Why CRM Doesn't Work E-Book

Frederick Newell

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

Seitenzahl: 391

Veröffentlichungsjahr: 2010

Beschreibung

CRM was supposed to help businesses better understand their customers and increase efficiency. Yet most companies are not getting the return they expected. Is it possible to make customers happy and, at the same time, improve ROI? Is there a practical, affordable way to get customers to say what they really want? In Why CRM Doesn't Work, leading international marketing consultant Frederick Newell explains why it's time to change the game to CMR (Customer Management of Relationships). CMR allows companies to empower customers so they'll reveal what kind of information they want, what level of service they want to receive, and how to communicate with them--where, when, and how often. It is a bold solution for businesspeople at all levels in all industries who want to stay ahead of the curve in the development of customer loyalty. Newell shows by lesson and example why the current CRM isn't working, what needs to change, and how to put the CMR philosophy to work--without additional expense. The book includes case studies of good and bad relationship marketing from companies as diverse as Kraft Foods, Procter & Gamble, Budweiser, Charles Schwab, Dell, IBM, Lands' End, Sports Authority, Radio Shack, and Staples. With the knowledge in this book, a company can learn to build long-term relationships and bring in profits instead of relying on one-time sales. Why CRM Doesn't Work is important reading for companies of every size that are trying to satisfy and sell to today's consumer.

Leseprobe

Table of Contents

Praise

Title Page

Copyright Page

Epigraph

Dedication

Acknowledgements

Foreword

Preface

PART ONE - What’s Not Working

Chapter 1 - Why Doesn’t CRM Work?

IS CRM REALLY ABOUT THE CUSTOMER?

MOVING TOWARD CMR

UPDATING THE CONCEPT

COMMON CAUSES OF FAILURE

A LOOK AT CRM INITIATIVES

IT WON’T BE EASY

Chapter 2 - It’s Not a Question of the Chicken or the Egg

THE IMPORTANCE OF PLANNING

STRATEGY

A GOOD EXAMPLE

Chapter 3 - “One Girl in a Convertible...”

CONNECTING

ASKING THE RIGHT QUESTIONS

BEATING THE COMPETITION

Chapter 4 - Why Do We Have Two Ears and Only One Mouth?

GETTING STARTED

THE POWER OF INFORMATION

PART TWO - What Needs to Change

Chapter 5 - It’s No Longer Good Enough to Ask Forgiveness Rather Than Permission

PRIVACY CONCERNS

POSITIVE STEPS

PERMISSION MARKETING

IT’S NOW THE CUSTOMER’S TURN

Chapter 6 - Permission in Action

THE POWER OF PERMISSION

MOBILE PERMISSION MARKETING

Chapter 7 - Type, Point, Click, and Send Now

WHAT DOES E-MAIL MEAN FOR CMR?

SPAM

KEEP IT RELEVANT

Chapter 8 - Who’s Minding the Store?

LETTING THE CUSTOMER CHOOSE

PROVIDING CUSTOMERS WITH OPTIONS

Chapter 9 - Personalization Technology—Boon or Bust?

PERSONALIZATION AND CUSTOMIZATION ARE NOT THE SAME

BENEFITS OF PERSONALIZATION AND CUSTOMIZATION

THE EMPOWERMENT ASPECT

TECHNOLOGY

CREATING A BALANCE

Chapter 10 - But What About the Loyalty Card?

THE VALUE OF LOYALTY PROGRAMS

THE DOWNSIDE

LOYALTY AND CMR

Chapter 11 - No Card? No Problem!

INCENTIVES CAN DELIVER INFORMATION

CUSTOMER-CENTRIC MARKETING RESEARCH

Chapter 12 - All Cows Look Alike

WHAT IS A BRAND?

CUSTOMER DIALOG

CUSTOMER INVOLVEMENT

THE BRAND PROMISE

THE EXPERTS WEIGH IN

NEW CHALLENGES

PART THREE - How to Change

Chapter 13 - Before You Build a Better Mousetrap

GETTING BEYOND THE DREAM

AN EVOLVING PROCESS

Chapter 14 - Customer Service—Who Cares?

