Think Customers: The 1to1 Blog

Profitable - When executives think of profit, most often they think hard dollars. But there are other elements of profitability when it comes to customers. Consider the value of an enthusiastic consumer who recommends a product at every opportunity. Companies like Zappos.com and Bath & Body Works do little or no advertising because word of mouth does it for them. Customer profitability also goes up when the cost to serve those customers goes down. That may happen because they use self-service tools or participate in a user community offering advice to other customers, or because they've provided information about their needs and preferences that makes communicating with them more relevant, thus more effective.

Just as important is making the relationship profitable for customers. Defining what that means is crucial, and requires actually asking customers versus just making assumptions. A profitable relationship to a customer may be one in which they get the best deal or special treatment or exclusives opportunities; it may be easy access to information, about your products or services and about related topics that will help them be better informed or perhaps help them more effectively reach their goals; it might also be access to company executives or other customers through events or an online community. It could be simplifying their interactions with your organizations through SMS reminders or emails that offer one-click purchasing or intuitive self-service options online, at kiosks, or by phone.

Another area of profitability to consider is balancing short- and long-term goals. Every action a company takes, whether it be sending an email marketing campaign or cutting average handle time or adopting team selling, makes an impact at that moment of whether customers are more or less likely to do business with that firm again now and in the long term, i.e., their profitability. Organizations need to balance their need for short-term revenue with their need for long-term sustainability. An enterprise that takes too many actions that drive short-term profit at the expense of long-term customer satisfaction may over time find that it no longer has customers to sell to.

Partnership - Of course, different businesses require different types of partnerships; but one company may itself have multiple types of relationships with its various customers. Making a partnership successful requires first understanding your company's and customers' expectations of what that partnership should be. Dow Chemical, for example, partners closely with customers that require extensive customization of its products, while also offering online self-service for customers that need only purchase standard products and that want them in the fastest time at the cheapest price. Both partnerships are based on value, but the value for the former is based on collaboration; the value for the latter is based on efficiency.

From the customer perspective, partnership may be as simple as getting what they expect--based on branding or contracts or interactions. For the customer, having a "partnership" is often just knowing that the organizations they do business will deliver the service, price, or product they have promised. On the other hand, some customers expect an in-depth, long-term partnership where seller and buyer work together to create unique solutions to meet the customer's needs.

Customer experience - Customer experience is more than customer service, whether that be in the call center, at retail, or during a face-to-face interaction with a salesperson or field service technician. Those are all integral to delivering a compelling customer experience, but for many enterprises, those touchpoints are just the beginning. The experiences customers have with advertising, products (e.g., how they look, how they work), back-office operations (shipping, billing), a website, all impact their likelihood of continuing or discontinuing doing business with a company, as well as their likelihood of doing more or less business or recommending the product or service to others.

One challenge for companies today is that increasingly there are aspects of the customer experience, or the perception of that experience, that are out of your control, like online product rating systems or sites and blogs and online communities that discuss your brands. Good or bad, what is said may be accurate or inaccurate; it's imperative to have a plan for appropriately addressing the issues raised in these forums.

Customer - An organization can't create an effective CRM strategy without first understanding who its customer actually is. Is it the end consumer? Is the channel your partner or your customer? Consider, for example, a hospitality operation that franchises its hotels. Is the customer the franchisee or the people who come to the hotels and sleep in the beds? Without an agreed upon definition of the customer, employees will work to best serve the constituency they each feel is the "right" customers--the result being employees working at odds instead of in tandem.

Some organizations consider all of their constituencies to be customers. If that's the case, there needs to be a CRM strategy that addresses each, as well as a prioritization of the customer groups so there is an understanding of whose needs should be met first if, for example, the needs of two groups conflict. That information must then be communicated throughout the organization.

How is this all different than in the past? Customer influence. Customers today are increasingly expecting a more active role in their relationships with the organizations they value. They want to give feedback that actually gets used in developing products or improving service. They want to participate in creating marketing campaigns, deliver service to other customers online, and share their expertise. More and more, customers today demand to be heard. They want to help formulate what partnership and profitability and customer experience mean and how those things impact them.

Organizations that don't recognize this do so to their detriment. Now more than ever it's time to work with customers to create profitable relationships. Letting go of "controlling" the relationship even a little could return a lot--a lot of trust, value, loyalty...all integral to transforming a CRM strategy to what it really should be: a profitable, enterprisewide business strategy.

NOTE: This originally appears in and is excerpted from the "Leaders Speak" online chapter of CRM authority Paul Greenberg's book CRM at the Speed of Light (Fourth Edition).