Six Ideas for Next Generation CRM

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I chaired the IIR Telecoms CRM, CEM and Retention conference in Berlin yesterday. It was a great day with some excellent speakers. Of all the speakers, one stood out for me: Christian Magel, the Chief Marketing Officer of low-cost mobile telco Simyo in Germany.

Simyo is a relatively recent entrant in the crowded German mobile telecoms market. It provides a simple, no-frills voice, SMS and data proposition to cost-conscious customers. But that doesn’t mean that its customers don’t have any affinity for Simyo. On the contrary, it has a much, much higher proportion of brand advocates (as measured by the NPS score) than any of its much larger competitors. It is a real customer-centric company.

At the end of his presentation, Christian spoke about six guiding ideas for Next Generation CRM (with my own interpretation):

  1. With the Internet, the Cost of Communications is Not the Issue – With the Internet, communications, whether they are voice-to-voice through a VoIP service like Skype, interactive like IM, or direct like email, are all effectively free. The real issue isn’t the cost, but the relevance of the communications to customers. If your communications are targeted, informative and timely, there is a good chance that customers will appreciate them, and you for providing them. Indeed, youth mobile telco Blyk, that offers free mobile minutes and SMS in return for listening to branded ads, found that many of its customers actually complained that they didn’t hear enough ads! This is quite a change from ‘maximum contacts per period’ rules used by most data-intensive companies, that explicitly acknowledge that the communications are, at best, irrelevant to customers, at worst, a damned nuisance!
  2. Customer Loyalty Starts with Product Design – Loyalty shouldn’t happen by accident. It should be the natural response to explicitly designing, products, services and experiences that help customers get everyday jobs done. This means really understanding customers’ needs, in terms of the jobs customers are trying to do and the outcomes they are trying to achieve, and how you can provide solutions that help customers. It also means designing products that really deliver what customers’ expect, wrap-around services that add real value to the customer and knitting them together so they deliver a superior end-to-end experience for the customer, particularly during that all important post-purchase, product usage period where customers really get value from the products they bought.
  3. Bad Products have No Chance on the Internet – Simyo is an internet-based mobile telco. If its products don’t work properly the first time, customers will drop them immediately and tell all their facebook, twitter and calling community friends. In the same way we all quickly back-track out of websites that don’t work, are too slow, or that don’t have any sticky content. That doesn’t mean that products on the Internet have to be perfect or fully featured, but it does mean that they have to meet the customers’ core needs from the start. And at a suitable price point. This provides a great opportunity for disruptive innovators like Simyo, who provide products that meet customers core mobile telephony needs, without all the expensive, unused frills of traditional providers, at a rock-bottom price. Evolving and additional customer needs can be met later through a process of continuous innovation, in a similar way that companies like Google do.
  4. It’s Not the Product, It’s the Customer – Most telcos and indeed, most companies, are still product-centric. Their annual report may say how customer-centric they are, but in reality, their whole world revolves around making better products and then trying to find customers to buy them. There is no wonder that 80% of their products fail on market entry and 60% fail on re-entry. In contrast to this, Simyo has built its business around understanding its customers’ needs, provides products, services and an experience that exactly matches them, and then delivering them to customers at a profit. By delivering value to its customers throughout the customer experience, Simyo has earned the right to be paid handsomely by them for doing so. Customer-centric business starts and ends with customers.
  5. Don’t Stop with Loyalty, Evangelists can Achieve Much More – Customer satisfaction, retention and loyalty, and their relationship to profitability have been agued over for decades. But even emotionally committed, loyal customers arean’t enough. Not today. Companies need to provide enough value to customers so that they want to tell everyone else about it. The old saying was that a happy customer told five friends about it, on the Internet, they can tell 5,000 or even 5,000,000. And as research by Kumar on Customer Referral Value has shown, talkative customers can have a value to the company through their referrals of up to four times the value of their own purchases.
  6. Crowdsource your Best Ideas from your Customers – Experts in innovation like MIT’s Eric von Hippel, estimate that up to 80% of successful innovations originate from customers. The challenge is in tapping into the right customers to see how they are using your products, those of competitors or a mash-up of different products to get important jobs done. Approaches like crowdsourcing, open innovation and lead-user innovation all provide a way to look outside your own company and to bring in winning innovations from outside. In Simyo’s case, they have hired hundreds of Simyo Paten who crowdsource answers to customers questions. With response times to email questions in hours rather than the more normal days, this is just one way to harness the wisdom of the crowd.

Christian’s six guiding ideas provide a great framework to think about Next Generation CRM. They encompass much of what is in Paul Greenberg’s CRM 2.0 yet go much further at the same time. Take a look at how you stack-up against them. And where you must do better if you are to build brand advocacy in your customers like Simyo has.

You can follow Christian and the Simyo team at the Simyo blog.

With great thanks to Christian for his stimulating presentation in Berlin.

Graham Hill
Customer-driven Innovator
Follow me on Twitter

Interested in Customer Driven Innovation? Join the Customer Driven Innovation groups on LinkedIn or Facebook to learn more.

4 COMMENTS

  1. In full disclosure – I have been following Graham and a few others on Twitter regarding CRM 2.0, Next Gen CRM or SocialCRM (the naming battle is half the fun). The conversations, with great links to articles like this, in 140 words or less has been very informative.

