The Economic Meltdown Will Sort the Wheat From the Chaff

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Writing this blog in the middle of the biggest financial catastrophe in living memory is a sobering experience. No one can predict with any certainty what is going to happen in the next week, let alone the next few months or even years. What seems certain is that political, business and economic life will never quite be the same as it was. This is not just a market correction, as was suggested early in September; this is more like a seismic shift in the economic system we once called capitalism. The economic pundits who abhorred debt-fuelled growth are having a field day, shouting “I told you so” at every opportunity.



There are business observers, and I include myself in this group, who believe these very market and economic conditions are just what is needed for CRM to really come of age, because customer loyalty has never been more severely tested as it will be now. Let’s be honest, CRM was never fully embraced by most companies in the way it was intended. Companies paid lip service to it, content in the knowledge that enhanced customer data was making their sales and marketing more incisive. Such companies are not really customer-centric; they just present a veneer of customer-centricity. How do I know this? Because I ask the question: “What is the purpose of your customer service organisation and how is it measured?” 99% of customer service organizations are defensive in their strategy (e.g. minimising the cost to serve) and measured in terms of productivity, utilization or cost. They are remnants of the industrial age, managed as once were factories and often the first part of the business to be outsourced to far-flung corners of the globe where costs are lower. So if the left hand (business generation) is goaled and measured differently to the right hand (service), they won’t be coordinated and the customer experience will be consistent. And that’s what really irritates customers, frustrates employees and damages the loyalty of both.

My big fear for the future is not for customers – for they will only benefit from a major shift in power. My concern is for customer-facing employees. Operating in a climate of fear means they will take fewer risks; they won’t step outside the box to satisfy customers. Executives like to be in control and passing control to customers (or employees come to that) is anathema to them. So if the delicate balance has shifted towards customers, executives will want to increase control over employees to compensate. For my money this is the wrong thing to do. It is time to run companies using a different model, where customers are an extension of the organisation and where employees work together across business functions to provide the products and services that customers want. So how companies respond to these new economic conditions will separate the wheat from the chaff. Enlightened companies and executives will seize the opportunity to make the changes they instinctively know are right and move the whole business towards being truly customer-centric, engendering the loyalty of their customers and their employees. Those who choose a different path will alienate their two key stakeholders, perhaps forever. We have already seen some major casualties in the financial sector but for the rest of the market the ‘fun’ is only just beginning.



2 COMMENTS

  1. David, you are so very, very right when you say that these “market and economic conditions are just what is needed for CRM to really come of age, because customer loyalty has never been more severely tested as it will be now.”

    It’s now 2 weeks since your post, and the economic story is even grimmer. Consumer behavior has changed, probably not for ever, but certainly for the near term. Households are acting in three new and worrying ways: they are postponing purchases, particularly of more expensive items; they are cutting back on the frequency with which they purchase non-essentials; and they are trading down to lower cost versions or outlets.

    Any company that can retain their customers’ behavioral and attitudinal loyalty against these fundamentally changed customer dynamics is doing fabulously well.

    Can anyone name a company doing this?

    Francis Buttle, PhD
    The Customer Champion

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