Customer Advocacy Versus Customer Analytics. Which Will Win?

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CRM is continuously evolving. Indeed, it is Customer Experience Management (CEM) that is all the rage at the moment rather than CRM. And Customer Co-creation is hot on the heels of CEM as the next evolutionary stage of CRM.

Underlying much of CRM were big databases and technology that enabled analytically-generated insights to be used at marketing, sales and service touchpoints to sell more to customers. In contrast, CEM is much more about delivering value to customers through the customer experience and earning a ‘fair return’, rather than simply selling more to customers. And Customer Co-creation takes this a step further by getting customers intimately involved in innovation, marketing, selling and self-service. We are now living in an always-on world where treating empowered, connected customers with kid gloves is the name of the game.

Maybe it is time for a return to CRM’s analytical-driven sales roots.

A new book called Super Crunchers: Why Thinking With Numbers is the New Way to be Smart, by Ian Ayres, a professor at both Yale’s Law School and its Management School, suggests that our increasing ability to crunch vast volumes of demographic, situational and transational data is leading to a new analytically-driven era. This computing power allied with in-memory databases and business-rules engines will soon allow even small devices like mobile phones to make insightful, real-time recommendations about products that will be personalised for each and every situation.

If we can really supercrunch data in this way and use the insights generated to achieve our sales goals, isn’t this going to make CEM and Customer Co-creation an expensive luxury? Why treat customers with kid gloves in the hope they will eventualy become loyal and buy more from you, when you can micro-target exactly the right product to them at exactly the right time, driven by the computational power of their own mobile telephone. Food for thought.

Maybe this is a good time to go long on those CRM tech shares after all.

What do you think? Is softer CEM and Customer Co-creation the way forward? Or will brute computation power give traditinal CRM a new lease of life?

Post a comment and get the conversation going.

Graham Hill
Independent CRM Consultant
Interim CRM Manager

3 COMMENTS

  1. GH, you hit a nerve here 😉 Although I consult in the analytical CRM space, I still think that loyalty is deepened with a personal touch that does not necessarily include remembering someone’s birthday and sending a generic e-card! In the same raw, vein, I think that no matter how many process related steps you follow and check off your prescribed selling script, it has been established that the ‘thing’ that closes the deal or pulls in a sale is the relationship of the particular sales or service (or marketing) person, with the buyer.

    For me, the point is that you need both; good information and a good, personal treatment. Since kid glove treatment is generally provided to your ‘A’ list customer, what appears to logical is to use the information wisely, understand the timing, know the organizational mood, the politics the buyer is dealing with and then allow the analytics and systems to trigger, when you, the sales/marketing/service professional chooses to do this. I have yet to see a system develop that level of sense and respond capability! Further, since unstructured information is better than 80% of all information one requires to create value and then pass that value proposition onto the customer, I really think it will be an awfully long time before a system can master this capability.

    In the end, to have a system send out offers at the quintessential moment-of-truth is downright creepy! Yah, I’ll promote the analytical point-of-view, but in balance, and I will hang on to the “R” (relationship) in CRM!

  2. Some business processes that used to be personal experiences using people, like depositing money or placing a phone call, are not desirable for many people now because we just want something that’s convenient and fast.

    CRM systems, including analytical tools, can certainly do the “blocking and tackling” that we expect modern businesses to do. Even basic stuff like personalizing an email, or remembering our preferences.

    But now that we expect that, and many companies provide it, it’s no longer a differentiator. Unless you don’t have it, then it can hurt your position. So, you can’t really win, but you can lose.

    The pendulum is swinging back towards people. Customer Experience Management can be systematized to a degree (think online experiences, for example) but our research last year found that customers feel that great experiences are mostly about people. Are employees on the frontline friendly, helpful and trained to do the right job?

    And since it’s all too easy to send out electronic or system-generated communication, the hand-written letter or thank-you card stands out.

    I agree with Vic 100% that the combination of analysis and the personal touch can be very powerful. As human beings, we think and feel. Businesses should do the same, and remember to use both sides of their brains. Spreadsheets, systems, and data mining are no substitute for a customer-centric culture.

    Bob Thompson, CustomerThink Corp.
    Blog: Unconventional Wisdom

  3. Vic, Bob

    I fully agree that not all products & services are amenable to a supercrunching approach, but many if not most are.

    A quick look at the breakdown of household spending from a recent UK Government Household Spending survey and the potential for taking an analytical or customer experience approach is illustrative.

    1. The biggest item with 15% of spend is Transport (buying a car, operating it and public transport). Tha majority of this spend is amenable to an analytical approach. As my own interim work at Toyota has shown, the new vehicle repurchase rate can be increased by over 50% by analytically-driven CRM.

    2. The joint second biggest items with 14% are Recreation and Other.
    Clearly, recreation (equipment, services and newspapers) is greatly
    influenced by the customer experience but the majority of other (housing, licences and holidays) is more amenable to an analytical approach.

    3. The fourth biggest item with 11% is Food & Non-Alcoholic Drinks. This is largely supermarket territory. One only has to look at the enormous success of Tesco’s Clubcard to see where the land lies here. That doesn’t mean to say that the experience isn’t important, just that it isn’t the critical success factor.

    4. The joint fifth biggest items with 9% are Housing, Fuel & Power and
    Restaurants & Hotels. The first is obviously amenable to the analytical
    approach whilst the second is is greatly influenced by the customer
    experience, although it has to be noted that analytically-driven yield-management and loyalty programmes play an increasingly large role in hotel chains.

    These items account for over 70 of all household spending. The rest of the items split out in a similar way. By my quick reckoning, approximately 60% of all household spending is highly amenable to a predominantly analytical approach, 40% to a customer experience approach.

    As you both point out, the key is not just to do one to the exclusion of the other, but to blend them both together in the optimal push-pull approach. Our ability to process vastly more information in real-time provides a cost-effective, highly reliable boost to the analytical side of the equation. High quality, empowered staff on the other hand provide an expensive, somewhat unreliable boost to the customer experience side. Faced with constrained budgets, organisations face a difficult decision where to spend to get the biggest bang for their buck. I know where I would be investing the bulk of my budget.

    As I suggested earlier, maybe this is a good time to be hanging on to those CRM tech shares.

    Graham Hill
    Independent CRM Consultant
    Interim CRM Manager

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