Common CRM Pitfalls and Misconceptions about Customers

1. Common CRM Pitfalls and Misconceptions about Customers Scott Rogers thinkjar @jayhawkscot scottrogers0924@gmail.com

2. What is CRM? “CRM is a complete system that (1) provides a means and method to enhance the experience of the individual customers so that they will remain customers for life, (2) provides both technological and functional means of identifying, capturing, and retaining customers, and (3) provides a unified view of the customer across an enterprise.” Paul Greenberg, CRM at the Speed of Light, 2001 “CRM is a philosophy and a business strategy, supported by a system and a technology, designed to improve human interactions in a business environment” …”a continuous business initiative, aimed at providing mutually beneficial value”... “what distinguishes CRM and its strategy from all other business strategies is that it starts with the voice of the customer and is determined by the customer value provided and derived.” Paul Greenberg, CRM at the Speed of Light, 3rd Edition, 2004

3. Best Practices • Process • Strategy • Experience • Voice of Customer • Data Management • Metrics/Analytics • Leadership • Engagement • Change Management • Training Pitfalls • Training • Strategy • Data Management • Change Management • Process • Leadership • Metrics/Analytics • Voice of Customer • Satisfaction • Experience Source: Scott Rogers, thinkjar, Review of posts from keyword search of CRM pitfalls and best practices – non-technical and non-implementation focused – 2010-12

4. “CRM” Jobs today Nearly 50/50 split between Marketing and all other responsibilities – Sales, Service, Operations/Support, Analytics, etc… * Multiple categorizations permitted Source: Scott Rogers, thinkjar, Review of job descriptions for Director and VP level jobs (non-IT) with CRM in job title -2011 to 2012 , n=743

5. Key activities and responsibilities Source: Scott Rogers, thinkjar, Review of job descriptions for Director and VP level jobs (non-IT) with CRM in job title -2011 to 2012 , n=743

6. Conclusions about “CRM” Jobs today Despite the plethora of advice about pitfalls and best practices, • the vast majority of companies are not using the words that show they are focused on the end-results of their strategies • those that are using these words are using company-centric words (retention – 35%, loyalty – 27% and lifetime value -17%) more often than customer centric words (experience -17%, satisfaction – 12%, customer centricity – 6%) • In terms of insights, more are focused on the company centric aspect of customer research – behaviors (30%) versus voice of customer/customer research (23%)

7. Have we been looking through the wrong end of the binoculars? CRM “The problem is that for the first 15 or so years of the CRM market people approached CRM in a technology-centric way and an extremely inside out way.” Laurence Buchanan, 7/2/12, The Customer Revolution

8. Apparently, yes….

9. More than ¾ of companies have some form of customer feedback mechanism Less than 10% think their efforts are stellar Source: thinkjar VOC Report, 2011

10. 80 percent of organizations think their customer experiences are good 8% of customers agree source: Bain and Company, Closing the Delivery Gap Report

11. “Competitiveness is far more about doing what your customers value than doing what you think you are good at” Clayton Christiensen, The Innovator’s Solution “Competitiveness is far more about doing what your customers value than doing what you think you are good at” Clayton Christensen

12. it starts with the voice of the customer… Paul Greenberg, CRM at the Speed of Light, 3rd Edition, 2004

13. Customer Mindsets

14. Feedback is Invaluable What the average American thought a minute of their time was worth US Yankelovich Monitor 2005 the average American’s per capita income = 4.5x PS: (this also explains thinking behind low churn rates…time-onomics over economics)

15. Hearing is a physical capability we are born with. Listening and understanding are skills developed throughout a person’s life.

16. Context Matters 800 14,000 17 the average number of words people use on a regular basis the number of meanings these words have the average number of meanings per word Source: Martin Hill-Wilson, Brainfood Extra, The Art & Skill of Customer Listening

17. “Humans and Thinking are like Cats and Swimming – they can do it if they have to, but it’s very, very hard” Daniel Kahneman, Nobel Laureate in Economics

18. Human Thought Patterns System 1 Thinking • Fast, intuitive, emotional, sometimes irrational, impulsive • Operates automatically, with little or no effort • Unconscious, often behavior precedes attitudes • Can generate surprisingly complex pattern of ideas • Comprises the majority of human thoughts System 2 Thinking • Slow, deliberate, logical, rational • Operates automatically, with little or no effort • Conscious, focused Source: Daniel Kahneman, Thinking Fast and Slow, 2011

19. How we process information • Familiarity– preferring things you’ve heard about it • Framing– being overly influenced by the context in which information is presented • Priming – look for things you’ve been ‘told’ to look for • Loss aversion – losing £1 hurts more than gaining £1.50 • Hyperbolic discounting – a bird in the hand… • Salience– being overly influenced by the last piece of information you came across • Norms and peer pressure – liking what others like • Obedience – doing what an authority tells you • Inertia – letting the initial cost of doing something outweigh bigger, longer-term benefits Source: Alan Mitchell, Reinventing Marketing blog, Market’s Very Own Climate Change

