Chapter 1: Customer Relationship Management is not an option
Most customers are only profitable in the second year that they do business with you. That’s right.
Initially, new customers cost you money—money spent on advertising and marketing and money
spent learning what they want and teaching them how best to do business with you.
First, consider the word “comprehensive.” CRM does not belong just to sales and marketing. It is not
the sole responsibility of the customer service group. Nor is it the brainchild
of the information technology team. While any one of these areas may be the internal champion for
CRM in your organization, in point of fact, CRM must be a way of doing business that touches all
areas
The second key word in our definition is “approach.” An approach, according to Webster, is “a way
of treating or dealing with something.” CRM is a way of thinking about and dealing with customer
relationships. We might also use the word strategy here because, done well, CRM involves a clear
plan. In fact, we believe that your CRM strategy can actually serve as a benchmark for every other
strategy in your organization. Any organizational strategy that doesn’t serve to create, maintain, or
expand relationships with your target customers doesn’t serve the organization.
When you implement your CRM strategy, you will capture and analyse data about your targeted
customers and their targeted buying habits. From this wealth of information, you can understand
and predict customer behaviour. Marketing efforts, armed with this customer intelligence, are more
successful at both finding brand new customers and cultivating a deeper share of wallet from
current customers. Customer contacts, informed by detailed information about customer
preferences, are more satisfying.
CRM is about growing advocates and finding new ways to add value.
CRM is about creating the feel of high touch in a high tech environment. Consider the success of
Amazon.com. Both of us are frequent customers and neither of us has ever spoken to a human being
during one of our service interactions. Yet, we each have a sense of relationship with Amazon. Why?
Because the CRM tools that support Amazon’s customer relationship strategy allow Amazon to:
• Add value to customer transactions by identifying related items with their “customers who bought
this book also bought” feature, in much the same way that a retail clerk might suggest related items
to complete a sale.
• Reinforce a sense of relationship by recognizing repeat shoppers and targeting them with thank
you’s ranging from thermal coffee cups to one-cent stamps to ease the transition to new postal
rates.
CRM is about managing relationships more effectively so you can drive down costs while at the same
time increasing the viability of your product and service offerings.
Your CRM strategy should drive your organizational structure, which should in turn drive choices
around technology implementation. Yet, individuals and organizations become enamored of the
technology applications and forget that that they must start with a CRM strategy.
Strategy Isn’t Technology
Listen to the way the term CRM is used in your organization. Do people confuse strategy and technology?
If so, you can be a voice for clarity.
Insist that CRM applications and technologies be referred to as CRM tools.Ask how each tool supports
your CRM strategy.
Know Your Purpose
Don’t get enamoured of the tools of CRM before becoming clear about your purpose and what your
approach to creating, maintaining, and expanding customer relationships looks like. Having a customer
database is not the same thing as having a CRM strategy. As a friend of ours is fond of saying, “A
dictionary is wonderful database of words, but a dictionary can’twrite a letter for you.”
To gain clarity about your CRM intention, think for a moment
about your own customers, be they internal or external, consumers
or business-to-business.
• What drives them to do business with you?
• If you manage an internal support area, ask yourself, given a realistic choice, would your customers
choose to do business with you?
• In what ways do you need to enfold your customers in your business, so that you can better
understand what they want and need— and more effectively provide it?
• What do your customers need and want to have happen during their encounters with you?
• What will drive your customers to continue to do business with you?
• What information about your customers will help you identify ways you can grow the amount of
money they spend with you?
CRM Success Factors:
1. Strong Internal partnership around the CRM Strategy
2. Employees at all levels and all areas accurately collect information for the CRM system
3. CRM tools are customer and Employees- friendly
4. Report out only the data you use and use the data you report
- Keeping Guest happy
- Avoiding customer Ire
5. Don’t go high tech when low tech can do
CRM is here to Stay – Keep it Simple
Manager’s Checklist for Chapter 1
❏ CRM is about managing relationships more effectively so you can drive down costs while at the
same time increasing the viability of your product and service offerings.
❏ The strength of CRM lies in the clarity of your approach and purpose. Before taking a single step
forward, be absolutely clear about what you want to accomplish.
❏ Remember, customers want to do business with organizations that know them, that understand
what they want and need, and that continue to fill those wants and needs. CRM is about making
sure you have the information you need to do just that.
