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From CRM to the Customer-Managed Relationship

How Customers’ Expectations and Influence Have Changed Their Dynamic with Businesses

by Jamie Anderson | SAPinsider, Volume 15, Issue 1

January 1, 2014

This article explores the shift from traditional customer relationship management (CRM) to more of a customer-managed relationship, where the consumer increasingly holds the power in business interactions. Organizations today, recognizing this changing dynamic, are using real-time intelligence to become better informed about their customers and meet customer demands. Learn how next-generation applications such as SAP Cloud for Customer on SAP HANA are helping to close the execution gap between identifying valuable customer insight and acting on it.

 

From the inception of customer relationship management (CRM), the focus has been on brands and companies controlling the relationships they have with customers. This is changing: Customers have gained power in their interactions with businesses due to many factors, including their use of social media and mobile shopping. And because of this power, customers are fundamentally changing the rules.

We’ve moved from customer relationship management to what I like to call the customer-managed relationship. As a result, organizations need to adapt and put in place solutions that allow customers to orchestrate their own journey by leveraging the multiple touch points of their business. They can achieve this by recognizing the changing nature of CRM and by using solutions and practices that promote customer engagement, with an emphasis on meeting a customer’s needs at the time and in the manner that the customer prefers.

While traditional CRM and transactional systems have been populating database tables with information for years, information today comes in many forms, and can offer valuable insights into how and why people make purchase decisions. You can focus on the predictability of interactions by mining real-time customer insight and using it to make every customer interaction more relevant and engaging. By using next-generation solutions like SAP Cloud for Customer powered by SAP HANA, you can close the gap between identifying valuable customer insight and contextual execution.

Customers Are More Prepared Than Ever Before

Customers today are digitally connected and socially networked — and they’re better informed than they have ever been. Before they walk into a store or branch, customers have researched a product and know more about it than they did in the past. As a consequence, the way businesses engage those customers is significantly different from the customers of years before, who walked in looking for something and were more receptive to a salesperson’s recommendations.  

Customers no longer conform to the push-marketing, sales-funnel thinking that most CRM systems are built upon, which tends to force customers into a relationship paradigm in which the business is in control.

Now customers are willing to abandon an in-store purchase due to negative online sentiment. They can scan an item and read an online review before deciding whether to buy the product. In the past, customers would have to purchase a product and bring it home before possibly finding fault with it. This preparation and advanced knowledge changes the nature of the relationship between the customer and the business, which can no longer sell and market to the customer in the same way.

Instead of trying to control the customer’s journey, companies need to act as an orchestrator or conductor of that journey, which needs to be seamless across all channels. Many customers are past being sold to, but love to buy. Making the buying journey the anchor point for how you build engaging customer experiences will allow you to facilitate the outcome that the customer wants to achieve. The company needs to be connected across sales, service, and marketing to achieve this goal. 

Customer Service: A Value-Add

Customer service is another critical component of the customer relationship. Fifty-nine percent of customers are willing to try a new brand on the promise of better customer service. Research shows that brands rated high for customer service over a five-year period have better stock price performance than brands rated low for customer service. There is a significant value to be harvested by investing in customer service.

Superior customer service allows you to not only prevent your customers from defecting to other brands, but also to price your product differently: One survey states that 86% of customers are willing to pay more for better service.

The Evolution of CRM

In the past, CRM systems would focus on metrics like lead volume, number of calls, and first-call resolution. These metrics drove internal efficiencies for the business that at the time also offered benefits to customers. As customer expectations increased and channels evolved, businesses then needed to look at ways in which each customer interaction could be more effective for them and the customer (see Figure 1).

Figure 1 — The evolution of CRM: From front-office efficiency, to front-office effectiveness, to customer experience

In essence, while effective, this “inside-out” approach didn’t lend itself to either brand or service differentiation or the ability to make an emotional connection with the customer. The interactions became merely transactions. The next generation of technology is forcing businesses to look at ways in which they can use CRM to differentiate the end customer’s experience.

Engaging Your Customers

To truly transform your business today, you should focus on one-to-one customer engagement, which involves recognizing the power that the customers hold and interacting with them on their terms, using real-time intelligence to become more informed about the customers and their needs.

Customers no longer conform to the push-marketing, sales-funnel thinking that most CRM systems are built upon, which tends to force customers into a relationship paradigm in which the business is in control. This is the notion that customers follow a model designed to elicit awareness, interest, decision, and action. It was developed in the 19th century and no longer applies today. This is why pull marketing is becoming so effective in uncovering customer need and connection.

There are now multiple touch points where the customer enters and continues his or her relationship with a business, and the journey doesn’t happen in a linear fashion — it happens at the customer’s convenience.

As a company, the challenge is that you need to be consistent across all channels, from social channels like Facebook and Twitter, to your local branch, to your call center — all the points of interacting with your customers need to reflect a consistent brand experience. 

It’s not only about the digital and online experience; it’s about understanding as a brand that not every customer wants or needs the same thing. For example, imagine a traveler running late to the airport. He uses the self-service kiosk because he can quickly input his information, get his boarding pass, and head to the gate.

Now think about a traveler with a first-class ticket — she may not want to use a kiosk. She paid for added value, which may include going to a special location in the airport to relax while checking in. Both travelers have an experience, but the nature of those experiences is linked to the individual, customized to his or her preferences. You need to be able to distinguish between the two experiences and facilitate them in an individual way to each customer.

The competition for customers’ attention is driven by the fact that customers are subject to an unbelievable amount of data, and their attention is limited. With all the information being created today — for example, more than 100 hours of video are uploaded to YouTube every minute — companies must find a way to stand out from the crowd. They need to provide content that provokes an emotional reaction that makes the customer feel like the company is speaking to him or her directly.

The Future of Customer Engagement

Customer engagement continues to evolve, and more change is inevitable. I often wonder what watching television will be like in a few years. We already have smart television, but aside from connecting to internet-based services there is very little that is smart about it. Imagine, though, a scenario in which your cable provider helps you customize your nightly viewing schedule. Because the company knows you and your family generally watch your favorite shows between 7:00pm to 9:00pm, it can help plan what you watch during that time period, a combination of recorded on-demand and live broadcasts. And imagine that the cable provider can then share this information with advertisers, allowing for more targeted offers.

For example, you could sit down hungry at 7:00pm and see an advertisement for pizza pop up on the side of your screen, and you could gesture toward it and order the pizza as you’re watching the show. Now that’s taking customer engagement to the next level and creating a customer experience that can differentiate the brand.

Customer engagement is much bigger than the scope of many traditional CRM applications that follow an inside-out, control-based, salesforce automation design principle that is entirely at odds with the modern buyer. CRM applications today are at an inflection point, one driven by a future in which companies need to start closing the execution gap from the analysis of customer information to driving contextual engagement in real time, because with customers in control, they can quickly and easily move on to other options if brands don’t meet their specific needs.

Learn More

SAP is helping businesses run better and engage their customers like never before. SAP’s solutions for Customer Engagement allow you to have the right insight at the right time specific to your industry, integrated with your complete enterprise and designed to deliver customer experiences that drive results. This will help you transition your focus from CRM to the customer-managed relationship.

For more details, read the rest of the feature stories in this issue, and visit www.sap.com/customer-engagement.

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Jamie Anderson
Jamie Anderson

Senior Vice President, Marketing
SAP Hybris



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