In today’s business environment, it is imperative to deliver high growth rates, profitability and increase customer retention. Companies today seek newer and faster approaches to interact with customers and maintain consistency across all the channels of interaction.
They need to adapt to customer advocacy in order to enhance customer experience and loyalty at optimum costs. To achieve this, companies need to focus on factors driving customer satisfaction while optimizing cost.
That is why customer interactions have become the core of customer relationship management (CRM). Every customer relationship is dependent on the quality, consistency, value and relevance of those interactions. You cannot transform your business focus to customers or optimize customer relationships without transforming the interactions you have with customers at all points of contact.
Customer interactions go hand in hand with customer experience. The customer experience is your customers’ perceptions – both conscious and subconscious – of their relationship with you resulting from all their interactions with your company during the past.
The customer experience is critical to your CRM planning efforts. For many organisations, this process is very revealing because, for the first time, they begin to understand just how many different ways they interact with customers.
Customer interaction transformation
Customer interaction has four main stages: Mass transaction, targeted campaigns, segment-specific communication, customer-contact integration and individual permission-based interaction.
Mass transaction
In the mass transaction stage, there is a ‘one-size fits all’ orientation for marketing, sales and service contacts. Marketing communications efforts can be characterized as mass advertising and lacking any real customer interaction. Communications and offers are crafted to appeal to the audience at large. Consequently, marketing metrics emphasize frequency and reach of brand image and awareness messages.
If you are a recipient of mass advertising, you will recognize the law of averages at play. You may he exposed to several thousand messages a day, only a fraction of which are relevant to your immediate needs and interests. Picture yourself driving along a highway with bill boards on your left and right. Your radio pipes in two to three dozen commercials every 30 minutes.
Ninety-nine percent of these messages may be tuned out; one percent may be relevant to the situation at hand. You have become so immune to the clutter and have developed the capability to selectively recognize those messages that matter.
Mass advertising continues not because of its consumer appeal and relevance; it survives because it is difficult to measure on a return-on-investment basis.
It is this very lack of measurement that enables mass advertising to continue often unchallenged as a viable communications approach.
Similarly, at this mass transaction stage, both sales and service are primarily focused on coverage.
Driven by the efficiency of transactions, there is typically little or no capture of customer information beyond the necessary details of the transaction.
Performance metrics relate to cost per sale, the length of lines at checkout stands, or how quickly a customer’s transaction can be processed.
When asked to collect customer information, there is often resistance from order entry or retail operations due to a belief that it just cannot be done without significantly decreasing efficiency. Surprisingly, this strict focus on efficiency is often unfounded.
Targeted campaign
A targeted campaign identifies an audience likely to buy services or products and promotes those services or products to that audience. Once these key groups are recognized, companies develop promotion campaigns and specific products for those preferred market segments.
Promotional messages and advertisements are sent to those primary groups. However, the promoted products or the specific offer may still be driven from a product or merchandising orientation. The emphasis is on identifying which customers will respond to a given offer, rather than on what customers might need.
In this marketing-centric environment, there are often challenges working with other areas of the company ranging from sales point to customer care point.
They may not have been involved in the planning and therefore cannot support the intended.
There are three key targeted marketing strategies: Geographic strategies (find audiences in a certain location), demographic strategies (find audiences with certain characteristics like race, age or gender), psychological strategies (look for desired personality attributes such as religion or previous purchases of a certain product), attractiveness and relative ability.
Once these elements have been determined, the focus of the marketing campaign is narrowed by determining if the identified audience is likely to be interested in the specific product. Companies that offer specialized products or services typically benefit the most from using targeted marketing strategies.
Segment-specific communications
Beyond the coordination of mass and targeted media, many organisations have begun to develop efforts focused on specific customer segments. Segment-specific communications represent the beginnings of a shift in focus to people - that is, the customers - more than the company’s products, programmes and promotions.
It involves the ongoing development, refinement and management of marketing efforts to specific customer segments.
Focusing on customer segments allows a company to tailor communication streams to the needs and interest of each group of customers and the ability to manage differential investments based on each segment’s potential value to the company.
At this stage, the company must have consolidated customer data, including customer profiles and behaviours and a common definition of customer segments across the company. Ideally, measures of current and potential value for each segment should define the allocation of marketing, sales and service resources.
Managers in charge of segments serve as representatives for their respective groups of customers, directing the entire contact strategy for their customer segment.
In that role, they also educate the rest of the company about unique customer attitudes, needs and preferences related to products, channels and media.
In addition to the information on and understanding of each customer segment, a company needs the ability to measure on both a micro and macro basis the results of its investments in each segment. This information enables increased customization, interaction and delivery to each customer segment.
Customer integration
Customer integration is the component of CRM which puts technology in place that allows customers to process their own transactions and to have direct contact with the organisation. This means that the need for middlemen is reduced. It is a way for the organisation to do business with substantial savings on human resources.
Goals of customer integration
Effective customer integration will achieve the following goals:
- An improvement in communication with customer
- Customer retention and loyalty
- More improved and targeted marketing
- Enhanced tracking of customers and prospective customers
- It increases the business’ focus
The companies can heavily benefit from customer integration. Unfortunately, it has not yet fully caught up in Sri Lanka. For example, if you are living a western country, if you need a pair of sneakers, instead of going to the local mall, you can go online to the supplier’s website, check your design and make your purchase there. By selling the shoes directly to you the consumer, the shoe company was able to reduce distribution costs.
When companies are practicing customer integration, it communicates a customer-centric mind-set. It lets the customers know that they are at the centre of the organisation’s activities.
This customer-centric attitude can assist the organisation with obtaining and maintaining a positive image in the marketplace.
It’s all about the customer. As part of the customer integration process, companies collect and store data on their customers. They keep customers’ contact information, buying patterns, product and/or service preferences and income details if available. They do this as a way of knowing the customer so that they can anticipate and provide for their changing needs.
(Lionel Wijesiri, a corporate director with over 25 years’ senior managerial experience, can be contacted at lionwije@live.com)
