CRM Or MCR?

by Michael Cusack and Graham Williams

There is a Shona saying that nicely sums up the nature of relating: A thumb working on its own is worthless. It has to work collectively with the other fingers to get strength and be able to achieve. One finger cannot pick up a grain. Good relationships are a dynamic in which all actions, problems and decisions are made in full consideration of the other. And sound relationships are formed when the parties involved have chosen to relate closely as equals, and can rely on each other (mutual listening, understanding, trust, care, encouragement, truthfulness, transparency, courtesy, and responsiveness.) They go far beyond ‘mere’ communication.

In the "workplace," whatever or wherever that is nowadays, relationships impact along the entire internal supply chain (teamwork, the meeting of deadlines, productivity, creativity, motivation, networking effectiveness, leadership development and internal customer service delivery.) Clearly, relationships drive the strength of chosen external customer bonds (pushing customer support along the satisfaction-preference-loyalty-advocacy spectrum.)

Where long-term relationships with chosen, valued customers are a strategic imperative for business success, then how businesses and customers think, feel and act towards each other is an absolute key to the fulfilment and satisfaction of both parties.

Hence The Appeal Of Customer Relationship Management

When the importance of customer relationships are allied to the explosion of communications and information technology, eCommerce, speed of light changes in values, process efficiency benchmarks and emerging information-manipulation possibilities, then clearly it is not surprising that 1-to-1 marketing, CRM systems (for business-to-business and for business to end-user customers) and the convergence of CRM systems and ERP (Enterprise Resource Platforms) have emerged as the latest panaceas for business. This is especially so when coupled with the promise of much improved cost-efficiency.

But business has been disappointed because promise has so far exceeded delivery. For many who’ve equated CRM with Cost Reduction Management, the perceived value of the CRM system has allowed vendors to charge high acquisition and implementation fees and the systems have not yielded the expected cost-savings. For the many who have equated CRM with Customer Relationship Management, there has been a gross misunderstanding. They have not fully realised that:

Yet, newer, bigger, better CRM systems continue to be purchased and implemented in the misguided belief that CRM systems will lead to long-term retention of valued customers and the gaining of desired customers. Will lead to the building of satisfaction, preference, loyalty and advocacy through enhancing relationships and optimising value to these customers.

It’s Time To Think 'MCR'

As the name implies, a customer relationship management system is supposed to be designed with the goal of enabling a business to build a relationship with its customers. However, the reason that many of these implementations fail to produce the desired result is because the definition of a customer "relationship" is poorly defined from a strategic perspective. There is a distinct difference between using a system to identify the customer with minimal time wastage, build a high-level customer profile, smooth communications with customers and track customer contacts; versus using a system to augment a customer relationship developed through people and process excellence. The former scenario describes an efficiency-based environment, whereby front line people may or may not get to know the customer intimately, but can at least provide the caller with up to date statuses on an inquiry, review notes from previous contacts, and log and/or escalate new contacts. This is a standard approach for centralized operations.

Typically this approach simply means that the customer will conclude that their inquiry is being handled more or less appropriately, depending upon the particular demeanour of that customer. The company may or may not (depending upon its reporting structure) analyse certain elements of the customer contact in order to generate rolled-up management reports, such as repeat sales potential, revenue accrual, late delivery complaints, billing disputes, product problems, missed commitments, etc. Some companies (and without being facetious, these are few and far between) will use this information in order to drive greater efficiency throughout the organization. The biggest mistake that an organization can make in adopting such an approach, however, is confusing efficiency-based operations with customer relationship management.

The latter approach described above (i.e., using a system to augment a customer relationship developed through people and process excellence), suggests that the organization is structured to nurture one-to-one partnerships with customers (or a chosen subset of particularly valuable customers). This might be described as MCR (Meaningful Customer Relationships), rather than CRM. It is a critical difference.

In such cases, the company is committed to building a unique information sharing relationship with the customer. Marketing, sales and service staff are structured so that only certain individuals will interact with a customer, no matter when the contact occurs. A "picket fence" is built around those customers whom the company values most.

There are certain customer service situations in which we expect (and want) nothing more than convenience and efficiency. We don't expect the counter person at a chain store pharmacy to greet us by name or tell us that the "Aspirin is on sale today," or a McDonald’s counter person to say "The Crispy Chicken is good today"! However, there are other, relationship-based situations in which we expect a great deal more. This, we believe, lends itself more to the customer's innate need for significance, self-worth and security.

When the Chief Scientist at Johns Hopkins acknowledges so-and-so’s existence as an excellent pharmaceutical company (customer preference), he fully expects the company to reciprocate by taking responsibility for the quality of his hospital's experience with that company. Thus a strong relationship is established to the mutual benefit of the customer (The Hospital), the contact (The Chief Scientist) and the organization (The Pharmaceutical Company), that can lead ultimately to customer advocacy for the business—resulting in new, unsolicited custom and in built-in retention of existing custom.

