You Don’t Need a CEM/CRM Strategy To Be Customer Centric

Last week I read a (Dutch) post that covered a new white-paper from SAS. The post was titled: “Customer Centricity, still in its infancy”.

After reading the white-paper I concluded (and commented to the post) that it was written completely from the perspective of the solutions SAS has to offer. And that, as a consequence, SAS itself does not get higher on its own Customer Centricity maturity model than the level “self-centric” (being the infancy level).

That statement, of course, was a little harsher than needed, because I think SAS provides some great solutions that many Customers really appreciate. But it was a shot at open goal, I just could not resist ;)

Three elements of Customer Centricity, according to SAS
In the white-paper they presented a model of Customer Centricity shown here.

Customer_centricity_SAS_544_306_s_c1_smart_scale

You can find some explanation in English here. I liked the model at first sight, but was disappointed that “Customer Value” was not about “Value for the Customer” but about “Customer Lifetime Value” (and some newer elements like Referral Value), in other words: Value to the Firm. On top of that, the white-paper consistently talks about improving the Customer experience by making the (the right) Customer (the right) relevant offers (at the right time), by using Customer data-analytics (of course).

Customers do not desire offers
I’ve said it before, and I’ll keep saying it whenever prompted: Customers do not desire offers, they desire the benefits they can create with the use of your product and/or service (at a price they feel fair). Hence Customer centric marketing focuses on improving Customer value-in-use, not (just) the Customer journey leading to a transaction.

You do not need A Customer Lifecycle Relationship Management Strategy
I believe one can be extremely Customer centric without having a Customer Lifecycle Management strategy or a Branded Customer Experience strategy, aimed at positively wowing Customers with excellent service (think Zappos-like). CRM and or CEM? You don’t need them per se!

Operational Excellence can be Customer Centric
I maybe wrong here, but Ryanair seems like an excellent example of a company that purely leverages Operational excellence and Cost-Leadership to provide the best service possible for their target Customer segment. That is the segment that wants to get from A to B at the lowest possible price with the highest likelihood of being on time including luggage. And that is the segment that is willing to trade-off all other “frills” for these three benefits.

Pay-back
It’s also a strategy that seems to pay off. In their Q4 2012 report (pdf) they not only report a continuous growth of passengers, and being the number one International airline by number of international flight passengers. They also report a 92 % Customer repurchase and 87 % recommendation intention. (hello!)

And yes, Ryanair knows how to up-sell to their Customers, and they know how to monetize their Customer (data), but they do not try to be excellent at other stuff than what they chose to be excellent at because that matters to their Customers most. And they do care about the experience being designed to differentiate the airline in a positive way from other airlines, just not in a way branded “experientialists” want it to be..

Ryanair loves the Customers who love them, and is that not what Customer Centricity is all about?

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6 responses to “You Don’t Need a CEM/CRM Strategy To Be Customer Centric

  1. Hello Wim
    Thank you for initiating this conversation.

    I agree with you when you make the point that SAS has simply rebadged CRM thinking and called it customer-centricity. Others have rebadged CRM and are now calling it Customer Experience Management. It occurs to me that is the way of the world – we steal whatever buzzwords are fashionable and will hypnotise the prey that we are after. That is neither good nor bad, it is just what is so.

    If it is OK then I want to respond to the main points that you make in defence of your assertion.

    Customer do not desire offers.

    But they do! I have noticed that my wife looks forward to her offers (and rewards) from Tesco. I notice that I value Amazon’s ‘offers’ when I buy a product and see related recommendations. The research suggest that brands are followed on facebook mainly to get access to offers. And companies like Groupon and Wowcher do well simply because they provide offers. Lets, not forget lastminute.com which is all based around getting the right offers to people at the right time – selling distressed inventory at the last minute.

    You do not need a customer lifecycle management strategy

    Here you give the example of Zappos. I find myself to be in agreement with you. At the same time, I have come across cases where both the customer would benefit if the company did consider customers well being across the lifecycle and provided the right information or offer. For example, as a customer you might buy an expensive piece of machinery and want to get the max out of it. You would welcome proactive, service centred, value creating communications informing/advising you on how to use/get most out of this equipment. Further, as a customer you might not have the expertise to service the equipment and would value getting information on what the company can do for you: where the service centres are, the capacity, the specific expertise at each service centre etc.

    Operational excellence can be customer-centric

    You put forward the example of Ryanair. It occur to me that if you and I are not careful then we can point to any business that is doing well and say “Look this business is customer-centric”. What we truly saying is this “Look this business is successful”. On the basis of your logic Nokia was customer-centric for a long time. Until Apple came along with the iPhone. Or for that matter, RIM was customer-centric until Apple came along.

    Or take the example of the British banks: HSBS, Lloyds, Barclay, RBOS etc. For a long time they were making lots and lots of money. They were the money making machines. Does that mean at those points you and I could point at them and say “Look these British Banks are customer-centric!”. It occurs to me, that is not the case.

    No, I say customer-centric, to be of any practical use, has to be disassociated from financially successful. Nor is repeat purchase or tenure of customers reliable indicators of customer-centricity. The brand name software vendors tend to get and lock in customers. Customers stay locked in. Why? First, if you are looking for hi-tech you have to go and buy. And all the sellers practice the same practices. So you choose the best from a bad bunch. Once you have chosen you stay because it is too much hard work to move. And what for? It occurs to you that you will end up in exactly the same place after all the effort!

