Tuesday, July 7, 2009

12 Principles that Drive Profitable Customer Relationships

Trying to figure out what customer relationship management really is? Well you're not alone. The term has been bounced around so much it remains a great source of confusion. And a popular business movement, now lost in a sea or wonderment.

What we are really talking about is building profitable customer relationships. From the days of the corner store, to the global enterprises of the future, the following 12 principles will remain the backbone of building a successful business. Each is both compelling on its own and intertwined with the others — there is no question, though, that customer relationship management as an integrated whole is greater than the sum of these parts.

1. Continuously Learn About Your Customers. This is the first principle of managing customer relationships because it is the most fundamental. Everything else follows. When you know your customers, you can make sound business decisions on developing relationships with them. Collect and analyze information about your customers to get to know them. Maintain your knowledge as you make and create customer profiles that fit with your business. But don’t stop there. Apply everything you know to building a customer valuation model. Knowing the value of customer relationships is essential for managing them wisely.

2. Handle Different Customers Differently. This idea has been repeated so many times that I wonder why I’m saying it. The power of this principle lies in the potential for optimizing the value of each customer relationship through differential treatment. Based on customer segmentation, It is important, however, not to differentiate customers simply because you can or because technology exists that can do so. Segment your customers sensibly. There are hidden costs to differentiation that must be weighed against the increased value that personalization can be expected to produce. Effective strategy ultimately seeks to optimize the value and "wallet share" of each customer segment.

3. Anticipate Customer Needs. Building strong customer relationships positively can alters the selling process in many ways. Knowledge of your customers presents new opportunities for making the right offer to the right person at the right time. Analysis of customer profiles, especially using powerful analytics tools, can provide insight about who buys what from you when. Contact management systems can detect cross-sell and upselling opportunities and act upon them by presenting suggestions to agents during service calls, dynamically responding to customer input or automatically presenting customized offers in Web pages and IVR systems. Even government and nonprofit organizations can use these principles to better fulfill their charters and anticipate the needs of their constituents.

4. Interact With Customers. Yes get out of your office and get f3f, belling to belly with your customers. Creating Desirable relationships is not one-way. Relationships result from interaction. Knowing your customers is just the first step. Using that knowledge to deepen relationships with customers whenever you interact with them. No matter how sophisticated the technology that organizations and customers use to communicate, your customers are still people and people appreciate being recognized, listened to and understood. Letting your customers know that you care enough about them to get to know them is an important part of managing the customer relationship.

5. Focus on Revenue and Retention. Unlike many other management initiatives, building strong customer relationships is not about cost savings — although that will often be the end result. Instead, the emphasis is to increase the revenue received from current customers and heighten the retention rate of valuable customers. A focus on customer relationships can require process changes that operational cost savings may well be realized. Talk time on customer calls may increase to make the most of each opportunity — it takes time to service customers well, to listen to them, to collect information about them and to up-sell and cross-sell. These steps can pay off. The return on investment for building customer relationships should not be expected from short term operational cost savings. Keep your focus on long term growth

6. Increase Value for Your Customers and the Organization. The bottom-line reason for building customer relationships is to increase value both for customer and the organization. There are many ways to deliver increased value, including being “easy to do business with,” creating efficiencies for your customers and making timely offers of products or services that perceptively address customer needs. Similarly, there are many ways to increase the value of your customer relationships, and the most fundamental of these appear in this list of key principles. When executed properly, building customer relationships is a “win-win” for all parties.

7. Present a Single Face Across Channels. One of the ways to create value for your customers is to simplify the ways that they deal with your organization. Take a holistic view of your customers and consolidate information from across the organization, regardless of geography, department, function or product line. When you have a complete picture of each customer’s relationship, you can design customer interaction processes from the customer’s perspective, thus increasing value and letting customers know that you know them.

8. Enable Information Sharing and Interaction Across the Organization. Building customer relationships requires all parts of an organization, not just the call center, sales department or customer service personnel. It is both a requirement and a benefit that organizations improve their internal communication processes. The only way to develop a comprehensive view of each customer’s relationship with the organization is with the full participation of every part of the organization. This requires strong support from top management and all the way down the line. As the central point of contact with customers, sales people and the call center has a vested interest in driving the development of organization wide interaction processes.

9. Create Business Rules to Drive Decisions. Business rules codify and automate processes, specifying what should happen in specific situations, thus enabling both differentiated customer treatment and automation. Developing organizationwide business rules is a huge task, and how well it is done directly affects your success in building customer relationships. Business rules define the ways that the strategy is executed. Make your rules proactive to let your front line people be heros to your customers

10. Empower Employees with Information and Training. Capable desktop tools may be the most visible technological feature of customer relationship. Just as the cockpit of an airplane displays all the information a pilot needs to fly in any condition, the contact management screen should pull together cleanly and clearly all that the organization knows about its relationship with that customer. Business rules should dynamically change that screen to support and guide the agent in optimizing the customer relationship. Empowerment is a key principle, because no set of business rules can or should fully anticipate every conceivable situation: Sales people and agents need training, information and support offered by a business’s rules so that they can make good sound decisions that are consistent with the organization’s strategy.

11. Retain the Right Customers. Have you ever fired a customer? One of the truisms associated with customer relationship management is that it is cheaper to keep a customer than to go out and find a new one, but this idea can be taken a step further. In order to maximize value, organizations should focus on retaining valuable customers, not necessarily all customers. Be warned, however, that misapplication of this principle can be dangerous. Mistreating “low value” customers, even if you are losing money on them, is hard to justify in the court of public opinion (which is where your future high-value customers are sitting).

12. Remember That Cultivating Customer Relationships is a Way of Doing Business. These efforts go beyond tools, techniques, rules or programs. Building customer relationships is about the way you do business. It requires participation and hard work by people throughout the entire organization. If done right, the work never ends. Results from these efforts should be constantly fed back into the process to continuously refine business rules, marketing efforts and information systems.

Larson note: This is a Proven Principles for Success. You can trust these principles. You can bank on these principles. They have staying power, even in today’s fast-changing economy. They were not a recent discovery nor are they going to fade away. Build them into your strategy and operational plans. and you will be well-positioned for the changes ahead.

Howard Larson
Larson & Associates
Target Marketing & Telesales Professionals for new account acquisition
Making good businesses great and great businesses even better


P.S. We make telesales for small business affordable by offering programs down to only 15 hours a week. Maybe you could add telesales into your marketing mix call today and find out.

P.P.S. No sales staff? Use us as your complete marketing/sales department and take your sales city, regional, nationwide.

No comments: