Being direct... AdVantage Jan 2003
CRM ...
Customer 'Rip-off' Management?
Last month I reported on the US Direct Marketing Association conference recently held in San Francisco. One of the featured areas of this event was a whole track on the subject of Customer Relationship Management - a veritable marketing 'flavour-of-the-month' for a number of years now. The DMA conference featured some 20-odd individual presentations on CRM during its four-day duration, and promoted literally hundreds of CRM software solutions of one kind or another, as part of the exhibition.
Then I chanced upon a paper written by one Scott MacStravic (Ph D.) and found some interesting newly published viewpoints on CRM that are very close indeed to my own thoughts on the subject - given that our own business has primarily been about helping our clients to improve communications with their Customers, since I started it way back in 1983. It has prompted me to focus on this subject again this month, but this time with perhaps a slightly different perspective.
Scott suggests in his paper, that 'there are two polar opposite notions of what CRM means'. I believe that even though these may be considered as 'opposites' from the perception perspective, the executional difference between them is often so subtle - as to be missed by many practitioners of CRM.
At the far end is the view that CRM is a set of strategies and tactics that help firms ensure that they deliver optimum value TO THEIR CUSTOMERS, in total confidence that this will result in the firm achieving greater loyalty and profitability from such customers.
At the near end of the poles is a focus on 'Customer Lifetime Value' as a measure of the potential monetary value to the firm, of keeping as many profitable customers as possible - loyal for as long as possible - with no mention of the lifetime value of such relationship to the customer. He calls this unbalanced orientation towards maximising a firm's benefit: Customer 'Rip-off' Management.
MacStravic goes on to suggest that even the use of the term 'Customer Management' itself should be universally recognised as a useless oxymoron, since most customers neither wish to be, nor can be - commanded and controlled. As most of us involved in the customer interfacing arena will know, it is becoming more and more difficult to 'manage' the employees who make the most difference to customer loyalty and profitability - in the first place.
Clearly, customer relationships' value to the firm can only be optimised when and if the customers themselves derive enough value to choose to remain in the relationship. The near end focus on Lifetime Value can create a management mindset that presumes on the relationship, treating customers as if they were 'born' - or certainly acquired, for the sole benefit of the firm.
They are literally bombarded with communications and 'offers' where their worth is directly assessed on the basis of their responsiveness to such offers. As long as they simply keep buying whatever is offered to them, they are deemed to be 'loyal' and considered as worthy of even more of the same.
The fact that loyal customers are also known to be less sensitive to lower prices and switching efforts by competitors, leads some firms to take advantage of this fact by charging loyal customers even more - to ensure their greater profitability. Finally, he says that the (fortunately, now declining) practice of selling the firm's data about their customers to other firms, thereby ensuring that those customers would get even more direct mail, telemarketing and e-mail spam than ever - is another example of rip-off CRM.
The truth of the matter is that given the constant technical innovation and other changes that affect consumers on virtually a daily basis, the focus of traditional marketing remains fairly and squarely oriented in the wrong direction. Marketing may well have been part of the production-driven model that expects us to: Sell the stuff that we make; and the historic Marketing 'problem' was always defined as being task-oriented, and primarily had seller-centric concerns as driving force.
But, many in the communications world are now saying that this inside-out orientation has been overtaken by the changed needs of a 'new' consumer. This consumer has become overwhelmed by so many other considerations: too much choice; information overload; too little time; attention deficiency; trust deficiency; and so on. In this environment - the 'old marketing model' is having a hard time trying to remain relevant to such consumers. CRM that has not yet grasped the need to help the customer to deal with the perceived problems referred to above, but which concentrates instead on 'maximising the value of the customer' to the firm - will undoubtedly fall into the Customer 'Rip-off' Management arena, and ultimately pay the price for such one-sided self-interest.
The older I get the more I realise again and again, that the single biggest challenge that faces us today - is the potential and ongoing conflict between individual self-interest (both motivational and reward) and our collective well-being (the future health of society and the environment). Humanity simply has to find a fair and equitable balance between these two issues.
On the way back from the States, I had the weekend in London and bought a copy of Naomi Klein's (of 'No Logo' fame) very latest book - 'Fences and Windows'. In it she makes a very strong case that the seemingly unfettered 'need' for companies to pursue growth at the expense of anyone who gets in their way - including the very humanity that they purport to serve - is at the root of much of the world's economic and other socio-political problems. Many start with an altruistic intent, but the moment that their money-generating machine gets up to speed - our brothers appear doomed to allow greed and self-interest to take over.
Sadly, the same thing seems to have happened to this process called CRM. What may have started out as a wonderful opportunity to add value to a customer's (perceived) experience and insodoing encourage the customer's loyalty to the company or brand, - has been turned by some into another feeding frenzy of self-interest, where the customer has almost become incidental to the whole process. It's no wonder that our customers are becoming more and more cynical as to the real motives of business!
Despite the enormous challenges for the future of mankind, I do hope that you'll have a great 2003!!