? Make sure that each of your marketing campaigns includes measurement and tracking of ROI as part of their overall design. Begin with a very clear understanding of what factors or actions influence ROI, and then measure and track them using the marketing program’s core structure. Effective loyalty marketing programs begin with setting precise ROI-based metrics.
These five tips are just a start to getting your company on the road to recovery from any CRM hangover that it may be experiencing. The key to better customer retention and stronger customer relationships is to create a constant focus on building a loyalty marketing discipline in your organization — and from there, projecting that focus outward to all of your customers.
Chris X. Moloney is director of marketing strategy for Maritz Loyalty Marketing, a division of Maritz Inc., St. Louis.
