As often happens the last post on customer service prompted a flurry of emails. Thanks to Philip for the ideas in this extended sequence as quoted below. In effect a guest post…

“Churn is a well known issue in the telecommunications sector but I was piqued by your comment, “In fact many companies treat all customers the same and that is a fatally flawed strategy”

Yes, I think that’s right too. But equally that’s hard to do and the bigger the company, with systems then the harder to start making exceptions.

So how does a company, medium or larger scale figure out if there something to this idea of treating customers different so that they would be encouraged to translate that into a business action.

I mean it has to ultimately make them some money – somewhere right, even if that initially only comes out as good news stories and praise as decent company ?

How does a company design a loyalty program? or a pricing scale?

or a something that acknowledges and rewards their long term customers?  so that even if the customer service wasn’t great one night/day/weekend, or there is a hot special with someone else, the customer still feels OK to do business with their long term provider.

I don’t think it’s an easily answered but the more I thought about it . . .

How about I counter that while your statement  “In fact many companies treat all customers the same and that is a fatally flawed strategy” appears to be right
- it is fact incorrect.
(dum-a-dum- dummmmm)

Big spending customers get volume discounts, so they ARE treated differently. New customers can get introductory offers to join, so they ARE treated differently, Seniors get a deal ???

So it’s the people in the middle, you are talking about here.

Not big spends in corporate terms, nor people who churn as a way of life as they hunt out deals) but just business people or maybe better put, busy people,  who cannot be blowed, to getting on to new platform, or phone etc  and reprogramming their handsets with all those numbers (do I really have her phone number after this many years?)

So is your point is that there is a market, I mean a dollar in keeping them right?

Now if you could figure out the numbers for that – that would be a business”
Philip

Thanks Philip – what do the rest of you think about this? I’d say that I am in the neglected middle part of the customer group. In my view there is more than a dollar in reaching this group and that is one of the ideas I  was trying to reach.

I still maintain a view that segmenting customers and offering segment messages is the way to go but the temptation is just to go for velocity and hope customers stay for the ride.

When people ask “What business are you in?” I would say I’m in the business of leveraging customer capital.

The concept of customer capital includes goodwill and increasingly in these days of social media the ability to communicate widely about customer experiences far and wide.

Update: They might even twitter about it.

The old measurement used to be if I liked the company I might tell a few people but if I disliked the experience I would tell 9 people. Given the viral nature of websites and other media the multiple has to be more like hundreds and possibly thousands.

In the world of the internet market reach can also have a darker side and its your reputation that is up for grabs.

The thing is that not every company realises this and so there are no really useful measurements in place to find out what is happening to the customer vibe for the business.

When I worked as a management consultant we would look at ways to develop measurement criteria outside of the typical accounting numbers.

Sometimes managers would say we should know how many customer complaints there are.  The dirty secret with customer complaints is that staff manage those down to make it difficult for a formal complaint to actually show up in the systems.

According to the book “Customer Service From Hell” (by Phil Slater) only 5 percent of complaints actually show up as a formal measurement.

Another 10% of people tried to register a complaint and were blocked from the process. The other 85% just walked away and may have told everyone they know that they had a problem – but the company itself is blissfully unaware.

And worse they don’t realise that for every customer complaint that gets through the system they are missing the other 90+ percent. Each time this happens they miss an opportunity to win back a customer and buzz in the market and staff morale are effected like some kind of invisible virus.

Just imagine you have outsourced your front-line customer management (bad idea) how many complaints do you think you might hear about? This means the number of formal complaints might be less than 5%.

The answer is very few because outsourcers are expert at the fob-off and in the absence of explicit customer service policy a customer avoided might suffice when they are crunching the numbers.

Just like exit interviews for people leaving jobs – the person might actually say the truth about the company an exit interview for disappointed customers would be a great idea but most companies don’t want to think about it.

This is vital information on the health of the company and just like the canary in the mine – when the customers sing the management had better be listening.

If I was asked to develop a measurement on customer capital for a typical business I would want to have a look at customer lifetimes, churn rates and actual numbers lost each month. I would then annualize that up so that management teams have a more tangible idea of the power of customer buzz.

For instance if I pay company x $150 per month for a service then the annual revenue is multiplied by 12 times. If I stay for 3 years instead of 2 then as a customer I can be worth $1800 or by lifetimes $3600 or $5400 on a 3 year rolling cycle.

Straight away you can see why some companies want to “lock-in” customers on a fixed term.

The background reason for these calculations is that I recently changed suppliers after one customer service meltdown too many.

To put things in context – lets look at some real numbers. In the June quarter of 2008 Vodafone won 35,000 net new customers compared with a 57,000 gain in the March quarter. (Public numbers from NBR page 11, July 25th 2008.) On the website they have mentioned a customer numbers baseline of 2,024,000 for new Zealand.

