The perils of customer relationship management (CRM)
Food and Beverage

The perils of customer relationship management (CRM)

Peddlers of CRM software preach “Organisations should look at their business through their customer’s eyes and measure their performance against customer expectations”.

Easily said, not quite so simple to implement. So given CRM is more affordable than ever and much easier to use we must ask, why is it, so many CRM implementations fail to live up to rhetoric?

The question is simple enough so why is the answer so complex?

Effective CRM systems link to the organisations website, social media and the organisations workflows. Most CRM systems do link to the website and workflow in some way or another however most implementations lack strategy.

Many websites tend to be online mail order catalogues they broadcast information. The little information that is gathered isn’t used to build relationships. Websites primary focus should be on building relationships not disseminating information.

Your objective customer retention.
Why Kamdampully and Duddy (1999a) suggests “It costs five times more to attract a new customer than it does to keep an existing one”.     

To retain customers you need to offer; plus emphasis exemplary customer service and superior product quality. Of course you cannot appeal and delivery such expectations to everyone. You must focus on core customer segments. You must develop intimate segment knowledge of your target segments.

The more you understand segment habits, preferences the more likely you are to predict behaviour change. The stronger your relationship the less price becomes a factor of doing business. Another benefit it’s harder for competitors to compete against you.

Essentially the stronger you align with your target segment the more likely you are to develop the all-important, ‘strong know, like and trust’ factors. Each element essential to turning a perspective customer to a paying customer.

It’s worth noting consumers generally, do not use explicit and rational factors to evaluate a purchasing decision.

If you engage in dialogue with a diverse and evolving customer base you should place a high premium on organisational flexibility. The reasoning being as you better understand the purpose, meaning and quality of the dialogue from the consumer’s perspective you’re need to change to maximise your investment in gaining such insight. It is not the fact of two-way communication that matters, but the ability to manage that process to the mutual benefit of buyer and seller.

When analysing your organisations value chain your core competencies are irrelevant. Customers are the starting point i.e. ask what value is the organisation to the customer. A purchase is not the end of the process but a relationship starting point.

The lifetime of the customer is greater than the value of a onetime sale. Satisfying and keeping a customer should be your primary objective. To create satisfaction i.e. customer value, these factors need to be present in your customer communications:

  • Security
  • Convenience
  • Performance
  • Economy
  • Aesthetics; and
  • Reliability
  • Information
  • Personalisation; and
  • Interactivity

The stronger the emotional perception of value the more sustainable customer retention becomes. If you understand today’s customers’ holistic requirements and tomorrow’s anticipated need and you are able to communicate this you will strengthen your customers’ emotional perception of value.

You need to recognise what is necessary to create expected value and your knowledge must be based upon expert knowledge of the customer.

You might be thinking the above is rather sanctimonious information. You’re probably more interested in the application. Begin by developing your knowledge. Look at Amazon website. Research cloud technologies for example Constant Contact, Hub Spot, Ghost Twitting, Mail Chimp, Microsoft Dynamics, Sales Force, Marketing Cloud. Of course I’m available for chat alternatively submit a comment below or email me your questions.

Remember you can deploy any amount of technology, but unless you know how and why it benefits your business, time and money can be wasted.

CRM Slides

Developing Consumer Relationship

Christopher Bird Author


2 thoughts on “The perils of customer relationship management (CRM)”

  1. Good post Chris, I see a lot of the times the customer is dissatisfied is when they receive something else then what they were expecting. It is always good to first get an understanding of what the consumer wants and also very clear of what he will be getting

Comments are closed.