The question is whether a company wishes to build this sort of relationship with a customer. Today, competitive pressure typically drives a company to seek stronger bonds with its best customers. Just as the owner of the village store over time becomes innately familiar with the frequency, purchasing ability, personal situation, reciprocal potential, lifetime value, influence, complaint power and nuisance factor of a particular customer, so too the meaningful customer relationship-driven company strives to achieve the same level of intimacy. This means that a particular customer service representative may be part of a sales, marketing and service team who use the CRM system in order to share discrete information about a particular customer and for that particular customer’s benefit. Depending upon the segmentation or regionalisation of the customer base, this may involve one or several customers.

Such endeavours are clearly expensive, and careful consideration of the ROI is obviously required before determining whether or not to take this approach. The power of such a strategy, however, is that it ensures that any shortfall in reasonable customer expectations is fully investigated and rectified. For example, if the front office team determine through shared CRM system usage that there is a certain trend in high-value customer complaints about late delivery and missed pick-ups—a situation that would have most likely have remained unnoticed in an efficiency based relationship (if only because of the potentially large number of customer contact personnel involved), then the team will quickly move to identify and rectify the cause. This type of root cause analysis is virtually impossible in efficiency-based customer contact environments, regardless of whether or not these environments have implemented even the most expensive CRM systems.

That is not to say that implementing a CRM system without a meaningful customer relationship strategy is a waste of time, but the differences between the two approaches must be recognized so that there is an organization-wide understanding of the goals of system usage.

There is little point in front line employees making copious notations about customer contact if the only information that will be utilized is the amount of time the person spent on the telephone or in after call work. While some concise and relevant contact history may be useful to the next person who receives a call from that customer or the sales person, very often efforts to log the high-level type of contact, the contact detail, and a blow-by-blow account of the customer's inquiry are a waste of time, simply because the organization is not structured to take any sort of action on the information being gathered. To compound this situation, high turnover in efficiency-based front line environments results in enormous inconsistencies in gathering customer information. The discrepancies between the information actually received from the customer, versus the information recorded, versus the information analysed, versus the information actually used to improve the company's relationship with its customers, are enormous.

Typically, "new" technologies such as highly expensive integrated E-Business, CRM and ERP solutions are presented as panaceas for companies who wish to be on the cutting edge. When these systems are recognized simply as enablers rather than as highly automated off-the-shelf replacements for people and process, a company may flourish by using them as tools to augment customer relationships. However, regardless of how sophisticated these tools become, the measure of their success must be tempered by the strategic goals of the organization.

And if you decide that MCR is right for your organization, then adopt a mental model that recognises the pre-eminence and overriding importance of relationships, and incorporates appropriate technology in order to enhance relationships. A model that recognises that MCR has three inter-related components: People. Processes. Technology.

People are at the top of the hierarchy. They are supported and enabled by processes and technology. Processes are also enabled and supported by technology.

Balancing And Aligning The Elements

For a smooth ride, motor vehicle tires must be balanced and aligned. Balance is to ensure an even distribution of weight and smooth rotation, and alignment is to ensure a straight, true track. Meaningful customer relationships require both balancing and alignment within the typical business chain.

Balance. Consider the highly complex act of an infant walking for the first time and maintaining balance. The sense cells of eye, the gravity and balancing organs of the ear, the interpretations of pressures on the feet, stretch receptors in the neck, various muscles providing opposite tensions: all combine in the right weightings together with intangible factors such as volition, excitement, encouragement and confidence—in order to achieve the desired (even unknown) outcome.

Likewise, the achieving of meaningful customer relationship balance is also complex and demands great competency and determination. World-class, creative MCR through proper and continuous focus and balance seems to us to be a sensible, sober rationale for business today. As in the analogy, this balancing is needed in order to regulate, modulate, to apply appropriate and flexible responses, and to function successfully. This balancing or "weighing" of people, process and technology can be seen within the business-chain model as follows:

Alignment. Alignment is also required in order to make the business-chain model work. Apart from correctly balancing people, process and technology—making sure that the right blend of the three goes into the recipe; it is also necessary to align the three components—making sure that they work synergistically with each other, ‘track’ together. Consider the simple example of a golfer making an important putt. The key factors in this situation are the environment, the stakeholders and the internal elements that need to come into play:

These factors all impact on each other and have to be aligned for success. Wrong alignment results in a missed putt. In organisations facing a challenge and a change, the key factors to take into account in order to achieve the desired outcome are the same:

In business, as on the golf course, these factors all impact on each other and have to be aligned for success. Misalignment results in failure. This means, inter alia, that people-competencies are consistent with, developed and employed to achieve measurable external and internal customer relationships, that operating processes and measures are congruent with the vision, that information and communications architecture and technology throughout the business is appropriate to and supportive of (not directive of) people and processes.

Rules To Apply

Thais use the word michadhitti. Loosely translated it means an inappropriate, narrow view. This is how we see the way in which CRM systems are being applied generally. The Thais also talk about sammadhitti: having a holistic view, a better paradigm. It’s time for a new paradigm for those who truly wish to pursue MCR. A sammadhitti view that employs the following rules.

Michael Cusack is president of On Line Customer Care, Inc., and author of Online Customer Care, http://www.olccinc.com. Graham Williams is a management consultant and author of Centre-ing Customer Satisfaction, http://www.centre-ingservices.com.

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