What is not reported is how many existing customers left the company in the March and June quarters. Those numbers are even larger.

This is called a churn rate from Lock the Customer – Not the Phone (November 2007)

“This month KPMG completed a global study into customer loyalty in the telecoms sector. The findings show an industry rife with CRM failure – and it doesn’t look like things will improve any time soon…..”

“despite the advent of 3G services mobile telecoms companies were losing customers twice as fast as they were in 2003. Defection rates had more than doubled in those two years, from 15.5 percent to a crippling 33.4 percent.”

So if Vodafone churn rates are 15% then 300,000 customers each year are leaving. If it is closer to 30% then that number doubles and 35,000 net new customers for the quarter doesn’t look so good.

In fact 300,000 customers churning each year works out at 25,000 per month so in one quarter the numbers leaving can be anything between 75,000 and 150,000 (@30%)

To place it in a more bite sized context this is a range of between 1100 and 2200 people every day that have some kind of reason to leave Vodafone (based on 22 working days each month.)

This might be why there is /was all those 25min phone queues and outsourcing to Egypt.

In my case after 9+ years with Ihug and Vodafone I chose to leave as do many hundreds of others each day. I tried to make a complaint but was told there was no way to escalate as the team manager was on leave and couldn’t action any complaints till he got back.

He never did. I left and Vodafone is poorer and dumber as a result which doesn’t help anyone.

I’d say more but Vodafone has a monopoly position on GSM mobiles in NZ and until there is more competition I can’t really say exactly what I think – but you can guess my feelings.

In my case each time a customer like me leaves at $5400 per lifetime this equates to millions of dollars that the company has to replace in revenue and profit.

Even if we were to assume that only 10% of customers had a customer lifetime value of $5400 that is still at least 2,500 customers each month. This is still a very large number.

The real point is that for most companies the numbers are too scary to even calculate so they just don’t do it. Eventually this exodus can reach a “tipping point” at by then its all over red rover.

“The average number of businesses that will stop doing business with you each year is 20%. To achieve a 10% increase in sales you need to win 30% more customers.

On average each business spends 6 times more to win new business than it does on keeping existing customers.” From Six Marketing Mistakes off Marketing Best Practices

Who then goes on to recommend much better customer care of existing customers. In fact many companies treat all customers the same and that is a fatally flawed strategy.

For example – if the Ihug / Vodafone had kept various customer self service options for long standing customers then I might still be around – but forcing me to call a help-desk on numerous occasions for functions I had previously been able to do was the straw that broke the camels back.

How about this quote

“We can’t afford to have unhappy customers.  Just one mistreated customer can affect thousands of future sales.”

This comes from a list at on Measuring Customer Experience by Paul Holstein

We review our Product Reviews to see the problems or successes our customers experience.

We have a suggestion box on every single page of our website where customers can tell us if any page is confusing or needs additional information.

We monitor blogs with a tool from bloglines.

We use Google Alerts to monitor new web pages that reference us.

We look at new referrers to our site to see what they say about us.

We have a self serve testimonial page where our customers can share comments.

We monitor our e-mail to sales@ or orders@ or webmaster@ using help desk software.

We regularly perform usability studies in our own lab.

We regularly perform multivariate testing using Google’s website optimizer.

We use Alertsite to monitor our website performance.  Gomez is a more expensive competitor.

We monitor our 404 errors by studying our log files, not just our Omniture reports.

We poll our customer service reps. to get an idea of our customer’s thoughts.

We monitor high bounce rate pages.

We monitor zero site search results.

We use a newspaper clipping service from Cison (formerly Bacons). A competitor is Burrelles Luce.

We regularly crawl our own site looking for problems.

There are also a whole range of other  tactics businesses can use to leverage their customer capital. However will leave that till next time as this post is longer than I guessed it would be.

Is your business a customer circus or are you leveraging customer capital?

Circuses are fun but in my view it is much better to actively leverage customer capital.

Customer complaints are gold dust and should not be ignored or discouraged. Use them to do much better.

TED just released news (June 2008) that there have been more than 50 million downloads of their videos.

Ashley Highfield of the BBC mentions that iPlayer has now had more than 75m video downloads (as at May 2008) so clearly we are moving into a new era of accelerated video and this has major benefits right across the spectrum.

Keep reading for more about both stories.

The Johnny Lee short clip (at #10) is one that everyone should watch.  It highlights a surprising twist to a technology product which has much wider benefits and implications for product innovation. (5m40sec)

10. Johnny Lee demos Wii Remote hacks – from the top 10 list from TED

This is a brilliant example of a product taking a life of its’ own when someone else sees a new market for a new product and takes it there. I’d be guessing Nintendo wish they had though of this one.

