Customer Relationship
Management
Is this the key to improved customer relations?
In the previous decade, it was not unusual for companies to
speak about Customer Relationship Management, or CRM, as the
key to good customer relations. Vast sums of money were invested
in complicated computer systems, designed to inform you about
your customers, allowing you to tailor your services more
directly to them. Although now largely devoid of the place
that it once occupied, it still has an influence over the
market, and is seeing a growth again. In particular, the finance
industry has seen an increased reliance on CRM. However the
question needs to be asked; is CRM really helping to improve
customer relations?
But let us look at the background first. The CRM premise
seemed simple – knowing and understanding your customer
would strengthen their loyalty to you and lead to increased
profits. Systems were put in place in many companies to log
preferences and trends in their customers, in order to target
them with things such as premium services, loyalty cards and
special offers. CRM quickly became the new ‘must-have’
technology. Disillusion with the early systems were clear:
instead of providing a unified picture of their customers,
companies were left with a mass of data to sift through. Suitable
products for particular customers were not clear from the
data being produced.
Such early systems were condemned as a failure, and improvements
forced to be made. Analytics systems entered the equation,
using an analysis of customer data collected, along with analytical
reasoning to match customers with products. Although it has
overcome some of the problems initially associated with CRM,
its benefits seem far more in the favour of the provider than
of the customer.
In reality, is our trust and loyalty really gained by being
offered special offers and premium cards? Does this genuinely
encourage us to use the services of the company? The answer
is – it depends. Customer loyalty is not something that
can just be won by quick-fix solutions like special offers
and premium cards, but is something that requires investment
of a very different sort. What is requires is an investment
in the services being offered – their quality, the people
offering them, and their effectiveness.
What CRM often fails to take into account are the people
themselves: whilst it deals with customers as figures, it
often does not see them as individuals with basic needs to
be met. By trying to retain loyalty by offering extra services,
attention is often deflected from providing a decent basic
service. How often have we taken up offers that seem good
on paper, but have actually proved to be of poor service,
quality and worth? If a restaurant offers us a discount as
we have used it before and they have our name, what is driving
us to return is probably not the discount itself as a first
reason, but instead whether we had a good experience of it
before. If the initial service was inadequate then we will
in all likelihood not return, despite the offer.
What companies need to be focusing on is that initial service.
If we use the example of the restaurant again, what we need
to initially experience is a fantastic service, polite staff,
good food, reasonable prices and a good overall view of the
place. With this in place, a trust of some sort has been established,
whether we use it again or not. We trust that we will get
a good, enjoyable meal and experience if we use the establishment,
based on our initial judgement. If we are then offered a discount,
that initial trust established will be called upon if we take
it up. If we were dissatisfied with the initial experience,
a discount is unlikely to tempt us back there again.
If we were satisfied with the initial experience, and do
use the discount, we then expect the same level of service
from the restaurant again. It is this aspect of the experience
that will begin to build up a customer loyalty: we have received
a good service more than once. No amount of offers, discounts
and cards would win such loyalty if the basic requirements
were not there. If a company does not get its services right
in the first place, what is the use of targeting clients specifically,
according to a profile that has been built up?
Clearly for many companies, CRM is the key to their customer
relations, but in relying on it too much at the neglect of
other factors, it is unlikely to result in good customer relations.
Treating customers as statistics to increase profits is never
a good way to actually improve customer service. The initial
investment in basic services is far more important to win
the customer over in the first place. However, keeping existing
customers is far cheaper than winning over new ones, so CRM
is not necessarily completely useless. Once that initial trust
has been established, CRM can help to retain customers by
targeting their needs. However, their loyalty will only remain
if the basics remain good and constant, regardless of offers
and cards you throw at them.
CRM can be a building block to good customer service –
but only if the foundations there are already strong.
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