Managing the New Customer Relationship E-Book

Ian Gordon

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 550

Veröffentlichungsjahr: 2014

Beschreibung

Praise for MANAGING THE NEW CUSTOMER RELATIONSHIP "Gordon delivers an impressive synthesis of the newest methods for engaging customers in relationships that last. No organization today can succeed without the mastery of customer relationship management strategy fundamentals. But to win in the decades ahead, you must also understand and capitalize on the rapidly evolving social computing, mobility and customer analytics technologies described in this book. Checklists, self-assessments and graphical frameworks deliver pragmatic value for the practicing manager." -- William Band, Vice-President, Principal Analyst, Forrester Research Inc., Cambridge, MA

Leseprobe

Contents

Cover

Praise for Managing the New Customer Relationship

Also by Ian Gordon

Title Page

Copyright

Dedication

Acknowledgments

Introduction

Chapter One: Managing the New Customer—and the New Customer Relationship

Relationships Matter

The Old Rules of Marketing Don't Work

Technology Has Changed Everything

The Truth Is Visible

Marketplaces Are Social

Marketing Is Sociology

One-Through-One is More Important Than One-to-One

Defining the New Customer Relationship

Implications for Managing the New Customer Relationship

Chapter Two: Strategies for Better Customer Relationships

A Strategic Context for Relationship Management

Relationship Management Capabilities

The Cultural Imperative

Beyond Culture: The Strategic Enablers

Chapter Three: Planning Relationships with Existing Customers

What's In a Relationship Management Plan?

Customer Selection

Relationship Objectives

Engagement

Value

Innovation

Teaching

Sharing

Chapter Four: One-Through-One: Engaging Social Customers

The “Peoplescape” of Social Media

The Company is No Longer Center Stage

The Customer is Speaking

Listen

Social Media Taxonomy

Social Media Objectives

Social Media Planning

Individual Customer Engagement

Chapter Five: B2B Relationships

Consumer and Business-to-Business Relationships

Buyer–Seller Relationship

Managing the B2B Relationship

B2B, Social Media and Product Lifecycles

Social, Internal to the Enterprise

Chapter Six: Relationships with Mobile Customers

Defining Mobile Relationships

Mobile Relationship Objectives and Strategies

Selected Application Categories for Mobile Devices

Emerging Technologies

Chapter Seven: Mass Customization

Mass Customization Defined

An Expensive Option?

Technology for Mass Customization

Enabling Relationships Through Mass Customization

Approaches to Mass Customization

Customization Versus Standardization

A Mass Customization Plan

Chapter Eight: Customer Analytics

The Meta is the Message

The Upside of Customer Analytics

Putting Customer Analytics to Work

Online Customer Analytics

Customer Analytics Software

Customer Analytics and the Cloud

Net Promoter Score

Chapter Nine: Teaching Customers New Behaviors

What's Wrong with Existing Customer Behaviors?

Pedagogy and Teaching Customers

Emotional/Affective Pedagogy

Cognitive Pedagogy

Behavioral Pedagogy

Individual/Social Pedagogy

Developing Pedagogy for Teaching Customers

Learning Relationships

Best Pedagogy Practices

From Teaching to Addicting

The Consumer as a Functional Addict

Chapter Ten: Case Studies: Making it Happen

Dell

Leicester City

New York City, Health and Human Services

TransGaming

TransLink

Chapter Eleven: Strategy, Stakeholders and Semantics

Planning a Strategic Relationship

Customer Management

Direct and Indirect Stakeholders

Direct Stakeholder Management

Indirect Stakeholder Engagement

Strategic Response-Ability

Society and Response-Ability

Appendix A: Selected Customer Analytics/Data Mining Software Solutions

Notes

About the Author

Index

Praise for Managing the New Customer Relationship

“Gordon delivers an impressive synthesis of the newest methods for engaging customers in relationships that last. No organization today can succeed without the mastery of customer relationship management strategy fundamentals. But to win in the decades ahead, you must also understand and capitalize on the rapidly evolving social computing, mobility and customer analytics technologies described in this book. Checklists, self-assessments and graphical frameworks deliver pragmatic value for the practicing manager.”

—William Band, Vice-President, Principal Analyst, Forrester Research Inc., Cambridge, MA

“A very comprehensive and practical book on managing relationships with existing customers in the age of social media! I particularly enjoyed reading chapters on teaching customers new behaviors, which were illustrated by excellent case studies.”