Why is this Story Important and Significant?

The Johnny Lee story  demonstrates clear examples of what Kevin Kelly (in 1999 book New Rules for the New Economy and still worth reading.) Snips and comments on 4 of these rules follow.

• 1 – “Embracing the swarm, – competitive advantage belongs to those who embrace decentralized points of control” we can be anywhere on the network and still have an impact.
• 7 – “From places to spaces, – as place is replaced by multiple interactions with anything, anytime, anywhere (space) the opportunities for intermediaries, middlemen, and mid-sized niches expand greatly.” Think of the multiplier effect that YouTube played on this research project.
• 9 – “Relationship tech, enhance, amplify, extend, augment, distill, recall, expand and develop relationships of all types.”  With this amplification comes the opportunity for new people to tilt the paradigm of existing products and take them into new markets in new and exciting ways.I’d love to see a chart on how many controllers there were before Johnnies invention and now how many they are compared to the number of Nintendo consoles being sold.
• 10 -”Opportunities before efficiencies, – there is far greater wealth to be had by unleashing the inefficient discovery and creation of new opportunities.”

Sharing new ideas and researching new product innovations in a public way kind of like “research powered by video” goes counter to most of what we have understood about value creation and intellectual property management.

The web has changed everything and that is only going to accelerate if we understand what it is that we are looking at.  Best of all, many of these change cycles happen in real time and cross- pollinate at a furious and ever increasing rate.

So What Did Mr Lee Actually Do? (If you haven’t watched the video yet.)

Building sophisticated educational tools out of cheap parts, Johnny Lee demos his cool Wii Remote hacks, which turn the $40 video game controller into a digital whiteboard, a touchscreen and a head-mounted 3-D viewer. Researcher Johnny Lee became a YouTube star with his demo of Wii Remote hacks — which is almost more interesting than what he actually did – is the speed at which it has been picked up globally.

To understand Johnny Lee, just take a look at his personal Projects page. Aside from his Wii Remote hacks — voted the #1 tech demo of all time by Digg — you can see all the other places his mind has turned: typography, photography, urban renewal … to say nothing of his interesting sideline in Little Great Ideas, like the hypnotic “___ will ___ you.”

When he’s not hacking Wiimotes, Lee is a graduate student in the Human-Computer Interaction Institute at Carnegie Mellon University.

So the question is where else will video take us and what else is happening in the kind of television world that most people inhabit?

The Future of Online Video
A discussion panel [Ashley Highfield (first 11.5mins) , Christian Vollman (Germany), Antonio Campo, Dall'Orto] led by Matthew d’Ancona on the future of online video (35mins) Interesting that Ashley notes that BBC programmes are now available on the Nintendo Wii which is seen as a significant connected device now.

And check the numbers – BBC iPlayer has now had 75million downloads.  This really is the mainstreaming of quality video online when you factor in TED and the 4663 channels on Miro (Note: Miro includes much of the same content.)  YouTube is still a backbone but will be surpassed by other providers who have much better quality content very soon.

Now that broadband is more pervasive there is huge growth in the on-demand audience for quality video.

Ashley passes on some reports and stats that BBC can do as a public broadcaster and it is the trends that are significant on market share . This is great news for more specialist programming and offers a glimpse into the future trends that are shaping growth in other markets.

It will also ultimately have positive funding implications for programme makers looking at online broadcast platforms and potential audience numbers and revenue models.

Media7 in NZ looks to have a great future for example as it leverages outside experts and applies resources from a larger channel to get results way out of proportion to its actual current size. If you have taste-makers and media influencers in the same room anything can happen. When the audience amplifies that broadcast then you’re cooking with gas.

See also Zeitgeist Europe 08 video channel. Or here if you have a  login.

According to Youngblood the conference is now an:

“annual 2-day conference, which began in 2006, and is by invitation only for around 400 of Google’s strategic partners in the EMEA (Europe, the Middle East and Africa) region. This year’s Zeitgeist was held at The Grove in Hertfordshire, an impressive English estate about 40 km’s North-West of Central London.

Thankfully, it wasn’t a trade conference and Google products weren’t pushed down your throat as you might’ve expected, although there was some obvious tie-ins with certain products like YouTube and of course very strong branding throughout the event. The agenda was somewhat TED-like with a diverse mix of technologists, politicians, scientists and entrepreneurs as speakers.

from Youngbloods blog

Seems like Coin had a great time entertainment wise but glossed over  the really significant parts but since it was a closed set and I haven’t watched all the video it’s is hard to tell.

Regardless, we are a major online video explosion with video everywhere and getting better all the time.