CUSTOMER EXPECTATIONS

E-SERVICE AND SELF SERVICE

THE COMPETITION

TRAINING

SEGMENTED LEVELS OF SERVICE

Chapter 15 - Which Customers and Why

THIS IS A WAY

PERMISSION INTENSITY

GROWING YOUR BUSINESS

Chapter 16 - Crossing the Chasm—What Will You Need to Change?

Step 1: Think Differently

Step 2: Establish a Benchmark

Step 3: Define Measurable Goals and Objectives

Step 4: Create the Strategy

Step 5: Reengineer the Processes

Step 6: Get Ready for Change

Step 7: Keep Technology in Its Place

Step 8: Select the Right Tools

Chapter 17 - There’s No Free Lunch

WHERE TO SPEND AND WHERE TO SAVE

CUSTOMER RELEVANCY

CUSTOMER EQUITY

THE BOTTOM LINE

Chapter 18 - Don’t Boil the Ocean

TOOLS AND PLANNING

STARTING SMALL

PROTECT YOUR PRESENT BUSINESS

PART FOUR - A Look Ahead

Chapter 19 - There’s No There, There

THE INTERNET AND CUSTOMER RELATIONSHIPS

THE INTERNET AND CMR

Chapter 20 - Electronic Empowerment

THE PURPOSE OF WEB COMMUNICATION

A LOOK AT SOME TRENDS

WHAT’S NEXT?

Chapter 21 - What Do Customers Want from Mobile Messaging?

MOBILE COMMUNICATION

BEYOND WIRELESS COMMUNICATIONS

Chapter 22 - Will Wall Street Care?

CUSTOMER LIFETIME VALUE

MEASURING LOYALTY

Conclusion

Afterword

Notes

Index

About Bloomberg

About the Author

Advance praise forWhy CRM Doesn’t Work:

How to Win by Letting Customers Manage the Relationship

BY FREDERICK NEWELL

“Fred Newell raises relationship marketing to a new level, beyond database marketing, loyalty programs, targeted advertising, and customer relationship marketing. Read this before your competitors do.”

—PHILIP KOTLER SC Johnson & Son Distinguished Professor of International Marketing Northwestern University Kellogg School of Management

“In this competitive world, hanging onto customers is critical. Fred Newell’s new book is a commonsense approach to helping you do just that.”

—JACK TROUT President, Trout & Partners Ltd.

“Frederick Newell has hit the CRM nail on the head. A lot of company managers thought you could create profits by buying CRM software and building an expensive data warehouse. Fred has pointed out that they were wrong. You cannot predict or modify customer behavior with CRM. What you can do is waste a lot of money. What you need is a customer database and intelligent customer communications, which come from creative strategies, not a piece of software.”

—ARTHUR MIDDLETON HUGHES Vice President for Business Development CSC Advanced Database Solutions

“Fred Newell does a wonderful job of helping us understand why so few companies get the return from CRM initiatives that they expect. WhyCRM Doesn’t Work makes a compelling case for putting the customer in the driver’s seat and allowing the customer to manage the relationship.The book is filled with practical examples and tips and is an idealsolution for business executives intent on avoiding ‘CRM backlash.’ In the process, Newell addresses a host of relevant topics ranging from wireless technologies to brand building to permission marketing in a co- gently written and easy-to-read treatise. Newell moves beyond the buzz and quickly gets to the essence of what companies need to do if they expect to win the ‘hearts and minds’ of customers. A must-read for any manager in an enterprise focused on improving its profitability, as well as the qual- ity of its customers’ lives.”

—JONATHAN COPULSKY Lead Partner, Customer and Channel Strategy Practice Deloitte Consulting

“Fred Newell, in his trademark easy-to-read style, showers us with ideas and examples to illustrate his message that ‘it’s not technology that drives CRM, it’s intelligence about the customer.’ He rightly reminds us that the customers must truly be placed at center stage and that we must listen with both ears to their stated and unstated needs. As a recent definition of CRM states, ‘Customers Really Matter.’ Fred’s book is timely for all businesses.”

