OMG! Customer Channel Madness! Getting Strategic About Customer Relationships (Part 1)

It’s 2011, do you know where your customers are?

Do you know what they think about you?

Your customers and prospects are now coming at you for sales and service via — iPhone, Android, tablets, 1000s of Apps, Facebook, LinkedIn, Twitter, IVR, chat, internet knowledge bases, corporate websites, call centers, emails, video collaboration, texting, and yes even that relic channel, the US Mail.   And, companies of all sizes have established contact centers to provide quality service, support, and sales.   In fact, a contact center is really no longer a ‘center’ at all.  It is a virtual melding of multiple hubs of service agents dispersed all over the world, in remote centers or operating from home via VOIP.

CEO’s and heads of strategy, marketing, and sales see huge opportunities (and threats) in the new and evolving channels to connect with their customers.

Contact Center and Operations managers see… chaos.

How on earth do you begin to manage all these disparate and evolving channels, measure your success, motivate and measure your agent’s performance, ensure a quality customer experience, and meet corporate strategic goals and interests?

You need a Plan.   And, it isn’t as easy as saying, “to the Cloud”.

First and foremost, for the moment, stop thinking about you (the budget, the obstacles, the politics, the schedules), and start thinking about the single most important asset to your company:  your customer.

1. Develop a Focus on the Customer

The term CRM ‘customer relationship management’ has become tired and worn.  Yes, everyone gives lip service to customer relationships, satisfaction, loyalty, and retention; but, it’s hard to execute when your senior management are telling you to reduce operating expense, dilute loyalty program benefits, and trim headcount!

It’s important to remember and remind the organization that just a 5% improvement in customer retention can yield 50-100% in company profitability, a tenet from research conducted by Bain & Co’s Fellow, Fredrick Reichheld.

Don’t think 5% could mean that much?  Think of it like a MLB baseball player.  A player hitting .275 is considered a decent, average player, but a player hitting .325 is considered a superstar, commands significant compensation pay, and is held up as “elite” status.  A player that improves their hitting from 27.5% of the time to 32.5% of the time results in huge performance and economic differences.  That’s just a five percent difference.

So, before launching into significant technology upgrades and exploiting new social media channels, you need to know where you are (are you hitting .275 or .325, or even in the game?).

Start with this simple question:

Q:  Can we treat our customers the way we would want to be treated?…. across all the channels of engagement.

Your answers to that will begin the process of strategically approaching your customer relationships and solutions to enhance the interaction with them.

2.  Listen To Your Customer and Assess Your Relationship Status.

Next, begin to construct an analytical understanding of your customer.   Listening to them is paramount to determine the quality of your relationship.

There are many useful techniques to determining the quality of customer relationships, but two approaches provide a solid starting point and ease of administration.

First, a simple question for your customer:  How likely are you to recommend us (your company) to a friend or colleague (on a scale of 1 to 10)?

This is the underpinning question of the Net Promoter Score (NPS), again developed by Fredrick Reichheld of Bain & Co.  The essence of this simple score is that only the customers who score your company at 9 to 10 are truly promoters of your business, and thus have accretive effect to your revenue and profit growth.  Scores of 7 to 8 are viewed as passive and these customers are likely swayed by competitive offerings.  Scores of 6 or less are viewed as detractors – the lower the score the more negative their impact to your company.

NPS is a good ‘top down’ metric to get a barometer of your customer relationship, and is far easier to administer since it’s only one simple, but powerful question.   However, by itself is not enough.

The second customer relationship approach begins to get at the reasons customers buy, and keep buying, your product or service and the various dimensions of their satisfaction.  For this, we implement a modified framework of SERVQUAL, a survey method originally designed by Zeithmami, Parasurmaman, and Berry and has been refined and adapted since it’s inception in the 1980’s.  The objective of this approach is to measure customer satisfaction across five distinct dimensions:

• Reliability – A company’s ability to perform the promised product or service dependably and accurately
• Assurance – The knowledge, competence, and courtesy of employees and their ability to convey trust and confidence
• Tangibles – Physical facilities, equipment, personnel, brand, or other traits that impress the customer
• Responsiveness – Your company’s willingness to help customers and provide prompt service
• Empathy – The level of caring, individualized attention or understanding your company provides its customers.

Survey questions are offered for each of the dimensions, generally on a 1 to 5 scale, and are used to determine the gap between your customers expectations for excellence and their perception of your company’s actual service or value delivered.

The rate for customers responding to surveys is typically low (ranging from 5-40%) due to perceived inconvenience, etc.  However, administration of both NPS and SERVQUAL is far easier today, and with higher response rates, if you use web browser survey tools which make it easy for customers to easily and quickly submit their answers, and compilation of responses a breeze with powerful survey database reporting.  To improve your customer response rate, consider offering some small token of value such as a discount off next purchase, or points added to loyalty programs; but consider this wisely as it may skew the customer’s responses.

Armed with customer perspective analysis, you can continue the journey to assess your company’s ability to improve customer relationships and loyalty.

Coming Up:  Part 2+:  The Roadmap:  Continuing the journey to designing strategic processes & solutions, managing the myriad of customer channels, and focusing on the right metrics, to yield profitable, lifetime Customer Relationships.

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