Enjoy. Now go ahead and get enhancing, amplifying, extending, augmenting, distilling, recalling, expanding and developing all those relationships that will help us all create new value and true 21st century wealth.

As Kevin says “A network is a possibility factory”.

There was an extraordinary news item a few months ago in Sydney. An accounting firm there decided to cull some of the less profitable clients and came badly unstuck. When they sent out communications to those ‘unwanted’ clients some of their more valuable customers got caught in the crossfire.

This may relate to a poor understanding of the concept of customer lifetimes. In any business it would be useful to know which customers were the most profitable and then how to manage the client mix so that PR disasters like the example don’t happen.

For the record the firm was WHK Horwath and the full story is available under the title – “Quick Flick Reflects Badly” by Neil Shoebridge on page 49 of the Australian Financial Review on 13th of August 2007. Customer lifetime has been defined as:

“The net present value of the profit an organization expects to realize from a customer for the duration of their relationship. Customer lifetime value focuses on customers as assets rather than sources of revenue. The volume of purchases made, customer retention rates, and profit margins are factors taken into account…” from Bnet

In other words once you win a customer you should look closely at how that customers activities can be enhanced by your services over a longer period of time – and how they are looked after.

For many large projects the cost of winning new business is high and it is not until the 2nd or 3rd project that you might start making a profit out of the relationship.

Business life cycles are all different – however there is a general rule of thumb that it is 9 times easier to win business off an existing customer than to land a new customer. Regardless of the multiple – the point is look after your customers and they will look after you.

I suspect that the accounting firm looked at a short time period of time and not at a 5 or 10 year cycle which might be more valid. I wonder how many companies know where their business really comes from.

For example do some clients refer customers to their preferred suppliers? Sometimes this does happen – but it is unlikely to show up in a cashflow. If the business owner sees customers as an asset though - the results will show up on a balance sheet over the longer period.

For example many professional services firms work on sensitive projects for their clients. Sometimes they don’t want their competitors to know what they are up to and so a standard referral programme probably wouldn’t work.

However – If I am a potential client and I’m looking for a supplier – it would be helpful and indeed confidence building to know at least some of the names of customers who have been helped by that particular supplier.

Being able to supply a customer list adds credibility but it is hard to value in the context of simple financials.

In the case of the Sydney firm they accidentally sent an “unwanted client” letter to a valued client of 20 years standing. There had been a mix-up between the two lists. I suspect the admin person was not aware of the marketing implications – and in my experience this happens fairly often especially if ther task is seen as admin when it requires some sales insight.

Unfortunately for the Sydney firm their mistake was to send the wrong letter to Neil Shoebridge who is a high profile Marketing columnist at the AFR.

Here are some questions we should be asking Business Managers

1. What is a customer lifetime in our industry?
2. What is does the customer lifecycle look like?
3. Are their times in that lifecycle when profitability is impacted and does that improve later?
4. Do we have a way to value customers? (including referrals)
5. How do we measure customer profitability?
6. Can we increase our “share of wallet” – that is can we sell them more products and increase our revenue and / or profitability?
7. Can we service them is a different way – that improves profitability?

Perhaps you have some other questions – let us know?

Sales research is a regular part of my role in helping to develop better results for my customers and their projects. Increasingly the first contact most of us have with a new business contact is via their website and that may be all the contact we have.

The question is- are we making it easy for strangers and prospects to do business with us. From a recent project where I looked at some 300 sites in NZ (+ Australia & elsewhere) – the answer is not very.

In fact there were still quite a number of companies without websites at all which makes it much harder to guess how they might be useful. There just isn’t enough time to call everyone any more and chances they’ll answer the call are also slim.

Usually I’m looking for a clear indication of what is most important to that business and some reason to explore further and maybe call them. Like many prospects I want to save time and get a clearer idea of specific areas where that company might be able to assist.

As I work on multiple projects in NZ and Australia there is a very wide range of sites and industries. Your future customers may be offshore and they too will likely check your website first.

Here are three of the better examples of sales positioning from the U.S, Australia and NZ.

Customer advocacy works!
This summary from a real estate agent got my attention. Hat tip to Andy who mentioned her in passing. There is almost too much information there including a video intro which I think we’ll be seeing more of. (Scroll to the bottom of the linked Mary Pope-Handy page. )

The style of the overall site is not to my taste but the real key in this is to make a meaningful connection with prospective customers.

Conveying credibility, honesty, respect and trust in a few paragraphs is not always easy but here is a paragraph that would have convinced me if I was I was looking for this particular service.

“Folks who are buying and selling homes in Silicon Valley are highly sophisticated. They don’t need a “sales job” but an advocate who provides them with good data and a way to make sense of it so they can make intelligent decisions that will have long-term benefits.