BRIAN WOOLF Author, Loyalty Marketing: The Second Act

“CRM has been promoted as the answer to customer development and loy- alty. Fred addresses head on why this has failed for so many companies that have spent heavily and had such big expectations for CRM. Importantly, Fred now takes customer development and loyalty to a new level—beyond CRM—by redefining and empowering the customer. This is the way tobuild a successful customer-focused business. Fred is always ahead of the curve.”

—CHARLES J. BEECH Chairman & CEO, Message Factors, Inc.

“If you’re struggling with a CRM initiative in your company, get this book. It can set you straight clearly, easily, quickly and, most of all, through a very readable format. Fred Newell has taken a beacon to the ‘black hole of CRM.’ Grab a flashlight and follow along.”

—DON SCHULTZ Professor, Medill School of Journalism, Northwestern University

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© 2003 by Frederick Newell. All rights reserved. Protected under the Berne Convention.

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This publication contains the author’s opinions and is designed to provide accurate and authoritative information. It is sold with the understanding that the author, publisher, and Bloomberg L.P. are not engaged in rendering legal, accounting, investment planning, business management, or other professional advice. The reader should seek the services of a qualified professional for such advice; the author, publisher, and Bloomberg L.P. cannot be held responsible for any loss incurred as a result of specific investments or planning decisions made by the reader.

Library of Congress Cataloging-in-Publication Data

Newell, Frederick

p. cm.

Includes index.

ISBN 1-57660-132-3 (alk. paper)

1. Customer relations--Management. I. Title

HF5415.5 .N49 2003

658.8’12--dc21 2002153916

Acquired by Jared Kieling

Edited by Tracy Tait

Don’t believe what your eyes are telling you. All they show is limitation. Look with your understanding, find out what you already know, and you’ll see the way to fly.

—Jonathan Livingston Seagull Richard Bach

To the pioneers of customer relationship building from whom I have learned so much and to the many marketers who truly want to make life better for their customers—with the hope that some of these words will help you to look beyond today’s limitations, find out what you already know, and see the way to fly.

Acknowledgments

MY SINCERE THANKS to all the companies that cared enough to share stories, numbers, and insights. Special thanks to the many fine people at the companies I work with throughout the year. They have taught me more than I have been able to teach them, and I continue to learn from every visit.

Many individuals deserve my heartfelt thanks for their professional contributions. First among these is Loren Lemon who spent hours reading early drafts, always providing exactly the right incisive comments and suggestions.

Equal thanks to Professor Katherine Lemon, author of Customer Equity—How Customer Lifetime Value is Reshaping Corporate Strategy, my coauthor of Wireless Rules (and my delightful daughter), for adding the text that ties the customer management of relationships to the development of customer equity.

For the foreword I went to the one professional who really pioneered the concept of transferring power to the customer with his earliest thoughts about permission marketing. My sincere thanks to Seth Godin for accepting the challenge.

Thanks to my agent, Ed Knappman of New England Publishing Associates for finding the good folks at Bloomberg Press, to Jared Kieling, editorial director, for his dedicated counsel, and, above all, to my editor, Tracy Tait, who brought order out of chaos in the kindest possible way to help me sharpen my thoughts throughout the book. Special thanks to my associate, Devon Wylie, for her quiet patience, sound advice, and dedicated research.

I especially want to acknowledge the following executives who shared stories, quotes, and ideas: Héctor Bajac of Johnny Walker, Richard Barlow of Frequency Marketing, Bob Brand of the Newtown Bee, Susan Cohen of increMETRICS, Deborah Galea of email replies.com, Barton Goldenberg of ISM, Bernice Grossman of the DMRS Group, Sandra Gudat of the Customer Communication Group, Guara Verma and Todd Hollowell of informationweek.com, Kenneth Kanady of KANA, John Lawlor of Spectra Marketing, Federico Tapper of BancoRio, and Paco Underhill of Envirosell.