—Jagdish N. Sheth, Ph.D., Charles H. Kellstadt Professor of Marketing, Emory University, Atlanta, GA

“The strategic breadth and depth of this book is impressive as Gordon explores the new customer and how to plan and manage the new customer relationship. I found his review of strategies, techniques and technologies for social, mobile, mass customization and customer analytics to be particularly insightful. Gordon urges marketers to live and breathe one-through-one marketing and to master social engagement techniques. The checklists, cases and examples make the content grounded and actionable. This is an important, current and detailed book to which every organization should pay close attention to improve customer relationships and create shareholder value.”

—Marcus Ruebsam, Vice-President, Line-of-Business Marketing Solutions, SAP AG, Walldorf, Germany

“There are many books on CRM, but I recommend this one because Gordon's book does what others do not. He considers CRM strategy and evolves it to recognize a new customer, one who is always connected, socially available and influential. The book doesn't just discuss many point solutions for specific marketing challenges; it integrates technology with strategy, people, process, and customer analytics to develop relationships continuously. This book is a broad and deep exploration of CRM, providing practical, fact-based perspectives that every company can use to validate and rethink their customer and stakeholder relationships.”

—Helmuth Cepeda, Small, Medium and Distribution Director, Microsoft Mexico, Mexico City, Mexico

“Technology has completely changed the nature of social interaction. The new rules of customer relationship management require that companies use new thinking and apply new technologies to engage with customers, keep in contact and build relationships that matter. Gordon shows how companies can create innovative strategies and integrate technology, people and process to interact and collaborate with customers and achieve improved business results. This book is at the cutting edge of CRM and is a must-read for any organization that wants to assess and improve its customer relationships.”

—Peter Bergmann, Sales Strategy, BMW AG, Munich, Germany

“Gordon speaks to the heart of a most important strategic issue for our company as we develop ongoing relationships with customers in a subscription-based pricing model rather than selling software transactions repeatedly. Gordon observes the changing nature of the customer and customer relationship, and describes with great insight how to interact with every customer to create mutually beneficial value. It has never been easier to start a business yet never has it been harder to build a successful company. Gordon understands that customers are bombarded with choice and provides very current and powerful methods for any firm to build relevance and preference, and develop relationships that can lead to lasting success.”

—Selwyn Rabins, Co-Founder and CTO, Alpha Software Inc., Burlington, MA

“Ian Gordon has brilliantly and comprehensively articulated the fundamental strategies that any organization should be applying to turn their customer relationships into strategic and competitive differentiators for long-term growth. This book is a must-read for any company that wishes to build iron-clad customer relationships.”

—Vikas Gupta, CEO and President, TransGaming Inc., Toronto, Canada

“This book provides thoughtful perspectives on what any organization can do to improve customer attraction, engagement and management. The author never loses sight of the customer relationship as he discusses and develops existing theory and goes beyond to explore current issues that affect every marketer, including the technologies firms use and could use, and those their customers and potential customers are using. This is a strategic yet practical and insightful book that gave me a number of useful new ideas.”

—Jeremy Fox, Managing Director, Claro Learning Ltd., Tavistock, United Kingdom

Also by Ian Gordon

Competitor Targeting: Winning the Battle for Market and Customer Share (0-471-64410-2; John Wiley & Sons Canada, 2001)Relationship Marketing: New Strategies, Techniques and Technologies to Win the Customers You Want and Keep Them Forever (0-471-64173-1; John Wiley & Sons Canada, 1998)Beat the Competition: How to Use Competitive Intelligence to Develop Winning Business Strategies (0-631-15991-6; Oxford: Basil Blackwell, 1989)

Copyright © 2013 Ian H. Gordon

All rights reserved. No part of this work covered by the copyright herein may be reproduced or used in any form or by any means—graphic, electronic or mechanical—without the prior written permission of the publisher. Any request for photocopying, recording, taping or information storage and retrieval systems of any part of this book shall be directed in writing to The Canadian Copyright Licensing Agency (Access Copyright). For an Access Copyright license, visit www.accesscopyright.ca or call toll free 1–800–893–5777.

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Library and Archives Canada Cataloguing in Publication Data

Gordon, Ian, 1952 June 19-

Managing the new customer relationship : strategies to engage the social customer and build lasting value / Ian H. Gordon.

Includes index.

Issued also in electronic formats.

ISBN 978-1-118-09221-7

1. Relationship marketing. 2. Customer relations–Management. 3. Social media–Marketing. I. Title.

HF5415.55.G66 2013 658.8′12 C2013-900941-8

ISBN:978-1-118-25589-6 (ebk); 978-1-118-25585-8 (ebk); 978-1-118-25590-2 (ebk)

Production Credits

Acquiring Editor: Karen Milner

Managing Editor: Alison Maclean

Production Editor: Lindsay Humphreys

Cover design: Adrian So

Composition: Thomson Digital

John Wiley & Sons Canada, Ltd.