I work to help them, every step of the way, to analyze all the facts and stay current on everything affecting the buying and selling of homes: new laws, contractual changes and implications, trends, environmental issues and, or course, market conditions.

I use a lot of high-tech tools but keep an equally high-touch approach and am excellent at staying in constant communication. I am fortunate to always work with clients who are nice, honest, and committed to buying and selling – but also clients who refer me enthusiastically.

They tell me that they appreciate my knowledge, skills, dedication and determination, but above all else they recognize that I put their best interests first.”

Recognising that your customers are smart and that you need to add real value to the engagement process is critical. Understanding how to be professional and personal at the same time can win first chance at a new sale.

Law and legal services is a complex area and many prospects are wary of the expense and time commitments. Here is a great example of sharp positioning from Dilanchian who are intellectual property and innovation specialists based in Sydney. The site has almost too much information which is exactly opposite many of the larger law firms. One post in particular caught my eye - as sales positioning it has street appeal.

10 conversations about business models

“Listed in this post are 10 topics for telephone conversations we would happily have free-of-charge. If you want to discuss the topics call us whether you are a client, collaborator or a stranger. We’re proposing an open conversation to exchange thoughts, play cards and see where that might lead.”

1. What is affordable for you to do to increase the value of your business or go to the next stage?
2. How can you improve and secure revenues from intellectual property and fee for services?
3. Which branding and trade mark registration strategies help in an age of product proliferation?

Go there to check the other seven reasons and let me know what you think?

Collaboration Excellence
Also in the complex services space is the business of Michael Sampson who is focused on effective collaboration strategies and practice for a range of local and international clients.

“Michael Sampson helps people, teams and organizations improve performance through effective collaboration practices and technology.”

This site is is also information rich and engaging and but right there on the front page there is a single positioning sentence and a eye catching which cuts to the chase quite nicely. See speech graphic below.

So – does your website generate sales leads and support your business well? If so let us know what your top examples are. If not perhaps we can help. Ironically my services page needs an update now.

The most successful businesses that I know follow a clearly structured sales methodology and a detailed plan to get there. It shouldn’t be too surprising that in order to get to a big sales goal there are a whole series of much smaller structured activities that need to be followed through.

Here are some outlines on key learnings from many years of successful marketing and sales campaigns.

1. Define Objectives

Typically a business will select a CRM because they want new customers or new business. They see this as a sales hunting exercise and often have other sales people for farming or account management duties. The sales “farmers” are looking to grow the business by selling more products or more volume of the same products and services to the same people.

So the first step in more successful sales plan is to decide whether you have new customers/new business goals or account management goals and your strategy will be different. Remember – a CRM allows you to treat different customers in different ways according to their needs, goals and desires.

2. Tips for Lead Generation

I was talking to a business owner recently about their needs. The owner has a number in mind for new business and is looking for the best way to get to that point. The traditional approach is to hire a business development manager who can understand the market and work out where the business will come from.

Except that in this example, little or no marketing has been completed to date. Marketing is the brains of sales. An effective marketing plan has to be part of the sales plan otherwise the risk is that that sales team resources are wasted on chasing deals they have less chance of winning than they should.

What this business needs for their new Business Development Manager is a lead generation campaign so that a reasonable sales pipeline* can be built up. (*Sometimes called sales funnel – typically a list of potential customers ranked in order of their closeness to a sales decision.) Note: lead generation can now be outsourced.

The sales team needs to have directed, relevant, useful engaging conversations with their strangers or suspects, prospects and their customers to understand the most compelling reasons why they should do business with you.

3. Work your Sales Funnel

To have a relevant conversation with a business you only suspect may have a need of your product or service some form of lead development is needed.   A marketer would have a target list of suspects and some form of communication to those people is then triggered. Often this is a multi format communication like a direct mail piece to the decision makers, a case study in an industry magazine and possibly even advertising in trade publications so that the target businesses have some idea of who you are / what you do.

At this point the phone may begin to ring – however – many of your competitors are doing the same, so you really need to “close the loop” by making contact with as many people on your target list as possible. This means making a series of phone calls to decision makers so that you can earn the right to be heard when that business has need of your services.

Many sales people make 1 or 2 calls at this point – however the golden number is 5. If you make fewer calls you will get to less people but if you haven’t reached a person after 5 calls then you should probably add them to a later campaign. There will always be a group you can’t get to in any campaign cycle. When you have spoken with each contact, determine how much lead nurturing they might need in future. When is the best time to call them again and what do they need to know about so that the relationship is nurtured to the point where you can bid. 

4. What Others Say About You Wins Business

So lets say you have seeded the market with information about your positioning - what do you actually say to those suspects / prospects if you can get some of their valuable listening time?