Finally, most special thanks to my wife, Harriette, for her unwavering support and encouragement, and thanks to our three great children for their enthusiastic advocacy.

The quote on pages 74-75 is reprinted with the permission of Simon & Schuster Adult Publishing Group from Why We Buy, by Paco Underhill. Copyright © 1999 by Obat, Inc.

The sidebar on pages 140-141 is reprinted with permission, CMP MEDIA LLC, Information Week, February 18, 2002, “CRM Makes Strides in Self Service,” Guarav Verma and Todd Hollowell. All rights reserved.

The text in Chapter 17 from Driving Customer Equity appears with permission from the publisher. Driving Customer Equity: How Customer Lifetime Value is Reshaping Corporate Strategy, by R. T. Rust, V. A. Zeithaml, and K. N. Lemon. Copyright © 2000 by Roland T. Rust, Valarie A. Zeithaml, and Katherine N. Lemon. Reprinted with permission of The Free Press, an imprint of Simon & Schuster Adult Publishing Group.

Foreword

YOU’RE NOT IN CHARGE. Sorry. Someone had to say it. The delusion that you are still in charge of what your prospects (and consumers) see and think and do is costing you money. Consumers have a real choice today. They can choose to ignore your ads, your messages, your follow-up messages, your phone calls, your coupons, and your begging.

CRM, if you haven’t noticed, appears to stand for “Consultants (making) Real Money.” It’s positioned as an arcane black art, something both technical and artistic, and something that you couldn’t possibly understand without their help.

But that’s not true. CRM isn’t hard. It isn’t complicated. It’s just foggy. It’s foggy because too many companies persist in believing that CRM is just a tactic, something to be installed. Once companies get it nailed, they believe they can go back to business as normal.

All you need to do to really get it, of course, is to abandon that thinking. Realize that a sea change has occurred, that “permission” is not just a buzzword invented to get you to buy books and stuff. Instead, recognize that the empowered consumer is here to stay and we all better get used to it. That realization, together with a large dose of common sense (provided for you here by Fred Newell) gets you almost all the way there.

Last thought: quit studying the issue and go try something. You can set up a simple e-mail solution on your desk for a dollar. See what happens when you interact with 100 consumers a day by e-mail—treating them like real people and doing what you need to do to grow their business. The results will surprise you.

—SETH GODIN Author, Permission Marketing

Preface

AQUICK SEARCH of online bookseller Amazon.com lists close to one hundred books on customer relationship management (including three of mine) with specialty titles covering Canada, Western Europe, Central Europe, Japan, and Latin America. Why does the world need one more? Because all ninety-eight—including mine, I’m not afraid to admit—have gotten it wrong. The very phrase explained in these books—CRM, or “customer relationship management”—implies that companies can manage the customer relationship by targeting specific customers for specific product offerings. How audacious! How impudent! How wrong!

Most reports show that only 25 to 30 percent of companies implementing CRM initiatives feel that they are getting the return they expected. Too many executives want CRM deployed quickly and broadly because they think it will bring a rapid return on their investment. Not only do these executives underestimate the magnitude of the task, but they also fail to understand what the customer really wants from a business relationship. As a result, the very things they are doing to try to build and manage relationships with customers are all too often the things that are destroying those relationships. Customers don’t want to be targeted like hunted animals. This is seen in studies of marketing channel use and as increased numbers of consumers opt out of mailing lists. Consumers want companies to make their lives easier and less stressful by not forcing them to do anything they don’t want to do. With product and service options exploding on the Internet and through multichannel purchase opportunities, the balance of power has shifted to the customer, and the customer wants control.

The time has passed for customer relationship management (CRM); it’s time to transition to customer empowerment and switch to customer management of relationships (CMR). CMR gives the customer the power to tell us what he’s interested in and not interested in. For a customer relationship building initiative to be effective, it should be a well-managed process of turning control over to the customer. And that means letting customers tell you what kind of information they want, what level of service they want to receive, and how they want you to communicate with them—where, when, and how often.