6045 Freemont Blvd.

Mississauga, Ontario

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For Joanne, Lauren and Evan

Acknowledgments

First and most importantly, thank you for your interest in this subject so close to the hearts of us both, and for investing your time in this book. I hope you will find the time well spent.

This acknowledges and thanks those who have made this book possible: my wonderful family, clients, friends and colleagues at Convergence Management Consultants and more generally. Thanks, too, to the following for their friendly guidance and assistance on aspects of this book: William Band, Vikas Gupta, Paul Hencoski, John Herhalt, Archie Johnston, Robert Love, Robert Paddon, Tim Rideout, Izzy Sobkowski and Dan Trott.

To the professionals at John Wiley & Sons Canada and specifically to Executive Editor Karen Milner, thank you. Karen has patiently, kindly and with great intelligence guided this project to completion while serving as your advocate.

Introduction

“No man is an island, entire of itself; every man is a piece of the continent, a part of the main.”

John Donne (1572–1631)

The nature of marketing has changed much in the past few years and, even as we rush to understand the nature of the changes and how to modify what we do, what we expect, how we think and how we plan, the change is accelerating. A few short years ago we observed that the declining costs and increasing performance of technology and associated developments in strategic thinking had enabled an entirely new discipline for marketing: relationship marketing. This discipline offered the company an opportunity to manage each customer as a market of one, over the customer's purchasing lifetime. It held out much promise as the theory and practice addressed several of the problems companies were experiencing, including the low yield some companies were obtaining from their advertising investments, challenges accessing fragmenting markets and developing brand equity in more intensely competitive marketplaces. Relationship marketing principles expected a customer dialog to be initiated and sustained as a learning conversation that would create progressively more value for customer and company over an extended time horizon.

The nature of marketing has shifted in just a few years from a one-way monolog as companies advertised to consumers, to a two-way dialog in which the company sought to understand and communicate with each customer, to engaging with customers in a two-way dialog that recognized the customer's social context. Along the way, the underlying principles of marketing were no longer limited to cognitive psychology. Managing individual customer relationships brought behavioral psychology into the realm of marketing. Now that markets are social, marketing should also consider the implications of social psychology and sociology. The integration of these disciplines changes much about the organization's strategies, technologies and processes and it also invites consideration of what it means to be an employee and what it means to manage. It challenges the organization to revisit its very essence because these categories of knowledge have the potential to renew how an organization conceives itself and how it engages society. This, in turn, invites organizations to consider what philosophy might mean to the enterprise, which has the potential to bring more meaning to everyone with whom the company engages. Meaning, in its own turn, has the potential to make relationships—and the enterprise—more durable.

This book is about creating and sustaining relationships with individual existing customers. It recognizes that social media has profound marketing importance, that social media has revolutionary—not just evolutionary—implications for the marketer. This book seeks to focus on strategies for business-building that other books have not done fully: it broadens and integrates existing relationship management theories, concepts and methods that focus on existing customers with new approaches for managing the social customer; it also includes additional conceptual considerations that are associated with new technologies (such as mobile devices), new methods to develop customer-specific understanding, new roles for the enterprise (such as teaching customers new behaviors) and new perspectives to help the organization to endure by finding meaning beyond a series of transactions—important though these are.

Many companies have already embraced customer relationship management (CRM) strategies, technologies and initiatives to manage individual customers and their relationships with the enterprise. This book recognizes that CRM is no longer novel and adopts the perspective that core CRM principles nevertheless merit revisiting both to solidify the conceptual foundation and to provide a platform from which additional concepts and approaches can be engaged.

Strong relationships are good for customers, the company, shareholders and other stakeholders, and this is now widely acknowledged. But research and one's own experience shows that few companies actually enjoy strong customer relationships. Talk to companies with weak customer relationships and they have a number of things in common. Key relationship management principles, processes or technologies are as yet not fully considered or deployed. Few companies can point to a plan to develop great relationships—they may have a CRM plan but usually this plan focuses more on technology than on customer-specific relationships. So before we deal with the new customer and associated management principles—the primary focus of this book—we will consider the core relationship marketing principles that should be a starting point for relationship management in any enterprise. Once we have done so, we will turn to the management of the new customer relationship, the social customer, and then explore related arenas, ending with considerations for an organization to advance stakeholder relationships amid rapid and ongoing marketplace, technological and societal change.