This is where careful thought on call scripting is needed. A script needs to frame your messaging about capabilities and credibility in a way that can cut through all the other sales messaging in your market.   You probably have 3-10 seconds to say something relevant to that person at that business before you get turned away.

What really works at this point is to get the suspects attention by telling them of a well known industry success where you were the supplier. This is especially powerful if you can quote that customer in their own words. A customer testimonial has major social capital and is much more significant that anything you can say about your own business.

As Brian Clark says

“What other people say about you is more important than what you say about yourself. This is the foundational aspect of linking and the backbone of social media.

Testimonials and media mentions are important because of the concept of social proof. We all, to vary degrees, look to others for indications of what to do and how to behave. Social proof is the basis of buzz, word-of-mouth marketing and fashion trends, but it’s also an important aspect of our day-to-day lives. We avoid sensory and information overload by looking to social indicators for judgmental heuristics that help us make decisions.”

More to the point – the suspect is more likely to believe you and give you another 30 seconds to communicate the “why” you are calling. This progressively wins you the right to more time to talk about the how and hopefully earns you an appointment where you can engage more fully in person.

5. Structure Your Sales Process

A sales call is therefore very important and needs to be carefully structured so that the prospect/s needs goals and objectives can be identified along with timelines, compelling events and other material factors like budgets and people.

So the next time a business owner asks you to sell – be very clear on all the key aspects of messaging, positioning, and proofs so you can build a quality pipeline. Every sales call needs to be a step closer to a sale for your product or service. Many times you will still have to wait for a budget cycle – but that is part of the discovery process and if you know that you can be in the right place at the right time.  Those prospects will already know who you are and you should make the shortlist for serious consideration.

The other part of the sales conversation is to be clear on the other 6 key decision metrics about that particular sales need.

6. Fine-tune with Customer Relationship Management (CRM)

If we follow a structured sales plan then we can use our CRM to fine tune these process steps and maximise our chances of success by making certain we are “in the frame” when an important opportunity comes up.

It is time to improve your strike rates with new business. We believe the notes above  provide an essential guideline for your business. To get help with sales planning and lead generation contact me now for a no obligation chat.

Find out the 6 key decision metrics you absolutely need to know.

If you would like more CRM related content please see these earlier posts

• CRM is not a Magic Bullet
• CRM & Knowledge Management
• What to Look for in CRM Strategy
• CRM as a Process Platform
• What is CRM Used For?
• CRM Thinking about Strategy 1

sales leads marketing strategy lead nurturing marketing tips

Many organisations still see CRM systems as some kind of magic bullet.

Some vendors even oversell the features of their software when everyone knows that the benefits to customers, staff and owners will only come from successful business development strategies and management to match.

It is true that implementing a CRM system will enable business development processes to become more structured and focussed but: only if the management team uses the system to support sales, marketing and service strategies already in place.

In the early days of a CRM project there is often an emphasis on system skills. That is how best can we use the new system to support the various processes that are in place.

Hopefully the new system can be used to standardise, streamline and automate existing and new processes which will make life easier for all. What is sometimes missed though, are the longer term objectives which are ultimately to support methodologies and management in developing a resilient and resourceful business culture.

Often a key driver for purchase of a CRM is to provide a platform for winning new business by adding new customers and account management by adding new business to existing customers.

The skills needed to win new business and skills needed to optimise account management are complementary but not all sales people can do both well.

This is where the CRM might need different templates for opportunity management as different tactical considerations are at work. The sales manager needs to understand those differences and be able to provide resources if opportunities get stuck at any particular stage in the sales cycle. Providing that sales progress and process is documented inside the CRM then the sales manager has some key indicators to steer the various marketing campaigns typically based around acquistion, retention and growth goals.

Sales and marketing managers need to be able to make sense of all the data that is coming from the CRM and to also be able to adjust inputs to maximise results.

For example I have experienced sales calls where it is not clear to me what the value proposition really is. A standard question to ask sales and marketing people is; How is our offering different to our competitors? and then make sure that all sales messaging and proof statements will support that positioning. Note: the very best proof statements come from customer testamonials or other reference materials.

The CRM can then provide scripting guidelines for directed conversations about areas of mutual interest, but you will only get that chance if – you can communicate key points of difference and offer benefits to your target market.

Consequently, when you start customising your CRM settings you should be asking questions like

1. Do these changes support our sales methodologies and business development strategy?
2. Will they make it easier for our customers to buy from us?
3. Will they make it easier for our staff to provde the best levels of quality, service and value to customers? 
4. What is our sales metholodogy?
5. Does the system support our marketing campaign messages?

Mike Bosworth of Customer Centric Selling (as paraphrased by me) notes that it is more successful to:

“Ask relevant questions versus rendering opinions – people like buying but not being sold too..Sales are based on conversations” not sermons…
“We should enable buyers rather than selling to them.”