20. Choice is good, but has its costs With it…. Without it… • a sense of loss (when we forgo the benefits of the option not chosen. This leads many people to procrastinate) • decision anxiety (fear of making the wrong decision) • decision regret (“Damn! I did make wrong decision!”) • fear of decision-regret (sometimes, we’re so worried about making the wrong decision that we end up making no decision at all. Tragically, the bigger the decision the more likely this is to happen Source: Barry Schwartz, The Paradox of Choice

21. Coping with Choice • Buy the one I know I like (decisions based on experience) • Buy what I bought last time (reduce research costs and risk) • Buy the one I always buy (habit + research and risk reduction) • Buy the one I’ve heard of (risk reduction) • Buy the ones my friends recommend (research and risk reduction + peer pressure) • Buy the cheapest (value and/or necessity) • Buy the most expensive (quality, status seeking, special occasion) • Buy somewhere in between (‘hedge my bets’) • Buy the one that’s easiest to buy (convenience, hassle reduction) • Buy the one with the biggest discount (value, bargain hunting) • Buy the one I like the look of (impulse, aesthetics) Source: Alan Mitchell, Reinventing Marketing blog, Market’s Very Own Climate Change

22. Consideration Sets CONTEXT Constraints (expectations, memories, fears, perceptions…) Beliefs & Values Influences, Impulses… Hurdles (time, resources, space…)

23. Perceptions

24. Value Perception Source: Value-in-use and exchange value: Irene Ng

25. Loyalty Company lens Customer lens • Rational loyalty • Rewards/Perks • Irrational loyalty • Habit/inertia • Convenience • Familiarity • Lack of Alternatives • Fear of change • Risk Aversion • Affinity loyalty • Belonging • Connectedness • Emotional bond • Locked-in • Repeat purchases driven by: • Something • Product preference • Brand preference • Incentives • Strong emotional bond • Increased interaction with the brand

26. Relationship • 4 types: mutually beneficial, parasitic, predator/prey and competitive • Series of interactions or transactions over time • Preferential commitment to a brand/company • Strong emotional bond with brand/company • Building step to lifetime value • Willingness to share or invest precious resources (time, information, attention) Company lens Customer lens • Willingness to share or invest precious resources (time, information, attention) in exchange for preferential treatment • Emotional bond with brand/company

27. Satisfaction Company lens Customer lens • Result of outcome of perceived performance versus expectations (of product/service/interaction, etc), filtered by time, memory and post-experience environmental factors • System 1 thinking • Static point in time assessment • A silver bullet metric • Key building block for loyalty • Emotional measure of outcome of experience with touchpoints

28. Experience Company lens Customer lens • My perception of the experience is my reality • Perceptions are unique • Perceptions are influenced by other pre-and post experience factors, some of which have nothing to do with the experience • Perceptions are influenced by expectations • Sum of every touchpoint • Sensory stimuli and emotions generated while using product/service • Impact of touchpoints on rational and emotional needs and expectations of customer

29. Brand Company lens Customer lens • Defined by the customer • Influenced by company, friends, family, peers, reviews, etc… • Sum of all perceptions, associations and attitudes held by customer • Differentiator • Market asset created by marketing • Reputation • Emotional bond with customer • Sum of all perceptions, associations and attitudes held by customer • Measure of NPV of future revenues • Premium pricing potential

30. Company lens versus Customer lens Customer Satisfaction Pyramid Brand Pyramid

31. Customer Satisfaction Pyramid how we make them feel how people are served and treated “Things that the company and its employees provide and do at each level take on progressively more importance in terms of their influence on customer satisfaction…addressing progressively higher-order customer needs, similar to human needs in general as described by Maslow…and adding progressively more value for the customer.” how well we perform on product and process promises the infrastructure that supports and enhances the core the essence of what we offer Source: James Barnes, Secrets of Customer Relationship Management, 2001

32. Value Journey

33. What is CRM? • “CRM is a philosophy and a business strategy, supported by a system…. • which starts with the voice of the customer • Provides a means and method to enhance the experience • Aimed at providing mutually beneficial value • Paul Greenberg, CRM at the Speed of Light

34. What is CRM? “..a Customer does not value a relationship with the company, but mostly values the outcome generated from the experience of using your product or service…” WimRampen, Social CRM – What Relationships Shoud You Care For and Why, 2/2/10

35. Understanding what customers value / want / need

36. Recommendations • Understanding the customer’s needs and values is critical to success - it’s their successful outcomes that matter • “Your product/service is a means to an end, and thus, they are creating value WITH the product, not FROM the product”(WimRampen) • Understanding the customer’s mindsets and perceptions are critical to crafting strategies and processes to improve the experience from their standpoint • Attitude (or sentiment) does not always equal behavior. Identify when they do and don’t and develop strategies and tactics accordingly. • There are NO single, silver bullet metrics for satisfaction (CSAT, NPS, etc) or loyalty (or customer effort) that will help you grow and improve your business. Why customers do what they do is not that simple! • Measure what is important to the customer (outcomes, etc), not just what is important to you. Measure what you can take actions on, and those that have true cause and effect relationships. • “Your customer may not always be right, but your customer is always your customer, and therefore, should be cherished.” Liz Kislik,what your customer should and shouldn’t have to do for you