Traditional marketing focused on mass everything—mass production and distribution, and mass communication and positioning. And all the while, no one within the company was listening. Many marketers would be dismissive of the individual, often considering him or her of marginal importance because the business didn't depend on a single customer. Each person mattered less than the market segment that could be economically accessed and influenced in aggregate. If the company thought a customer was in an untargeted segment or in the tail of a segment's bell curve, that customer's voice would never be heard. The company was determined it would give the target market—all of it—what research said customers in this segment wanted.

Mass everything worked well at a time when products were relatively differentiated from one another, when many companies were operating near capacity and when marketplace demand was not saturated. It also worked well at a time when media was mostly a one-way street that ran from the company to the customer, never in the other direction. If a company yelled its message into media loudly and often enough, just maybe it could drive consumers to store shelves and cause products to be taken away. At least that's how most marketers seemed to operate as they contemplated metrics such as gross rating points and cost per thousand.

Mass marketing often resulted in mass wastage. Messages were sent to customers for whom the content simply didn't matter, for any number of the many reasons that make individuals different from one another. Just as marketplaces were fragmenting, so too were products and services proliferating. Companies needed to spend more and more on mass media simply to keep the same share they previously held in the customer's mind. And the messages were about as numerous and undifferentiated as grains of sand on the beach. The old marketing math simply didn't work very well anymore and companies trying to operate according to the old rules found that they could never have enough money to make the old rules work for them financially.

Product and service commoditization was compressing margins. So volumes or prices—or both—needed to go up for companies to retain profitability. And, again, commoditization made sure this was unlikely to happen unless some fundamental changes were made in the business model and marketing, specifically.

Along came ever more powerful and less costly new technologies that made accessing individual customers a consideration of economics for many companies. As marketing theory developed in concert with the technology evolution, marketing managers could plan their approach to individual customers strategically and for business advantage. So, at long last, companies could cater to each among their customers uniquely with tailored products, services and communications. Transactions and preferences could be remembered. And the importance of individual customers could be appreciated and recognized without incurring costs in excess of those that previously applied in the era of mass marketing.

While much attention has been paid to the enabling power of technology, customer relationships depend on much more than the artful or thoughtful use of technology. The management of the customer relationship starts with a commitment not to all customers but to each chosen one. Every skilled marketer has learned to walk the corridors of his or her customers' minds. Marketers have used cognitive marketing principles to influence the perceptions that drive consumers' attitudes that, in turn, lead to desired behavioral outcomes, such as visiting the store or buying the new product.

Management of individual customer relationships brings with it a new set of tools—those associated with behavioral marketing. The marketer operating according to behavioral principles considers how best to motivate customers' behaviors more directly than the cognitive marketer. Does the name Pavlov ring a bell? According to the Pavlovian stimulus-response model of buyer behavior, customers can be influenced by inducing a purchase response using coupons, price reductions or limited time offers, for example.

And once existing buyers' behaviors are known, marketers can look for customers and potential customers with substantially similar behaviors. This leads to replacement of the market segment as a concept with the “behavioral cluster”—a way of aggregating customers who have behaviors in common rather than those who have similar demographics, attitudes, psychographics or lifestyles, for example. The concept of behavioral clusters alone would be enough to replace traditional marketing principles. But the management of the individual customer goes far beyond this, especially now that communications with customers is bi-directional, now that consumers communicate more with their peers and friends than receiving communications from businesses and now that customers place greater emphasis on learning from one another than from companies. For the most part, companies are now much less relevant to customers than was previously the case, largely because their share of the customer's attention and mind has declined. This decline of “mind share” can be directly associated with a reduced percentage of communications in which customers engage. Those devices in the hands of customers provide conduits to the eyes and ears of the people who matter to them. The companies that supply them with goods and services are almost never among those that matter most. This decline of relevance leads many customers to make their purchase decisions with less input from the corporation for information, guidance and help. Customers rely increasingly on their friends and third parties they are more likely to trust. This challenge is big and it is vital. Now companies must struggle with relevance every hour of every day or risk becoming invisible. And customers don't often buy from invisible companies.

Companies have made themselves and their products more visible by differentiating their customers and treating them unequally according to the value each represents. The saying that “the customer is always right” has been replaced with “the right customer is always right.” Just as all customers are not equal, neither are all relationships. Procter & Gamble will place a different value on its end-customer relationship than will marketing management at Ford, the difference being largely associated with a comparison of a lifetime supply of P&G's non-durables compared with vehicle purchases and ongoing service and parts revenues at Ford. Companies such as these will have recognized the importance of relationships to their businesses. Ideally, firms will have currently relevant plans for developing these relationships to create customer and shareholder value (but many firms do not have such plans in place, as will be seen).

