Satisfaction symbiosis?
Editor’s note: Jeffrey W. Marr is group vice president for Walker Information, an Indianapolis research firm.
Looking back over my customer satisfaction measurement research career, which began in the late 1970s, I never cease to be amazed by the sheer duration, not to mention the ever-new stages, of what has been called the customer revolution. First, there was the rise of the service economy and the “search for excellence” that by the early 1980s demanded customer survey feedback. Then, the late 1980s and early 1990s brought total quality management and relationship management principles that motivated customer surveys and analysis to be more widely adopted and scientifically designed. By the turn of the decade and millennium, there came the increasing recognition of new measures of corporate performance: intangible assets, customer value modeling, and balanced scorecards. Each of these trends made customer surveys even more prominent as a key indicator of strategic performance.
Now here comes the big one - CRM
Over this same timeline, many client users of customer satisfaction measurements (CSM) evolved from customer satisfaction ratings per se, to customer value modeling, and then to customer loyalty modeling, which allowed them to track commitment levels among strategic customer segments. Now, along with the new emphasis on loyalty modeling, entire enterprises are converting not only to e-commerce, but also to business applications categorized as customer relationship management, or CRM systems. CRM systems are destined to have the largest impact of any trend yet upon customer satisfaction measurement. Though prior business changes promoted the evolution of CSM, CRM stands poised to eventually absorb CSM, although the volume of customer survey information will grow and techniques will continue to be refined as this change occurs.
Client enterprises are making enormous investments in these new customer relationship management systems. According to a March 2001 Forrester Report, “A typical global 3,500 firm will spend $15 to $30 million per year on software and services for its customer conversion.” CRM is a business intelligence process built on software and databases that integrate front- and back-office customer information, and streamline customer contact applications. The CRM “movement” follows on the heels of the huge investments made by companies in the last 10 years or so to automate internal accounting, business process data, and inventory management with enterprise resource planning (ERP) systems.
Allies, not rivals
While the prior investment in enterprise resource planning systems was mainly to support efficiency and drive out costs, CRM is more about maximizing revenue - better understanding one’s customers, prospects, and suspects in order to sell more and earn customer loyalty. ERP and CRM systems share the same enabling force - information technology that centralizes the information storage, and makes it more accessible to users in the organization. If technology is the enabler, then the real driving force behind CRM is for the enterprise to become customer-centric. This is why we can say that CRM is another spoke in the wheel of the customer revolution. More aptly, picture CRM as the all-encompassing wheel of customer information, and these other elements of the customer revolution, including CSM, as the spokes.
After all, CRM systems are designed to capture and integrate all sorts of data about targeted customers (and prospects) - sales profiles, service transaction history, demographics, segment classifications, etc. By pulling together such detail from various sources, the hope is to transform static data into dynamic information that guides decisions in customer marketing, sales, and service, and makes the company more successful. If that just sounded like a definition of primary marketing research, it was intentional! CRM systems will conceptually offer what marketing research on customer satisfaction/value/loyalty research has always strived to do — to narrow the area of decision-making in fulfilling marketing strategy, and achieve business success.-
But does this mean that CRM replaces CSM in any way? No. In fact, customer survey work is likely to grow. Where much of the data that feeds a CRM system is about what customers have done, CSM tells more about how they think and what they plan to do based on having evaluated their supplier, its products, and services. Such measures of customer thinking should become invaluable components of any advanced business intelligence system. Customer perceptions and loyalty intentions deserve an honored spot within any system that otherwise handles objective, static data on customer behavior. So the point is not how to do an end run around or fight the coming CRM revolution, but how to join up! The real question has become, how do we make sure that customer satisfaction data become part of our CRM systems as soon as possible?
Where CSM fits in
The enabling technology and software of CRM will incorporate data coming from a wide array of customer channels, or contact points. These include field sales visits, dispatched service calls, call centers, reseller/dealers, accounts receivable, order processing, and, of course, Web and e-mail interactions. The intent is to warehouse this data to make it accessible for analysis and to enhance the understanding of customers. In reading literature on CRM applications, the priority application to date seems to be the automation of inputs from the sales, marketing, and order-taking processes in order to help others make the best offers to targeted customers. In short, the first order of CRM has been to sell more — cross-sell, up-sell, etc. The promise of revenue growth undoubtedly helped justify investing in new customer relationship management systems. But early CRM applications and these classic channels of CRM data leave out another crucial force behind top and bottom line growth — customer loyalty intentions, and the underlying attitudes that drive them.
Want loyalty? Don’t forget the loyalty predictions!
To overlook customer value/loyalty measurement survey data as one of the crucial CRM channels would be ironic, because it’s rare to read a white paper about CRM systems without coming across Fred Reichheld’s work from his 1996 book The Loyalty Effect. Reichheld emphasized the importance of measuring and predicting customer loyalty using surveys. The most common reference to his study notes that profitability can be enhanced 100 percent over time by retaining just 5 percent more of one’s customers. But those same white papers often fail to emphasize the crux of Reichheld’s work - that customer value or loyalty survey feedback is at the heart of knowing how to enhance customer retention. These surveys absolutely warrant being included as one of the premier channels of customer information. Those of us who are professionally responsible for CSM information take the initiative to carve out a role within these new systems for customer survey data.
