The Ca$e for Customer Management

Excerpted from Neil Woodcock’s article in Interactive Marketing, April/June 2000

Do companies which manage customers well actually achieve better business performance than those which do not?

There is a largely unspoken assumption among senior managers that a focus on ‘customer relationship management’ is conceptually desirable, but actually may not be the panacea that it is often heralded to be. There is a commitment to it (at least verbally and with mission statements) in boardrooms all over the world, but when margin pressures increase, the focus from senior management can often become myopic - leading to a concentration on short-term financial measures.

As a result, the customer experience often degenerates and a downward spiral of volumes, margins and people motivation may be created and perpetuated.

Research based on application of UK based CQi’s CMAT customer management assessment model demonstrated a positive correlation of good business performance (based on eight criteria combined) and good customer management. Conversely, companies that do not set up good customer management practices are likely to be poorer business performers.

The key lessons are:

• There is a significant prize to be gained by focusing on improving the way customers are managed.
• The approach to improvement involves a holistic view of customer management and prioritising a series of actions designed to improve the whole CRM model, but notably:
  • Working on the leadership and development, management and motivation of people and core suppliers;
  • Development of clear customer management measurement criteria and ‘actioning’ processes;
  • Carrying out practical, sensible customer management activities, following a set of essential principles.

Essential Principles of Customer Management

This is a common sense, high-level checklist of customer management principles that can lead to improved business performance:

• Have you adopted a holistic model of customer management that makes sense to you an your organization and used it to plan your customer management approach
  • QCi’s CM model components are: Targeting; Enquiry Management; Welcoming; Getting to know; Customer development; Managing problems; Winback.
• Have you worked to understand customer value and behaviour, and determined which customers you actively want to manage, and which you do not?
• Are you clear, as a whole organization, about your core (profitable) customers’ core needs and how these needs can be delivered efficiently with out error, in a way that allows the customer to enjoy the experience?
• Have you set up and do you measure the service standards defined in the value proposition to each key customer segment?
• Do senior managers reinforce basic customer management principles, show that they care about customer service and cascade clear people targets related to retention, penetration, acquisition and efficiency objectives?
• Are your people and supplier competencies and activities aligned with the achievement of the only four things that matter – retention (often through excellence in customer service), acquisition, penetration and efficiency? This is a leadership issue as well as a remunerations issue.
• Do you listen to and act on feedback from your people. On balance, are they happy at work?
• Have you influenced the key job roles in your or your suppliers’ organizations (not necessarily customer facing) which influence the customer experience? Have you ensured that jobholders are competent to enhance the customer’s experience?
• Do you have a system plan to support the holistic customer management approach?
• Have you identified the everyday core processes and policies, especially those which impact on customer experience? Did you check that they are robust (nothing falls through the cracks), customer friendly (customer perception) and measured (internal compliance against set standards)? Have you done this for your company and your customer-facing suppliers?
• Does the technology actually support the business model, or does it hinder good customer management? Have you checked that the enabling systems are not over-engineered?
• Is the customer experience of your overall proposition monitored and are any issues quickly identified and remedied?

If the answer to all the questions is Yes, you are likely to be a good business performer.

There is clear benefit to be gained by returning to common-sense customer management. Focus on sensible practices - they make a good ca$e.