Customer Disservice

by Toronto based columnist and CRM consultant Stephen Shaw
Go Direct Marketing

Almost as quickly as CRM rose to the top of corporate agendas it has come under fire – too much pain for too little gain, critics scoff. Even if that was true, there is no turning back now.
For a sober reminder of how tough CRM is to pull off, just pay a visit to the eComplaints Web site where consumers describe the dismal and sometimes comical experiences they’ve had with companies after a purchase has been made.

Take this example involving an exasperated customer of the online bookseller Chapters.ca who posted a complaint after purchasing a DVD. “They have turned a simple order into a month long ordeal”, the person moans, then goes on to describe how a promised $20 discount was never applied to the original credit card purchase. Even more infuriating, when the product finally arrived after two weeks it turned out to be defective. The customer is later perturbed to discover that the same DVD could be found on sale at Future Shop for $5 less. After making four calls to customer service, each time having to wait in the queue for 20 minutes, on top of sending half a dozen e-mails, the person finally succeeded in wresting a $15 credit out of Chapters - only to see a $10 debit inexplicably appear on the very next credit card statement. The person concludes by snarling, “All together my experience with Chapters online has been one of disgust”.

There are even more wretched stories to be found on this site, but whether the target of the invective is an airline, phone company, bank or on-line retailer, the cumulative impression reading these tales of woe is that most companies treat service as an afterthought – and the situation is not improving despite billions being spent on CRM systems. Many CRM projects are running into fierce internal pockets of resistance, integration headwinds and a lack of fortitude on the part of senior management to stay the course. And sometimes the heavy turbulence can bring a project crashing to the ground. In fact, according to one survey, about 13% of projects end in outright failures – a rate that may actually be closer to 50% according to the Gartner Group if judged from a customer perspective. So detractors have been quick to proclaim that CRM is more trouble than its worth.

Still, it is impossible to imagine that companies would roll the clock back on CRM since none of the pathogens afflicting corporate earnings – brand parity, consumer fickleness, stagnant markets, compressed product cycles – can be eradicated other than by aspiring to zero customer defections. Customers have come to expect superior products; what they rarely get is superior service. Since lasting relationships are based on consistent respect and recognition – the two qualities often lacking in service interactions - it would seem obvious that CRM is the only possible antidote. After all, the main reason customers defect is the perception of apathy. Even the venerable “Economist” magazine reminds us in a recent editorial (July 2001): “Only happy customers will be loyal ones – and loyalty is something companies desperately need if they are to survive in today’s difficult economic climate.”

The major barrier to CRM is not technology integration – it is structural integration. Much of the blame lies with narrow accountabilities that discourage a broader outlook. Projects labour under the competing agendas of internal factions and a lack of enthusiasm on the part of some participants (usually in sales). This tepid commitment to change sabotages any attempt to create a frictionless horizontal experience for customers. None of the business units passionately subscribes to CRM because each views the customer world through its own set of lenses. And as long as each continues to be rewarded solely on the basis of company-centric metrics they will never develop a more generous vision. Being asked to pump up sales or build market share or take out costs has nothing to do with pleasing customers. What’s needed is a hierarchy of cascading measures that conclusively establishes the link between shareholder value and customer loyalty. Without proving that direct correlation, organizations will continue to have a low pain threshold for the wrenching changes that breathe life into CRM as a business strategy - because the cost will always seem too high.

The best solution is not to dismantle the walls that exist; it is to make them more permeable. In order to encourage joint ownership over a top-to-bottom measurement system, cross-functional steering committees should be formed, ideally headed up by a Chief Customer Officer, whose role is to secure organizational buy-in, provoke radical thinking and streamline the value chain. One major telco in Canada has already taken the brave step of splitting its marketing group into consumer and business solutions units, each headed up by a tri-partite team made up of segment, product and channel managers who collectively agree on performance targets and develop their plans with the best interests of the customer in mind.

Another persistent blind spot is that companies continue to believe brand equity is all about price and product, the standard questions being: how do customers perceive the utility of the product in their lives and how emotionally connected are they to it? Whereas the relevant question today is, how positive is the overall experience with the brand? Does the brand bring meaningful value to the customer beyond its actual use? How committed is the company to the relationship past the point of sale? Is the brand intrinsic to the daily lives of customers? The relationship arc needs to cover every facet of customer interaction, leading to natural increases in brand equity as the thread of positive experiences grows longer over time.

Instead of frittering away customer goodwill for the sake of a few dollars – indicative of an upside down view of the world – the proper approach should be to do whatever it takes within reason to salvage future earnings. Give the customer the discount that was promised - maybe even a little extra as recompense; chances are, they’ll buy again. And if there are enough repeat customers profits are sure to follow. Then maybe the infidels will stop questioning the value of CRM and get on with the job of making it happen.