Editor's Note: For this special issue, we asked our columnists to cover a variety of e-business topics. Their insightful commentary provides a well- rounded outlook as to the benefits and challenges of the e-world. Regular column format will return next month.

CRM on the Web should be easy, right? Doesn't it just come naturally to focus on customer needs and attitudes and to optimize customer value in an e-business environment? Isn't CRM just a natural part of strategy for start-up Web-based companies? After all, they don't have to suffer through the painful transformation of business focus, organization structure or technology systems. And, isn't one-to-one easy when you can relate on an individual basis with each and every customer on the Web?

None of this is actually true. While CRM can and should be easier in a Web-based business, companies still need to put a lot of effort into covering the CRM basics. That means:

  • Anticipating the customer experience cycle prior to start up.
  • Optimizing customer value at each stage of the customer experience cycle.
  • Designing the Web site, customer care environment and fulfillment infrastructure to drive customer loyalty and increased value.

Getting each of these right will ensure that a company has the best possible relationships with customers.
In our soon- to-be released book, The Customer Differential: The Complete Guide to Implementing Customer Relationship Management, we discuss how maximizing customer satisfaction, loyalty and value requires that companies have an in- depth understanding of how customers experience products and services.

Defining and optimizing the customer experience cycle requires that you:

  • Develop a base understanding of customer needs, preferences and attitudes.
  • Identify the stages of the purchase cycle and understand the length, complexity, and the business processes and resources required of each stage.
  • At each stage of the purchase cycle, identify customers' needs and the inbound and outbound interaction opportunities. These opportunities allow you to proactively address problems and delight valuable customers.

These activities would seem to imply the need for some level of customer history. However, in a start-up mode where there is no customer experience, companies can anticipate and shape the customer experience cycle through a number of customer- focused activities. Defining the profile of the target customer segments is a helpful exercise. Try to identify the likely demographics, technology and Web savvy, need for interaction, price/value sensitivity, channel preferences and loyalty drivers for each potential customer segment. Next, define the likely stages of the purchase cycle from awareness through research and trial to the purchase through consumption and after. Focus group and other types of primary research can help you to validate your profiles and round out your understanding of customer needs, attitudes and preferences at each stage of the cycle.
Finally, brainstorm the interaction opportunities at each stage. What can go wrong? What would delight the customer and further cement their loyalty? Identify and plan for the experience scenarios that will ensure you are maximizing customer satisfaction and value.

The overriding consideration in developing a CRM strategy is customer value. Ideally, companies will be able to maximize the value received from customers by optimizing the value delivered to customers. Optimizing customer value requires that you:

  • Calculate customer lifetime value and long-term potential value and understand the segment-specific drivers of increased value.
  • Identify what creates value for customers. These metrics can usually be defined in terms of segment-specific needs and attitudes relative to pricing, convenience and ease of use, content, community, exclusivity or status, reward and customer service.

This value equation provides the critical foundation for building your Web-based CRM strategy and infrastructure.
Many companies think about the dynamics of customer value and loyalty after the Web site and customer care centers have been developed. Ideally, however, customer value and loyalty drivers should be the foundation for designing the Web site as well as the customer care environment and fulfillment processes. As one of our frequent co-panelists, Ellen Reid Smith, stresses, "If you design your Web site around average customers, the site will be just that ­ average.

If you want to stand out and avoid being average, then profile those customers with the highest lifetime value and design your infrastructure around their specific needs and preferences. These are the customers you want to keep coming back. And, if you meet their needs, chances are you won't be far off in satisfying average customers as well. Use the high-value customer profile information to design and implement the:

  • Content served on the Web site and included in outbound e-mail. Is it relevant and timely?
  • Personalization and recommendation business rules, processes and technologies. Does the infrastructure allow you to present truly personal and relevant recommendations to customers on the Web site and though the customer care environment? Do the database and technology leverage profile, purchase and service information captured at every point of contact?
  • Online and offline community and forums. Can you moderate chat and forums to add value, focus and emphasis; ensure relevance; and gather customer feedback and input?
  • Customer care or interaction centers. Have you implemented technologies and business processes that facilitate inbound and outbound customer communication through the most appropriate channels including chat, fax, phone and e-mail? Do care representatives understand the customer experience cycle and how to optimize the interaction opportunities?
  • Reward and recognition programs. Do programs emphasize what's important to customers? Do they include elements of exclusivity, reward and personalization? Are they seamlessly integrated at all points of contact?
  • Fulfillment processes and infrastructure. Do you have payment systems and processes that match customer preferences? Do you have technologies in place to facilitate shipping and provide timely customer acknowledgements?

While the Web facilitates easier management of customer relationships, you can't ignore the basics of CRM strategy if you want to drive increased customer value and loyalty. Designing your Web site, customer care and fulfillment processes around best customers will help you to optimize customer value and drive long-term loyalty.

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