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Evaluating Your "CRM-ness"

  • August 01 1999, 1:00am EDT
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My company recently switched software vendors after doing business with them for a very long time. On the ride home from work the other night, I broke down the entire experience from the perspective of a customer relationship management (CRM) consultant. Though this analysis did not make me feel any better, I thought that by comparing this company's missteps to any recent issues you've faced might be a useful way for you to evaluate your company's "CRM-ness."

The bottom line is this: attention to CRM initiatives would have saved my company as a customer.

The Situation

Missing the Target
I received a direct mail promotion from a vendor that my company has been buying software from for more than six years. I was initially interested in their offer until I was told that the technology was not compatible with my company's operating system. I spent a significant amount of time talking to a sales representative and researching this issue, and I was told that the next release of the product would support our environment. Super, I'll just wait.

Redefining "Frequency"
About six months later, the same company sent me another direct mail promotion. They were inviting me to try their latest product upgrade. "Great," I thought. "Here's the support for my company's OS." Apparently, I was asking too much. The wonderful "new" software still did not support my environment. It was a beautiful direct mail piece, though - a glossy, colorful printed piece with a lovely illustration that must have cost a fortune.

In addition to this piece being poorly targeted to me, I received this direct mail promotion five days in a row. Monday and Tuesday I received the promotions addressed to "Larry Goldman." One of them was delivered to the third floor and one to the ninth floor (where my office actually is). Wednesday, our Indianapolis office received a fax version of this promotion addressed to me. Thursday, back in my Chicago office, I again received the glossy, now addressed to "Lawrence Goldman." Finally on Friday, a colleague forwarded me two copies of the same mailing he had received during the week. Talk about frequency. Talk about a waste of money.

The Last Straw
To add to my misery, the most recent invoice from the vendor had the same mistake three months running. When I called customer service, two things happened. First, the customer service representative immediately began pitching the latest upgrade - you know, the "new" version that won't work on my system.

When the rep finally stopped to breathe, I was able to tell her I had a complaint about billing. She suggested that I pay the full amount now and her company would reimburse me when the dispute was solved. I tried to explain that the billing error was a recurring problem, but she said she had no way of verifying it and had to send the matter over to the accounting department. This was the last straw.

The Analysis

Clean the Data
In data warehousing, cleansed data means verified codes and fields with the correct data type, length and values. However, cleaning customer data with data hygiene software for marketing purposes is much more complicated. Address standardization software uses fuzzy matching and other techniques to determine that multiple records are for the same individual.

If this software had been used, "Larry" and "Lawrence," the multiple mailings to the same address on different floors and the mailings to me at different locations may all have been consolidated. The result is that the vendor saves money on postage and printing, doesn't look careless and - most importantly - doesn't annoy the customer. This vendor could benefit from a number of database management tools including merge/purge and address standardization.

Data hygiene software has the ability to provide householding functionality - the ability to detect which sets of customers live and/or work at the same place. This functionality allows companies to understand profitability and revenue for entire households. In a given household, for example, if the husband is a low value customer but the wife shows high profitability, different contact strategies may be chosen than if you were to analyze them separately. And with business addresses, you could offer more appealing discounts and promotions to a single business instead of treating several employees at the same company as individual customers or prospects.

Record Customer History
Another problem with the vendor is that they are not using campaign management software to store contact history on their direct mailing efforts. Campaign management software provides a couple of important functions.

First, it provides an integrated system that standardizes and integrates marketing programs across a company. This feature helps product managers avoid sending conflicting messages to the same customer, helps assure that customer segments are defined the same across the organization and helps track and limit the number of contacts a customer may receive from the company over a period of time.

Second, campaign management software tracks each offer a customer received. In my situation, the company should have realized that I received this promotion six months ago and did not respond positively to the offer. Therefore, there is no need to send another mailing ... or is there?

Sharing Information
The sales rep noted why I did not respond to the offer in his sales force automation software. Clearly this information did not make it into the marketing systems because the reason I did not reply was technical - not price - sensitivity. Consequently, this mailing was wasted on me. This indicates that the vendor doesn't have an integrated customer database.

The customer or marketing database must be able to provide a single view of the customer, including past purchases and contact history. Contact history is more than a history of direct marketing; it should include contacts with the sales force, customer service and the vendor's Web site. This way, mistakes like the one I experienced wouldn't be made, and I'd be sure to hear about the release that will be compatible with my system.

Too Many Mistakes
The vendor's biggest mistake? They have no idea who "Larry Goldman" is. They don't know my buying habits, my interests and were not aware of my previous discussions with their sales rep. My company has been a customer of this vendor for six years, buying between 20 to 30 new licenses a year. So, what was wrong with their process?

If the vendor has a data warehouse, they are not using any of the closed-loop warehousing concepts. Feeding decision support data into the operational systems is a powerful way to enhance customer-facing applications. The customer service screen should show how long my company has been a customer, lifetime revenue and customer segment information. The customer service reps should also have contact history available so they can view and categorize all of my contact with them. For example, they would know that this is the third month in a row I have had a billing issue.

If Only They Had…
If this information had been available, the customer service representatives could have differentiated the way they handled my calls. If the company used data mining, statistical analysis or OLAP software effectively, they could have developed a lifetime value or customer profitability model. My value as a customer should have warranted some special consideration to speedily resolve the issue. Instead, it was tabled.

One of the core objectives of customer relationship management is to turn analysis into action by offering differentiated and customized services according to customer needs, wants and value. Not only did the vendor not take a proactive approach, they didn't respond to a request to customize their billing process to pre-audit my account. This organization must start further analyzing their customer base to perform more finely targeted marketing and develop programs for high value customers such as loyalty programs, low wait customer service phone numbers or special Web access.

Through customer analysis, this company would have seen a rising trend in billing complaints coming from the customer service department. Unfortunately, they, like most companies, do not integrate information from their customer- facing applications into their data warehouse because the data does not include dollar sales and other financial reporting numbers. Capturing complaints per customer, complaints per call category or inquiries per product could yield important service, quality and customer satisfaction information. In turn, this information would give rise to proactive services to combat customer satisfaction issues.

The Result

A couple of weeks ago, a sales rep from a competitor called and asked if she could come in and demo a new release of their product that was certified for our environment. She got an appointment.

When she presented a contract for signing, I said, "Do you have a loyalty program? Differentiated service? Rewards for being a good customer? Is your customer service system linked with your sales automation program and your billing records?"

I liked her answers. She understood our needs. Now she has our business.

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