❏ Tools enable customer relationship management. Tools don’t have to be high-tech. The best
tools are the ones that allow you to gather the information you need in the easiest way for both you
and your customer.
Chapter 2: The Customer Service / Sales Profile
First, it will show you what kind of customer relationships you’re trying to create. Is your success
based in initial, standalone transactions? Or does the nature of your product or service put
customers in partnership with you over longer periods of time? How important is it for you to have
satisfied customers acting as word-of-mouth advocates for you in the marketplace?
Second, the Customer Service/Sales Profile will help you identify strengths in your current CRM
practices. Even in cases where there’s no formal CRM strategy, if you’re still in business, you must be
doing something right, maybe several or many things. Knowing what right practices have evolved
naturally will help you create the greatest possible improvement with the least amount of expense.
Third, because this process creates a visual image of your customer relationships, you will find it
helpful in communicating to others throughout the organization. Knowing your current profile and
the desired profile will naturally help you focus your energy and attention.
Why Call It the Customer Service/Sales Profile?
Truth 1: Sales do not equal relationships
Truth 2: Service extends beyond the buyer
Truth 3: Service and sales are on the same team
Cultivate the Experience
The Wild Rumpus Bookstore in Minneapolis, Minnesota, is often listed among the top 10 independent
bookstores in the United States. Storeowners know that parents control what their young children read,
how much money they can spend on books, and even whether or not they visit Wild Rumpus. Parents are
the buyers, yet the experience Wild Rumpus creates for children is the driving force behind its success.
Everything about the store—the fish tank behind the bathroom mirror; the hamsters that live below the
Plexiglas® floorboards; the live chickens, cats, and reptiles; comfortable chairs for reading— is designed to
engage both children and their parents.
The Three Levels of Service/Sales
Level 1: Initial Transactions:
• Identify customers at risk of leaving, never to return, and find out how they can woo them back.
• Look for ways to teach new customers more about what the Nature Retreat Center offers and how it
works so that there are fewer avoidable service issues.
• Give staff tools and training on ways to turn their interactions into revenue-generating opportunities
while at the same time making guests feel well served.
Level 2: Repeat Transactions:
Repeat customers develop greater economic and emotional ties with you. And they bring with them
an expectation that you will value those ties. For example, the Caribou Coffee customer may expect
you to save the last Caribou cookie for him. And the insurance customer will look for a discount for
having car, home, and life insurance with the same provider.
Level 3: Customer Advocates
Those customers who are not just satisfied and willing to do business with you again. These
customers actively tell others about their positive experience. They spread the good word. You might
even consider them to be active participants on your marketing team.
The Shape of Your Custom Service/Sales Profile
The Pyramid Profile – Retail Customer Store
The Hourglass Profile – Home buyer/Auto Buyer
The Hexagon Profile - In the Hexagon Profile (Figure 2-5) describes a business that is
Very stable. It has all the repeat business it can handle or wants, so it feels little motivation to actively
seek for Level 3, customer advocates. It also feels no strong motivation to focus on initial
transactions, since there are already plenty of repeat customers The Hexagon Profile can self-destruct
when supply and demand are no longer in balance and no longer working in your favor. We watched a
small advertising agency go under because it was operating under this profile. Secure with its three
major clients and a steady mix of small “filler” jobs, the team focused on doing the work.
Pitfalls of the Customer Service/Sales Profile
1. Focusing on the top
2. Managing from frist door
Manager’s Checklist for Chapter 2
❏ Where is your customer relationship emphasis? Is it on creating initial or stand-alone transactions
(Level 1)? Is it repeat customers (Level 2)? Or do customer advocates
(Level 3) drive your success?
❏ You can’t have a customer relationship without service and sales working together, creating
positive experiences for the customers who give you the money and for everyone else at the customer
site who touches or is touched by your product.
❏ The Pyramid Profile is the most common. Initial transactions lead naturally to repeat business and
a percentage of those repeat customers move into advocacy.
❏ The Hourglass Profile describes relationships with customers where the buying cycle is long. The
focus is on turning customers into advocates based on their initial experience with you.
❏ The Hexagon Profile represents an organization at risk. It may seem stable, but it lacks a strong
base of initial transactions and has few customer advocates to help drive new
marketing efforts.
