In his book Why We Buy, self-described retail anthropologist Paco Underhill notes that if consumers purchased only what they really needed, the economy would collapse. Indeed one could argue that the heady mixture of good times and popular fads from protein bars to same-sex fragrances to sport utility vehicles has created a veritable buying frenzy.
But consumers are fickle, and more cynical than ever before. We no longer believe what we read and see, and for large purchases we're more inclined to do our own research. Your company has just announced another strategic alliance? You've got a cool new animated logo? You're on your fourth round of venture funding? So what, so what, and so what?
Consumers are busier than ever before, and have consequently placed a premium on their leisure time. After all, why tramp through aisle upon aisle of merchandise when I can order groceries off the Web and spend more time with the kids? And pizza? And dog food? And even that sport utility vehicle?
In a recent Information Week survey 1, of the companies actively implementing CRM, 93 percent claimed that increased loyalty and customer satisfaction would justify their CRM investment. The second-highest percentage, 83 percent, stated the need to demonstrate increased revenue. The implied mandate for most of these early adopters seems to be: Customer loyalty at any cost—even if we don't see a return on investment.
It certainly doesn't take much for a consumer to turn her head to a competing product or vendor. A jazz buff has a mental list of the CDs he wants to buy. When CD Now e-mails him a discount code for the new Dave Brubeck record, he goes to the site and buys it despite his hefty "wish list" on Amazon.com.
But just as loyalty is becoming the mantra on every executive's lips, customer satisfaction rates are plummeting. It's practically routine these days for consumers to vow never to do business with a particular merchant for, regardless of their frenetic embrace of the customer, companies seem to be angering customers at a faster pace than they are serving them.
In June 2000, Fortune columnist Stewart Alsop wrote a scathing piece on Sprint PCS and its poor service. The column, titled "Dear Sprint: You Ticked Off the Wrong Guy," provoked hallelujahs from Sprint PCS customers, one of whom responded:
Another reader weighed in with:
And another (with graphic metaphor):
Treating customers like cattle is the antithesis of CRM, the goal of which is to recognize and treat each customer as an individual. That said, if one individual is dissatisfied, odds are she'll tell a collection of other individuals—one widely accepted marketing rule-of-thumb claims that the average unhappy customer tells eight other potential customers about his negative experience. Such spreading of consumer disapproval turns the world of viral marketing, which depends on word-of-mouth from true believers, upside down. (Viral marketing—a phenomenon in which consumer buzz trumps advertising as the means of a product's adoption—accounts for the popularity of such products as Razor scooters, The Blair Witch Project, and MAC Spice lip liner, to name a few.) Web sites such as http://www.planetfeedback.com and http://www.downside.com are expanding the reach of these "viral complainers" and even speculating on the demise of companies that proffer poor service. The influence of such groups could in fact impact whether a product, indeed an entire company, succeeds or fails.
Companies are spending millions of dollars trying to prevent acerbic customer testimonials like the ones above, and to figure out the tactics that will not only help them keep customers, but keep them coming back.
Every company is working toward keeping customers happy in order to retain them, many going "above and beyond" to delight their customers, and keep them coming back. Scenarios like the one below represent how customer-focused companies like Virgin Atlantic are trying to improve the customer experience:
You've spent two grueling weeks of non-stop business in London and are ready to head home. Virgin Atlantic Airways sends a driver to fetch you at your hotel and bring you the airport. Upon arrival at Heathrow, the driver stops at an outdoor kiosk. Your window magically rolls down to reveal a uniformed Virgin associate, who politely requests your ticket. As the associate checks you in, the driver retrieves your luggage from the trunk—the "boot," in the local vernacular—tags it and deposits it on the baggage conveyor belt. The Virgin associate smiles and hands you your boarding pass.
The driver then proceeds to the terminal, pointing the way to the entrance of the Upper Class lounge which features sleek décor, laptop hookups, and a beauty salon. As you enter and stow your carry-on bag, a waiter asks for your drink order. Midway through your haircut, Peter Frampton walks by on his way to the bar and gives you a little wave. Once in-flight, you'll be offered a pair of fleece pajamas and a free massage.
Everyone's been super friendly. In fact, you've made no special requests, have barely lifted a finger, and still have the cash you left the hotel with. (Declaring this a far cry from your typical airport experience would be an understatement.) As you take the last sip of your complimentary cosmopolitan and prepare for preferred boarding, you make a mental note: You'll be flying Virgin Atlantic again.
Notice that this particular customer experience involved no Internet access. Indeed, as much as CRM technologies tend to usurp its other components, customer relationship management can be as simple as saying, "Thanks for your business." While some customers require a level of personalized service and specialized products that make them feel special, others simply appreciate good manners. And this is the crux of CRM: How to differentiate customer treatment according to individual preferences.
The Virgin Atlantic scenario exemplifies the ultimate goal of CRM. When you recall your trip home from London, your knee-jerk recollection isn't the cost of your ticket or your aisle seat. You remember the entire experience, from what the airline did (the limo, the massage), to that serendipitous extra—in this case, Peter Frampton acknowledging your existence. (Indeed, a recent Virgin advertisement wondered aloud to a fed-up traveling public: "Never hear of anyone cursing out the on-board masseuse, now do you?")
In fact, many companies have recently appended their CRM or customer care initiatives with the goal of "Owning the customer experience." The implication here is less about controlling what happens during a customer interaction than it is about the ability to influence how a customer perceives her contact with the company, be it through an advertisement, ordering a product, or calling customer support. CRM allows the company to transcend what a customer says or does to surmise a customer's unspoken needs.
Inciting a chance encounter with a 70s rock star is probably not in most companies' marketing plans. But there are subtler ways to give customers an experience they will remember and that they'll look for again.
The most visionary businesses understand that singular customer experiences will drive loyalty to levels unknown. Those who have already adopted a customer-focused culture understand that CRM done well drives customer emotion. It makes customers feel good, personally connected. It humanizes their purchase or service request or complaint. These companies define the truly loyal customer as someone who feels such good will toward the company that he "sells" its products to others, in effect acting as a voluntary (albeit unpaid) company agent. Moreover, he takes pleasure in proselytizing the company and its products, in effect repeating his own positive customer experience each time he relates his story. Harley Davidson has mastered the use of its customers as company agents.
In their book The Experience Economy: Work is Theatre & Every Business a Stage, B. Joseph Pine and James Gilmore argue that providing customers with a memorable experience, along with a useful product at a reasonable price, will become a key differentiator for companies striving to avoid the commoditization of their services. Pine and Gilmore cite NikeTown and The Hard Rock Café as two successful establishments that lure customers for reasons beyond their mere product offerings. The authors assert that the evolution from a service-based to an experience-based economy is not only natural but also inevitable. No wonder companies have embraced CRM as a strategic imperative: In serving a customers' unspoken needs, the likelihood is high that you'll be serving that customer for life.