In fact, the mission of anyone responsible for the customer satisfaction or loyalty survey feedback should be to position CSM as the “premium channel” for CRM. If CRM is all about business intelligence, what is more strategic than including the voice of the customer? There should be no argument that the customer’s own assessments of service transactions, their relationship and brand assessments of the supplier firm and competing brands, and especially their intentions to be loyal in the future, deserve a premier spot alongside other customer data.
Adding CSM to the CRM mix
Logistically, customer survey data simply offer one more channel of detailed information to load into the CRM system along with that from the other customer channels, namely the front-office operations such as sales and customer contact centers, and the back-office data stores of other processing, invoicing, sales and service history, etc. While the concept for pooling customer data seems simple, the reality of implementing the technology to make it work is not. Many large organizations struggle with the length of time it takes to make a wide-scale CRM system fully operative. If the emphasis in buying the new system was mainly to automate sales force data in order to grow the level of cross-selling, then it may take awhile to get around to integrating the customer survey elements and data. But where CRM exists, market research managers should be helping accelerate the process - at the very least by considering how to incorporate CSM into the new system, and discussing this with experts in IT, CRM, and the survey database, inside and outside the organization if necessary, to understand what integration will require. Just by becoming part of CRM, customer surveys should become even more valuable to the enterprise. CRM architecture and storage have been designed to the end of making information more accessible to designated associates within an organization. The ability of companies to act upon their customer survey data has always hinged on how readily the findings are disseminated, how easily referenced by the customer-interfacing people, and how well they are used to change processes and better manage relationships. Becoming part of CRM can only enhance the effectiveness of CSM.
Symbiosis in the customer data warehouse
In addition, the inclusion of customer survey findings in CRM systems will make the other customer channel inputs more useful, because the information from front- and back-office customer channels can enhance the value of customer survey information, and vice versa.
It’s all in the analysis. Consider the information related to individual customer accounts. CRM data will guide the segmentation of customers in the B2B world, helping companies understand who are the most profitable and important accounts. In that sense, CRM identifies the most coveted customers, and clarifies what these target accounts have experienced. But that really just sets up what the CSM “premium” channel can bring to the table. Customer loyalty surveys can dynamically connect with the other data by indicating how the targeted customers feel about their relationship with your firm and what they plan to do about it.
In advanced applications of customer loyalty survey analysis, B2B client enterprises today seek to know which of their accounts are “truly loyal” or “at risk.” It’s an added joy for senior account managers to learn the attributed reasons for this loyalty classification, whenever the survey data can be augmented by details of the sales and service history of the same accounts. Why wouldn’t marketing communications, sales, and customer service teams demand receiving such a complete understanding of the individual accounts they service, once they have entered the world of CRM?
One of the traditional strengths of marketing researchers will be invited to the CRM “party” - analytical skills and resources. The myriad of data stored within CRM will demand intelligent, discerning analysis; expertise in applying analytic software and other resources to glean the most valuable information and practical implications from the centralized database.
Some of the strategic issues to be resolved from the analysis will include:
- Which strategic accounts/types are most vulnerable and why, in terms of buying characteristics, attitudes, and service history?
- Which strategic accounts have become the most loyal/least vulnerable and why?
- Which business processes are priorities for improvement in order to boost customer retention of key accounts?
Fine-tuning customer service on the fly
Customer survey or CSM data to this point has focused mainly on the relationship assessment surveys that evaluate all aspects of the business relationship rather than a single transaction. But the advent of CRM certainly offers an important role for transaction CSM/survey data as well. In the world of consumers and mass-market customer service, the immediacy of customer feedback on service transactions can be used to fine-tune the operating procedures and training in customer contact centers. Customer transaction surveys are normally conducted among a sample of customers who initiated contact for various reasons. When a company implements a CRM system, and already conducts customer transaction surveys, it may want to gather survey feedback more real-time and continuously, since it now has a better means of disseminating the additional information. This is especially true as the customer contacts and the follow-up surveys are increasingly Web-enabled rather than phone- or mail-based. The customers’ perceptions of different aspects of service can conceivably be tied to other pieces of information available in the CRM database, such as the particular service representative, service conditions at the time, etc.
Get on board and propose a merger!
In many leading enterprises, CRM has already “left the station,” or will soon be doing so. A recent survey by the Boston Research Group for international data storage firm EMC Corporation surveyed 100 CEOs, CIOs, and other senior executives, and confirmed the immediacy of the CRM adaptation trend. The survey revealed that 60 percent of companies have already made the decision to install CRM, and a third of those were well on the way to completion. (More study detail is available at www.emc.com/information_generation/perspective).
Senior managers responsible for customer satisfaction information face the need for some careful planning in the near future on how to get aboard the CRM train. A customer relationship management system is neither an enemy, nor a process competing with or replacing CSM. CRM is about enabling a firm to really become customer-centric - thus pushing the same old goal that we in the CSM profession have always had, but arming it with the catalytic wave of enabling technology to make it happen. CRM and CSM seem destined to complement each other, just as in the old saying, “Iron sharpens iron.”
Let’s help bring these two together.