We do this by focussing on needs, goals and problems and working with buyer to use your product as part of the answer.

The real work in a CRM project can often be all about the tuning and articulation of sales methologies and practice management. As Mike Bosworth also asks in this podcast

“What are you automating? Do you even have a sales process?”

This is something that we like to help with so please call us with any questions or project needs in this area. Here is a list of related features on CRM that you may also enjoy.

• CRM & Knowledge Management
• What to Look for in CRM Strategy
• CRM as a Process Platform
• What is CRM Used For?
• CRM Thinking about Strategy 1

Every so often I get calls from a supplier rep who says something like, “It says here, that I need to call you”.  And then I get some kind of half hearted pitch from them. 

More often than not, this is a cursory process that is needed so that staff member can tick the box and get on with whatever they do, the rest of the time 

Somehow, despite having account plans, a  CRM and job that is all about serving customers the people from this particular company have missed the one thing that might get my attention.  

We live in a time where most products and services are quite similar and these “moments of truth” are the times when a customer might walk because of such auto-pilot attitudes. 

Here is a very shortened version of  a true story that did the rounds a few years ago.  

In Brooklyn, New York, Chush is a school that caters to learning disabled children. A father is at a school function and he tells this story about his son Shaya

One afternoon, Shaya and his father walked past a park where some boys Shaya knew were playing baseball. Shaya asked, “Do you think they will let me play?”

Shaya’s Dad asked if his son could play.

The boy looked around for guidance from his teammates. Getting none, he took matters into his own hands and said “We are losing by six runs and the game is in the eighth inning. I guess he can be on our team and we’ll try to put him up to bat in the ninth inning.” Shaya’s father was ecstatic as Shaya smiled broadly.

Shaya was told to put on a glove and go out to play short center field. Eventually it was Shaya’s turn.

Would the team actually let Shaya bat at this juncture and give away their chance to win the game?

The first pitch came and Shaya swung clumsily and missed. One of Shaya’s teammates came up to Shaya and together they held the bat and faced the pitcher waiting for the next pitch. The pitcher again took a few steps forward to toss the ball softly toward Shaya.

As the pitch came in, Shaya and his teammate swung at the ball and together they hit a slow ground ball to the pitcher. The pitcher picked up the soft grounder and could easily have thrown the ball to the first baseman. Shaya would have been out and that would have ended the game. Instead, the pitcher took the ball and threw it on a high arc to right field, far beyond reach of the first baseman.

Everyone started yelling, “Shaya, run to first. Run to first.” Never in his life had Shaya run to first. He scampered down the baseline wide-eyed and startled. By the time he reached first base, the right fielder had the ball. He could have thrown the ball to the second baseman who would tag out Shaya, who was still running. But the right fielder understood what the pitcher’s intentions were, so he threw the ball high and far over the Third baseman’s head.

Everyone yelled, “Run to second, run to second.” Shaya ran towards second base as the runners ahead of him deliriously circled the bases towards home. As Shaya reached second base, the opposing short stop ran to him, turned him in the direction of third base and shouted, “Run to third.” As Shaya rounded third, the boys from both teams ran behind him screaming, “Shaya run home.”

Shaya ran home, stepped on home plate and all 18 boys lifted him on their shoulders and made him the hero, as he had just hit a “grand slam” and won the game for his team.

The story is by Rabbi Paysach Krohn and is based on the experience of one of his friends. It was published as “Perfection at the Plate” in a book called Echoes of the Maggid. You can read the full version at that site.

What has all this to do with CRM and customer service? Well as Gary Bencivenga puts it:

“It’s vital for all of us to understand that our prospects and customers are people, too . . . and people like to connect with others who are unafraid of showing a little humanity, of taking some time now and then to share a laugh, feel some warmth, express some sympathy, do a favor, help a charity, be a friend.

Whatever your product, however impressive your expertise, people will never care how much you know until they know how much you care.

Every now and then, toss a few pebbles of caring into your pond of contacts. Those ripples of friendship will spread and unfailingly return to you in waves of appreciation and loyalty.” Gary B

A certain level of empathy and caring is needed in customers services – some companies even call this their customer care team.

I wonder what would happen if the company which prescribes account calls for their staff got them to place a little card on their computer screen with comments like the one Gary mentions above.

It is not about the tasklist or the computer system – it is all about caring for people and letting your customers know that you care about their business as well.  

The key to really great CRM is in the way that businesses can leverage what is known about a customer’s needs, goals and desires; (knowledge management or KM) by translating tacit (and essentially unstructured) knowledge into customer insights.

