It amazes me that in late 2015 so many organisations do not understand what it really means to manage customer relationships – 20 years since the CRM acronym started gaining currency in marketing circles.
This week I have been inundated by the ‘communications’ of some companies who have not thought at all about what it takes to have a good relationship with me. These are not small or second tier businesses.
Mainstream retailers, food stores, book distributors and online sale sites all are emailing me every few days. I have just about binned the Twitter feed from the HBR as it started to drown everyone else. Even my financial contacts, who must know a lot more about me than many companies, still can’t seem to say anything very relevant when they write.
This year it is clear that even middle of the road retailers have finally understood that they should communicate multichannel with their customers – digitally as well in-store…but several do not seem to have understood much more than this.
Seemingly many organisations have not worked out that if you send untargeted, over-frequent, and trivial communications to me (which is of course remarkably cheap and easy to do in this digital age!) then at minimum I will toss them away without opening and after a while I will ‘unsubscribe’!
Even skilled protagonists of the DM art are simply failing to think clearly. Some large charities are finding themselves mired in a controversy that will rumble on and start to do even more serious damage in 2016 as the frequency, channel and method of their contact with ‘active’ but vulnerable supporters has inflicted too much mail, high-pressure tactics and guilt-generating incentives on loyal supporters.
These scenarios are embarrassing and disastrous for what should be a mature and thoughtful discipline. Publicly they will push industry into the hands of more stringent regulations (voluntary or legal). Invisibly they will yet further undermine trust and respect for commerce. Both will significantly reduce the present value of the customer base and brand reputations, things that are as valuable as gold in our media rich, low trust culture.
I am amazed that this problem persists. Anyone involved in direct marketing even 30 years ago would have known this. However, perhaps it is the very invisibility of the real damage that is the problem. Thirty years ago it cost a lot to send unwanted, unproductive communications to prospects. Mail and phone campaigns are expensive. You quickly trim those that do not make sense. Digital is too cheap and easy.
Why are we here?
There can be many reasons for organisations to end up with such a poor approach to their customers:
- They might have developed their ability to communicate 1:1 incrementally, through a series of different functions and channels which they have failed to pull together organisationally. The result is a platform for multichannel communication but with no policy. This then becomes a vehicle for meeting only immediate, short term departmental priorities … and there are a lot of departments.
- Functions are often siloed, competing to capture customer business through their own channel (e.g. website vs store, call centre vs web or face-to-face). Sometimes these silos are even different business units with very similar customer propositions (as I have experienced in banks).
- In other places, poor monitoring and evaluation compounded by low visible campaign costs lead to over-contact and the loss of a customer perspective which degrades the long term value of the contact list.
Beneath all of this though is the failure to appreciate that a policy is needed.
Organisations need an explicit, holistic strategy that governs the way that they will manage their contact with customers (especially but not exclusively proactive contact). This then needs to be operationalised effectively across the whole of the business.
A contact strategy
A contact strategy is required. These are the business rules that underpin where, when, what, how, and why contact is made with a customer. This explicit policy needs to specify how each customer segment will be handled: the channels to be used, maximum and minimum frequencies, by type of contact, expressed preferences, responses, value and level of personalisation required. All this can then be integrated with an up-to-date history of the relationship (contacts, account status etc). Only when this is done can appropriate direction and control be exercised over how a relationship is handled.
In essence it is just what you would expect a good salesperson to know about an important customer. The challenge is to do this for each of the millions of customers that some organisations are handling – and for the targets that they acquire through list purchase or media activity.
Yes – this will limit the activity that a company pursues with its customers and limit it towards what these customers are most likely to want. Yes – this will potentially impact short term revenues and the use of promotional campaigns. But this is what CRM is really about. It is where the brand, proposition and customer interaction should line up tightly.
A move to action
Some organisations get round the issue by limiting their contact carefully. Amazon, for instance, does not engage in much explicit differentiated proactive contact. It relies on general media and then inbound propensity based personalisation that is transactionally focused, either on its own site or through search engines like Google.
Others are moving to an explicit ‘permission’ based approach. I heard RNLI on the radio only a month go describing the moves that they are making to sort out their approach and data to address the issue of over-contact before it impacts their standing (see RNLI). Their approach will only market with explicit permission. They reckon however that this might cost them £35m over five years. Yet they think it is worth it to get a sustainable position. At least they are actually managing the issue.
Other are clearly not.
These will pay an invisible price which some organisations may not appreciate for several years as the responsiveness of their customer set, the strength of their brand image and the quality of their profit are eroded.