eBite: I can’t get no...eSatisfaction

by David Cullen
August, 2001

Customers are king – or are they? What many organisations call customer relationship management (CRM) is just more efficient transaction processing. True CRM means transforming your organisation, but it’s not for everyone…

Most organisations think they understand their customers’ needs.  But what they really understand is what products / services they want to offer, while not taking changing needs into account.

For eBusinesses and eGovernment initiatives, investing in customer service is a must.

From the increasing headcount at call centres to 24-hour access to account information on the web to new technology that integrates the ‘front’ and ‘back’ offices, it seems all signs point to increasing dedication to customer satisfaction. 
Well…not quite.

What we are seeing is increasing dedication to the efficiency with which customer requests are handled. Call centres can tell you how long the average operator takes to resolve the average call, how many people used the web site and the exact location of Company XYZ’s package in transit. We are increasingly better at providing information, and increasing access to that information. 

But are we any better at giving customers what they want - what they really want? What have we learned about customer satisfaction?

A few surprises 

Two things that may surprise you about customer satisfaction:

1. Employee satisfaction is one of the most important drivers of customer satisfaction. 
2. What you already know can hurt you, if you don’t use it. Your organisation probably has the knowledge it needs to deliver superior customer satisfaction – the challenge is in bringing it together and acting on it. If you don’t you are putting your relationships with customers at risk.

We believe transformation is a more likely route, with call centres being replaced by customer contact centres that support more effective customer relationships. 

Becoming customer-centric

Before adopting CRM software or establishing a call centre, take a step back and look at your organisation from a customer’s perspective. To be customer oriented requires a fundamental cultural shift for most organisations. It requires knowing:

	Who your customers are: not just their demographics but how they differ from each other, their average lifetime value, how profitable different segments are, which types of customers you really want to make an effort to retain.
	What they need: this is where the biggest divergence between perception and reality occurs. Most organisations think they understand their customers’ needs. But what they really understand is what products/services they want to offer, while not taking changing needs into account. Consider transport businesses such as DHL: on-time delivery seems an obvious priority for its customers. However, when the company began analysing its customers’ needs, it learned this was not always the case. To some customers, it was more important that the contents of a package arrive in one piece than arrive on time.
	How you can best serve those needs.

Death of the call centre?

To date, many eBusiness and eGovernment initiatives have rested on the concept of call centres to deliver customer service. In some cases, poor management of call centres has resulted in a ‘sweatshop of the new millennium’ reputation, where productivity is relentlessly measured and wages are low.

Many pundits are predicting the death of the call centre, as automation increases and the web replaces human contact. Transaction handling may well become more automated, but merely dealing with a customer’s basic needs will only improve customer satisfaction – not build a relationship. We believe transformation is a more likely route, with call centres being replaced by customer contact centres that support more effective customer relationships. They will offer customers a number of channels – telephone, email, fax and the web – through which to contact them. They will implement best practices in human resources (HR), and provide multi-skilled and interpersonal training for employees. They will devolve responsibility for customer relationships closer to the front line service employees, who are in daily contact with customers.

CRM is an enabling tool in all this. So far CRM has been used to improve the efficiency of transactions rather than to create and support better relationships, but as the customer contact centre evolves this too will change.
 

The business case for CRM

Investing in true CRM will not be cheap, but for organisations who have made customer satisfaction a priority it will be a must. 

CRM is not about implementing technology, though technology is an enabler. It is not about the efficiency of transactions, though that can provide financial benefits. 
CRM is about the effectiveness and profitability of your customers. It is about understanding the value of customers to your organisation, and how to retain your most important customers.

It involves taking a longer term view of your measures of success and financial performance. 

Repeat purchases are the gateway to loyalty: using cross-industry averages, if customers purchase a product/service from you once, there is a 70 per cent chance they will buy from a competitor the next time. If they buy from you twice, this reduces to 50 per cent. If they purchase from you three times, there is only a 20 per cent chance that they will go elsewhere for their next purchase.

This does not mean harassing your customers to buy more from you at each opportunity:

it means approaching them when they want you to, the way they want you to, and becoming their first port of call. 

If you intend to be a market leader, if you are interested in competitive advantage and if you are willing to invest in the change management that is required, investing in CRM will pay off.

David Cullen is a director in the Customer Solutions Group for Arthur Andersen in the UK.

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