    The more that I grapple with the term “customer-centric” the more I am present to this: it is meaningless, it is confusing, it is ambiguous, it is actionable. Therefore, I propose that we drop that term. And that is the direction that I am heading. I used to say that I am about customer-centric business. I don’t say that anymore. Now I say that I want to work with/help those executives/managers/organisations that have an uncommon commitment to creating superior value for their customers. And you can do this in any number of ways: customer intimacy, product excellence, customer experience excellence, operational excellence…

    What do you say? I look forward to hearing what you have to say.

    • Hi Maz,

      Thx again for your support and your structured comment. I’ll try to reply in the same manner:

      Customers do not desire offers
      Sure, my wife and I sometimes have the same anxiety when “that time of year” is around, but that usually is because we want the best deal for a product we want. And yes there maybe some (or a lot of people) that are waiting by the mailbox for the next Groupon mail, but that’s not the issue I’m trying to addressing. For that is the issue that marketers are only focused on the moment of value-in-exchange, not the value-in-use. And, I dare to say (assumption though) that companies like “last-minute.com and Groupon” would have a lot less business if more marketers would steer towards value-in-use marketing..

      Lifecycle-management
      The Zappos example referred to the wow-experience, not the lifecycle management remark. And I’m not saying there is no use for lifecycle management in a Customer Centric world. All I’m saying it is not PER SE a part of it in all cases. Although, for reasons of healthy dialog, I took some short-cuts in my reasoning ;)

      Operational Excellence
      Here we do not agree. I’m not mistaking success for Customer centricity. I’m saying that Ryanair did a great job of understanding under-served jobs-to-be-done and desired outcomes of a (large!) Customer segment.. And they leveraged those insights to do just that: serve the under-served (or the over-served might be a better typology for some elements of the Customer job..) in a way that results in high Customer loyalty (measured in intent to buy again and recommend to others). If that’s not Customer-centric, what is?

      Thx again. Let me know what you think.

      Wim
      p.s. I might get back to you on the “definition” issue in a new post.. still reading in on that :)

      • Hello Wim
        Ok, I have been thinking and this is what occurs for me.

        Customers do not desire offers

        Your assertion shows up as correct. Customers do want help in creating value from the product/service they have purchased so as to get the job they have hired that product/service to do, done easily. And, if you have just paid $1m for a product then you certainly want advice/training/help in keeping this product productive as long as possible. So yes, you are correct in this assertion.

        Where we differ is this. That does not in itself mean that customer are not open to and do not value relevant offers. They do. I value recommendations from Amazon based on my recent purchases. I value recommendations by LoveFilm or Netflix based on what I have viewed and rated.

        It occurs to me that this is not either/or. It is a case of AND. Focus on value in use. And make the right offers at the right time to the customers who have put their hands up for this service. The key is that these offers should genuinely be in the best interests of the customers based on your understanding of your customer.

        You do not need a customer lifecycle management strategy

        It occurs to me that you and I are in agreement: you do not need to put in place a customer lifecycle management strategy to be ‘customer-centric’.

        Where I differ from you is in this: the right kind of customer lifecycle service based marketing strategy can create value for the customer. Just take information. There tends to be information asymmetry at least in some industries. And here there is an opening for a company to create value for the customer by providing relevant information that the customer does not have. Take telecoms: the telco has the information/ability to inform the customer if he is on the wrong tariff and recommend the right one. And if such a recommendation was made then the customer is likely to welcome it. One telco I know proactively contacts my brother – three months before the end of his contract – and offers his the latest Apple phone. Why? This telco knows that my brother is partial to Apple phones and is a valuable customer.

        To sum up: a customer lifecycle management strategy is not required. Companies like Zappos show that. And so does Timpsons here in the UK. Just great service does the job to keep customers happy and coming back. That does not mean that the right sort of customer lifecycle management strategy cannot play a role in aiding customer-centricity. The key here is that it is unlikely to be a management strategy so much as service/value creation strategy.

        Operational Excellence
        Yes, here we do disagree. And I cannot see a way around this disagreement because it does occur to me that you are finding an example of a successful business and labelling this customer-centric. Yes, Ryanair, took a look at the situation and found a place to play where they meet customer needs and get rewarded for it. And that is the case for every single successful business. Find an place on the business landscape where one can play and prosper is the basic requirement to survive in business. It does not constitute customer-centric.

        To use an analogy. There is a river and the folks live on one side of the river. Work is on the other side of the river. The folks can either go the long way round by horse. Or they can take the raft across. The chap that has set up the raft is surly. Yet, he is the only player in town. And when you take everything into account it is preferable to use his services then to go the long way around. So you take the raft. That makes the raft operator successful. And customer loyalty is great at least as measured by repeat business. The key question to ask is what would happen if a second player entered the market and set up a raft business. And he was so much nicer to do business with whilst charging a similar price. That is the test of customer loyalty.

        To conclude, I get where you are coming from and the key point you are making. It occurs to me that you are operating from a theory – SDLogic by Vargo and Lusch. I, on the other hand, are vary of theories and are coming from the perspective of phenomenology. And as such we see the matter at hand differently. That is fine by me – the world is big enough for both of us.

        Maz

  2. You’re right, Wim. There are any number of businesses who don’t have a CEM/CRM strategy that are customer-centric. Businesses such as Nordstrom’s were customer-centric long before software was invented. There are countless small businesses that can’t afford software that are doing just fine in customer-centricity.

    Software isn’t a requirement for customer-centricity. It is merely a tool that, when used properly, can aid organizations in creating better experiences and managing better relationships (with those who want them).

  3. Pingback: The Debate on how to be Customer Centric | Proto Partners Service Design Blog·

  4. Pingback: Are You Riding The Customer Experience Hobby Horse Into Wasteland? | Wim Rampen's Blog·

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