A meaningful relationship starts, as in a more private way, when supplier and customer see that it is in their interests to get together for the long term. This means a supplier needs to take stock of the customers it serves and decide which ones will receive special and continuing attention. Which customers are the most profitable now? Which can be made more profitable? Which are very important to the company's future? Which customers should be de-emphasized or even “fired”?1 Which customers want a relationship and which want to buy on price alone? Relationship management requires that organizations consider issues such as these and choose core customers, develop meaningful insights about them and predict their behaviors, formulate strategies for individual customer relationships and build the abilities within the company to deliver the value each customer wants.

Companies asking themselves these questions may find they have more work to do within the company to assess customers' profitability, strategic value and perceptions of the company and its competitors. Some companies may need to find ways to identify their end-customers in ways they haven't done thus far. Some may want to build better databases about their customers, or create communities or self-serve environments for customers on the Internet, or engage with customers one-on-one, or explore new avenues to be relevant to customers and make meaningful differences in their lives and society more generally. For some companies, opportunities may remain to focus what they do on the customer relationship, in part by placing relationships first and foremost in the company's vision statement, and then making this actionable by, for example, structuring the organization to deliver on the promise of relationships, categorizing and assigning responsibilities for relationships, and integrating people, process, technology and knowledge systems to achieve relationship objectives.

It is management's role to define and shape the basis for the end-customer relationship and to align all aspects of the enterprise with the customer. It is also the purpose of management to recognize and address the importance of the relationships that contribute to the end-customer relationship. For the end-customer relationship to endure, management may often need to rethink aspects about the company's internal and external relationships. For example, are salespeople compensated to be “hunters” or “farmers”? Are call center personnel rewarded for the number of calls they process or the satisfaction of the caller? Does marketing focus on developing new products or on the current and future profitability of its customers? Are investors patient or are they “light switch” investors who believe that money injected yesterday should already have paid them out handsomely today? Senior management might also ask themselves if they model the behaviors they want their internal and external customers to exhibit.

Although the focus of this book is on business, the concepts can also be used by government and not-for-profit organizations, such as charities and foundations, to manage their relationships for mutual advantage with their stakeholders. The concepts can also be deployed by governments, although there is one principle that makes these concepts of selective importance: democratic governments, by their very nature, offer their services equally to all. That is, while relationship management differentiates customers, citizen and public stakeholder engagement is undifferentiated by most governments.

This book discusses a number of considerations for private and public sector organizations to improve customer and stakeholder relationships while incorporating new principles to recognize and adapt to change, plan the management of new arenas and competitive battlegrounds and become an organization to which customers and potential customers can easily relate.

Chapter 1

Managing the New Customer—and the New Customer Relationship

“All for one, one for all, that is our device.”

Alexandre Dumas (1802–1870), The Three Muskateers

Relationships Matter

More than the machinery in the factory, more than inventory in the warehouse, more even than people who work for an enterprise, relationships are yet more valuable. While physical assets are a product of a company's past, derived from the resources that created them, relationships are predictive. Relationships suggest the direction in which a company's value will trend. If relationships depreciate, so will the future value of the company. And if relationships grow in value, there will be a commensurate growth in company value. When a company is about to launch a new product, the relationships it already has with its customers could provide an opportunity for testing. Customers will try products such as these if their relationships have built trust in the company. When there is some kind of problem between the company and its customers, it will be relationships that will get it past the bad times as customers remember the good. Relationships stop the unraveling of valuable business connections. Relationships provide a bridge of continuity and an opportunity for companies to develop ongoing revenues from their customers. More generally, relationships help a company reach its potential. And when a company gets weaker, when its products become older, when its competitive advantage declines, when its financial performance deteriorates, when some among its employees or channel intermediaries leave or defect, even then—and perhaps especially then—relationships will still be there to help pick the company up and put it on a successful path again.

So relationships matter. Even more, relationships are vital. Developing relationships and increasing relationship value should be the central strategic focus for every organization. Historically, many companies—especially those driven by mass marketing—sought to convert prospects into current customers using traditional marketing principles and then to cater to them in the usual, transactional way. These well-known marketing principles are no longer of much value if relationships are a fundamental determinant of enterprise value. It is now at least as important for marketers to develop a process for relationship development that comprises relating to existing customers and increasing customer value, and acquiring additional customers by connecting, attracting and converting non-customers into customers.