Why CRM Doesn’t Work is written to speak directly to the executives in companies of every size who are concerned with achieving a profitable return on their investments in building and maintaining customer relationships. It is an ideal solution for business people at all levels in all industries who want to stay ahead of the curve. This book will show you how to create business strategies and processes that put customers first and will help you develop a clearly defined plan for profitable return on customer-centric marketing invest ments.

Projecting a step beyond CRM, to CMR, this book shows by lesson and example how companies can improve the quality of peoples’ lives while, at the same time, improving corporate profits. You’ll find out why the current CRM isn’t working, what needs to change, and how to apply the CMR philosophy at your company. You will learn why so many initiatives fail, a new view of customer service, and a new definition of permission marketing.

Part I of Why CRM Doesn’t Work, “What’s Not Working,” takes you through the essential errors in CRM thinking, from not recognizing that the power is in the hands of the customer, to misunderstanding what CRM is all about, to misplacement of technology’s role. This section explains the problems caused by failure to change from a culture of product-based management, and by lack of commitment from senior management. The case histories cover different marketing challenges and provide ideas that any business can put into action.

Part II, “What Needs to Change,” explains specific alterations that must be made to current CRM programs and why. You will learn the new power of permission marketing, the most profitable role for e-mail in building customer relationships, and important rules for e-mail marketing. The ten commandments of personalization will show you how to balance personalization with privacy. In Chapter 10 you will learn the new role of loyalty cards. Chapter 12 shows how the traditional market-speak of branding hasn’t helped most companies and how the new CMR can build strong brands one customer at a time.

Part III, “How to Change,” is about updating both your mind-set and your approach to customer relations, and deciding whether or not CRM is important—or even right—for your business. You will see why “best customer service” can be a cause of failure for a CMR program and why you can’t let every customer manage the relationship. In Chapter 15 you will learn the questions and rules for evaluating customers, and Chapter 16 has eight steps for your transition to CMR. Chapter 17 shows how you can transition to CMR without additional expense, and how to get a true return on investments in relationship-building initiatives.

Part IV, “A Look Ahead,” will stretch your thinking about your market, and will show you what customers really want from mobile messaging. Chapter 22 demystifies customer lifetime value and shows how your company’s stock can earn a higher multiple based on it’s price-to-customer-relationship ratio. The Conclusion suggest the big-picture changes that will occur in a move to CMR, and directs the actions you can take today.

Throughout the book, you will learn from packaged goods giants like Kraft Foods, Procter & Gamble, and Budweiser; financial service leaders Charles Schwab and Fidelity; technology influentials Dell, IBM, and Hewlett-Packard; hospitality and travel firms Ritz-Carlton, Hilton Hotels, and EasyRentaCar; and retail champions Lands’ End, Norm Thompson, Sports Authority, Radio Shack, Staples, Tower Records, eBags—even upscale retailer Prada. With examples from airlines, booksellers, banks, telecoms, newspapers, supermarkets, shopping centers, and theme parks, this book has an important message for everyone whose success depends on selling to customers: consumers, business-to-business, internal clients—any kind of customer.

Switching to the new CMR is a process of realizing you are not in charge and allowing the customer to guide your efforts. That’s the only way companies will be able to build and sustain profitable relationships with customers. That shift is what this book is all about.

PART ONE

What’s Not Working

1

Why Doesn’t CRM Work?

Does the customer really want to be managed?

I’m not stupid. I read about what you guys call customer relationship management. Why doesn’t it work for me? Companies ask for my preferences and I tell them what I want from them. Still, each offer is more meaningless than the last. Why doesn’t your so-called CRM make my life easier?

MARKETERS HEAR THIS from so many customers that the question becomes, who’s the enemy? Is the customer the enemy or was Pogo right: “We have met the enemy, and he is us”? Our customers are crying out for us to understand their individual needs. They tell marketers what they want, but we keep bothering them with irrelevant offers.