The difficulty with customer interactions is that much of the really useful information needs to be collected in a structured way before it can become a business asset. A CRM is the ideal platform to capture such knowledge.  

Those tacit insights can then be used to better serve those customers in a more defined way. Therefore the CRM is contributes mostly to what becomes the Relationship capital of the business within the definition of capital as used by the KM model.

The other two types of generally acknowledged Knowledge management are Human Capital and Structural Capital.  The model comes from Sveiby and is a convenient way of understanding the different ways in which intellectual capital might apply to business.

Relationship Capital includes brands, reputation, customers and suppliers. Where it fits in a CRM is that it is often the ‘tacit’ knowledge that we gather via the process of engaging in multiple roles and processes with our customers.

Nonaka and Takeuchi described the difference between explicit knowledge and tacit knowledge as a vital concept. They also credited Japanese business success to being better able to socialize and translate that tacit knowledge into explicit knowledge.  

Long ago I worked in a large consulting firm where the best currency was what we called “war stories”.  These anecdotes were a form of experience and knowledge transfer from the senior staff to juniors and were based on actual projects and invaluable in developing the tacit knowledge needed for real success in that business.

Years later when computers and intranets and the actual knowledge management concept was popularised I worked for another large management practice which had a vast KM resource. Technology had arrived in a big way but ironically much of the knowledge asset that was documented was of the lowest value to staff. This was partly because of the culture of that business and partly because explicit knowledge is easier to document.

Explicit knowledge is the type of material that can be kept in a library for collaboration such as templates and other structured process formats that can enable reuse and leverage by staff. We missed much of the wisdom of tacit knowledge that might have been in a CRM if we had used one.

Tacit knowledge by contrast, is often unstructured knowledge for example about what  customers might like or not like. When your business has a “moment of truth” which is often when a customer asks a question that is outside the normal script - will your staff know where to look for answers?

Thomas A Stewart has a useful list on the essential tasks for managing explicit knowledge. From “The Wealth of Knowledge” ISBN 0-385-50071-8 published in 2001.

assemble it, validate it; as much as possible, standardize and simplify it;
keep it up to date, leverage it;
make sure that everyone who needs it knows that it exists, where to get it, and how to use it; automate and accelerate the processes of retrieving and applying it;
add to it,
sue any bastard who steals it.

Tacit knowledge is not so easy to frame, however a smart FAQ (frequently asked questions) list distilled from customer interactions and available to staff in service, development, marketing and sales teams from alternate angles might do the job.

Knowledge Management often exists as an overlap zone between the frontline functions of sales, services and marketing delivery. In the early days of computers we dreamed that expert systems might be able to build on a platform of business rules and processes but for many businesses a more creative outcome is required.

This is where a CRM system can help. A CRM is the best place for tacit knowledge as it can provide a non-linear format for structuring some of the common memes and recurring patterns in customer engagement. 

Here are 5 practical ways I believe a CRM can help with knowledge management

1.  Provide tools for collaboration and leverage of common goals needs a framework anchored in behaviour
2. Capture the practice DNA and cultural differentiation of an organisation / customer
3.  Provide information architecture for significant and relevant practice standards within the organisation.
4.  Provide a platform to replicate and enhance key moments of truth in a business on a sustainable basis.
5. Build corporate memory and customer values into outcomes according to a defined methodology or customer service approach.

If you liked this post, please check for related posts in the crmthinking category.

It may sound obvious, but not every CRM project has a plan or strategy in place.

Sometimes a business will ask its IT guys to implement a CRM program (they mean an application) when they should really be asking for a CRM programme of work.

If you are in the situation of being asked to investigate CRM for your business here are some of the things you might look for. 

1. What are the needs, objectives and goals for new business development? Customer acqusition is a key focus of CRM generally. The new business team will want as much help as they can get with managing leads, qualifying those leads into prospects and when the time is right transforming those prospects into customers. Acquisition=Growth

2. What does the business know about existing customers? How can your new system help with increasing “share of wallet” and improve levels of customer service so that you retain and keep customers (lower “churn” rate) sometimes measured as customer lifetime. (That is how long a customer stays with your business and what share of their Spend is directed towards your products and services.)

3. Is there a structure in place to recognise those customers who advocate for you and refer business to you? Referral business has a lower cost of sales and shorter time to profit so an effective CRM would want to look at this as well. 

The best fit system is part software and part culture – so the other thing you will want to do is to audit the company for supporting practises and customer centric thinking which would underpin any new system.

A CRM audit is best when it is completed in association with an outside party so that internal politics are minimised. This type of review is something we love to help you with. 

This post is part of series on CRM Made Simple. For earlier content please check earlier notes in this series.

• CRM as a Process Platform
• What is CRM Used For?
• CRM Thinking about Strategy 1a>