You Don’t Need a CEM/CRM Strategy To Be Customer Centric

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Last week I read a (Dutch) post that covered a new white-paper from SAS. The post was titled: “Customer Centricity, still in its infancy”.

After reading the white-paper I concluded (and commented to the post) that it was written completely from the perspective of the solutions SAS has to offer. And that, as a consequence, SAS itself does not get higher on its own Customer Centricity maturity model than the level “self-centric” (being the infancy level).

That statement, of course, was a little harsher than needed, because I think SAS provides some great solutions that many Customers really appreciate. But it was a shot at open goal, I just could not resist 😉

Three elements of Customer Centricity, according to SAS
In the white-paper they presented a model of Customer Centricity shown here.

Customer_centricity_SAS_544_306_s_c1_smart_scale

You can find some explanation in English here. I liked the model at first sight, but was disappointed that “Customer Value” was not about “Value for the Customer” but about “Customer Lifetime Value” (and some newer elements like Referral Value), in other words: Value to the Firm. On top of that, the white-paper consistently talks about improving the Customer experience by making the (the right) Customer (the right) relevant offers (at the right time), by using Customer data-analytics (of course).

Customers do not desire offers
I’ve said it before, and I’ll keep saying it whenever prompted: Customers do not desire offers, they desire the benefits they can create with the use of your product and/or service (at a price they feel fair). Hence Customer centric marketing focuses on improving Customer value-in-use, not (just) the Customer journey leading to a transaction.

You do not need A Customer Lifecycle Relationship Management Strategy
I believe one can be extremely Customer centric without having a Customer Lifecycle Management strategy or a Branded Customer Experience strategy, aimed at positively wowing Customers with excellent service (think Zappos-like). CRM and or CEM? You don’t need them per se!

Operational Excellence can be Customer Centric
I maybe wrong here, but Ryanair seems like an excellent example of a company that purely leverages Operational excellence and Cost-Leadership to provide the best service possible for their target Customer segment. That is the segment that wants to get from A to B at the lowest possible price with the highest likelihood of being on time including luggage. And that is the segment that is willing to trade-off all other “frills” for these three benefits.

Pay-back
It’s also a strategy that seems to pay off. In their Q4 2012 report (pdf) they not only report a continuous growth of passengers, and being the number one International airline by number of international flight passengers. They also report a 92 % Customer repurchase and 87 % recommendation intention. (hello!)

And yes, Ryanair knows how to up-sell to their Customers, and they know how to monetize their Customer (data), but they do not try to be excellent at other stuff than what they chose to be excellent at because that matters to their Customers most. And they do care about the experience being designed to differentiate the airline in a positive way from other airlines, just not in a way branded “experientialists” want it to be..

Ryanair loves the Customers who love them, and is that not what Customer Centricity is all about?

3 COMMENTS

  1. Wim, thanks for a thought-provoking post.

    I had the same reaction to the SAS white paper. The thrust is about targeting/segmenting to harvest value from customers. In my view, that’s a decent starting point, but hardly the end of the customer-centric journey.

    As for CRM and CEM, thank for linking to my post. I think most companies have a CRM and CEM strategy, whether they call it that or not. If you’re managing marketing, sales and services processes, that’s what most think = CRM. As for CEM, even companies that don’t proactively design or attempt to “manage” experiences are delivering them, intentional or not.

    Ryanair is an interesting example. I did some research, and stirred up some debate with my post, If the Customer Experience is so important, how do you explain the success of Ryanair?.

    On the one hand, I have to tip my hat to Ryanair for targeting an under-served market and making money with fares most airlines would say are impossible. In that sense, Ryanair is customer-centric for those who value price above all else, and are willing to live with the poor service, flights landing in out of the way airports, etc.

    And yet, I also think Ryanair has prospered because no other airline wants to compete for that business. So the Ryanair CEO can tell customers to bugger off and get away with it.

    As for the “reported” 92% repurchase and 87% intend to recommend, I’m not buying it. Independent studies rank Ryanair near the bottom of European carriers, even on the issue of “value.”

    My take is that Ryanair is benefiting from customers in a “trapped” situation — they don’t like the service but don’t have other options. As soon a competitor is willing to match pricing with a better experience, these supposedly loyal passengers will leave.

    Here are some recent ratings:
    * Which? reveals best and worst airlines: Ryanair comes bottom of our airline survey
    * Ryanair voted least popular short-haul airline: Passengers complain about extra charges on company’s flights
    * TripAdvisor Rating: 3 out of 5 stars, 60% recommend

  2. Hi Bob,

    Thx for the kuddos & comment. And you know me, I like them though provoking 😉

    Those are some interesting ratings.. I’ll review in short:

    #1:Which?
    Do you think it is a coincidence that the top 4 has been rated based on well under 100 responses (as few as 38! for number 2 on the list), and Ryanair based on > 500? Smells like bias to me, if only by sample (Which? seems to be a kind of consumer watch-dog organization that draws complaining Customers mostly, which could be an explanation for the difference in response numbers)
    #2: Article is based on same research as #1
    #3: Trip-advisor: Who’s checking it’s actually Ryanair Customers that fill out the ratings? And same bias could apply as per Which?

    Basically those numbers don’t convince me (either). There are a lot of people who do not want Ryanair to be successful nor a showcase for it..

    Either way, its business model has disrupted the industry, and that’s a good thing for all of us, regardless the airline of our choice.

  3. Point taken on the credibility, every survey has bias. But why is it that only Ryanair is reporting happy travellers?

    You might want to read this report based on survey of 6K travellers, including 600+ from Ryanair, in late 2011. Results look very simiarly to the more recent “Which” report. Ryanair ranked 18 out of 19 airlines.

    http://www.which.co.uk/documents/pdf/p62-64_airlines-274665.pdf

    The PDF is hard to read, so here’s an excerpt:

    Ryanair and Thomas Cook Airlines prop
    up our table, just as they did 18 months ago.
    Thomas Cook Airlines scored particularly
    poorly for its cabin environment (including
    cleanliness, temperature, legroom and
    comfort) getting only one star. The travel
    company has struggled financially this year,
    and, in response, plans to cut its fleet from
    41 to 35 aircraft in 2012.

    Ryanair, while scoring four stars for the cost
    of its flights, interestingly scores only two stars
    on value for money. Passengers have perhaps
    realised the hard way that cheaper doesn't
    necessarily mean better.

    I think the larger point is that Ryanair travelers may complain, but their behavior says they are “loyal” nonetheless. The things they don’t like don’t offset their primary goal to save money.

    The disruption here is that Ryanair is competing against taking a bus or a train, not other airlines. My son used Ryanair this past summer for just that reason. He said the flight was a “nightmare” but he had little money to spend and Ryanair was better than taking a bus. But he also found out that the saving was less than expected due to extra fees and cost of taxi from remote airport.

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