    My point: In reading this article, and some of the related articles by Paul Greenberg and Ed Thompson, as well as other, much of this sounded very familiar. From my perspective and referencing Patricia Seybold’s (and Ronni Marshak) Customers.com book published in 1999 (which has been collecting a bit of dust), items 1-4 are exactly the same as the were 10 years ago. My intent is in NO way to take away from their importance – they are still critical. I will however suggest that items 5 and 6 are the only next generation topics. 1-4 are the ‘cost to play’ and core foundations of CRM.

    Where 1-4 change within the realm of CRM 2.0 are simply the speed of action caused by 5 and 6. For those in the audience that consider themselves ‘new’ to CRM, the core values have not changed all that much – the style and speed of communication certainly have though…

    Mitch Lieberman
    mjayliebs (twitter)

  2. Genuinely new ideas don’t come along all that often. Much of what we call CRM today was known as “relationship marketing” in the 1980s. But new technology comes along, a new term is created, and the idea is given new life.

    Customer Experience Management (CEM) is another great example. Jan Carlzon popularized “moments of truth” (he didn’t invent the term) as CEO Scandinavian Airlines in the 1980s. CEM didn’t become a big thing until a few years ago.

    More recently, “Sales 2.0” is largely a new name for what many used to call CRM: an approach to selling better and more scientifically. “Web 2.0” is a term for the “next-generation” web, but the ideas were actually part of the original concept of collaboation upon which the Internet was based. And on it goes…

    While the ideas may not be totally new, new terms and TLAs are a Good Thing when they spur increased interest and development of actually putting the ideas to work.

    Bob Thompson, CustomerThink Corp.
    Blog: Unconventional Wisdom

  3. Hi Mitch

    Thanks very much for your comment. It is much appreciated.

    I have long been a fan of Patty Seybold. I have all three of her books on my shelf. Patty has spotted each of the three most recent evolutionary stages of CRM before they really got going and wrote books to guide us through them. The first stage, CRM, was all about doing things TO customers. Patty’s first book, ‘The Customer Revolution’ provided the ground rules for CRM. The second stage, CEM, was all about doing things FOR customers. Her second book, ‘Customers.Com’ provided a handbook for developing customer-focussed experiences. The stage we are currently entering, Customer CoCreation, is all about doing things WITH customers. And true to form, Patty’s third book ‘Outside Innovation’ provides a framework for thinking about how to integrate customers into customer-driven innovation. Her blog of the same name is a must read.

    Looking through Patty’s books, I find many similar suggestions to Christian’s rules, as you would expect. For example, Patty talks about ‘Focussing on the End Customer for your Products and Services’ which is similar to Christian’s ‘Customer Loyalty Starts with Product Design’. And there are a number of other similarities too. But that is almost beside the point. The point is that most companies have not taken enough of the ideas in Patty’s books and implemented them. They are still stuck in a CRM world where customers are targets whose only pupose is to hand over their cash and as fast as possible. Or in a CEM world that is all about the company’s brands rather than about the customers who create them. These companies haven’t kept up with their customers who now demand value throughout the consumption experience in return for their hard-earned cash, who expect to be involved in the experience and who will defect to competitors if they don’t get it. Customers are from Venus, companies are still from Mars!

    Pattty’s books describe the customer-centric theory, but Christian’s rules describe the real-life practice in a leading German mobile telco. It was a real pleasure listening to Christian speak at the Telecoms CRM conference. His presentation was about how to run a very successful customer-centric business, unlike practically every other telco speaker whose presentations were all about how to run company-centric businesses in difficult times. You can guess which company I am betting my money on.

    It will be interesting to see what Patty’s next book will be about. I am bettig on ‘Customer Peer Production’ as the stage of evolution after Customer CoCreation. We will just have to wait and see.

    Graham Hill
    Customer-driven Innovator
    Follow me on Twitter

    Interested in Customer Driven Innovation? Join the Customer Driven Innovation groups on LinkedIn or Facebook to learn more.

  4. Hi Graham,

    I really enjoyed reading your article, your views combined with Patty’s are a breath of fresh air..

    I would like to add 2 dimensions to Next Gen CRM:

    1. Next Gen CRM System need to be all about the INDIVIDUAL customer, they need to focus more on the buying process instead of the selling process. How many CRM systems still focus on the sales pipeline and its value? There is a definite shift towards viewing the customer from THEIR needs and wants and allowing the customers to define the creation and evolution of our new products and services.

    2. Next Gen CRM systems will be all about technology convergence. Integration is now clearly 2nd Generation Too Complex and Too Expensive. How many CRM applications integrate with this and with that? The fact that they integrate means you need to purchase other software applications, and in most cases pay for the integration and maintenance. Next Gen CRM applications will deliver all front-end sales tools in a single application. This means cheaper to buy and own, easier to learn and use and faster to configure and make your own.

    The above 2 dimensions combined with a new way of working with your customers will bring about the Next Gen CRM.

    In my view:

    * 1st Generation systems were about information and digitisation
    * 2nd Generation systems were all about knowledge
    * 3rd Generation systems will be all about intelligence (Which I define as Knowledge with action)

    CRM systems should not only hold ALL the information and also segment and present it in a knowledge form but most importantly it should help define the appropriate ACTION.

    I am interested in other people’s views as we have designed what we believe is the next generation CRM – http://www.nxgcrm.com. We welcome ideas and opinions for the future of CRM.

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