Somebody once told me that American cars are great – they do everything but run! Maybe things aren’t quite that bad anymore, but there is a lot of truth in that statement. The domestic auto industry failed for a number of reasons but the main one was that American automobiles didn’t reliably get people from point A to point B. At the end of the day it didn’t matter how cleverly designed the world-class advertising programs were, or how innovative the financing became, if the car couldn’t reliability transport a passenger from point A to point B then want good was it? Clearly the American auto industry missed the most critical opportunity and then they paid for it dearly.
In contrast, Japanese auto manufacturers recognized that reliable transportation was the most critical customer opportunity. Japanese auto manufacturers relentlessly studied their designs, simplified systems, and made sure that their cars were able to provide the greatest value for each customer dollar. The Japanese companies didn’t perfect their designs overnight, but they found a way to manage product defects in the field many times without the customer ever knowing that something was being repaired. This is an example of how the Japanese manufacturers anticipated their customers’ potential needs to achieve a sustainable competitive advantage.
Customer Relationship Management (CRM) Programs are designed to attract new customers, increase customer loyalty, and reclaim lost customers. A well designed CRM program focuses on providing the customer exactly what the customer wants, when the customer wants it, at the location of the customer’s choice, and for a price that the customer wants to pay. This goal is accomplished by aligning an organization’s internal and external business processes with the needs of the customer. But many firms don’t accurately identify what is most important to a customer. Frequently, management defines what is most important to their customer. . Unfortunately, the management’s list and the customer’s actual desires are quite different. Therefore, an effective CRM program must have a solid understanding of what is most important to the customer.
How is this accomplished? A simple approach to creating a well designed CRM program is implemented in a phased approach in order to insure the most complete and accurate measurements of customer perception. The three critical states of implementation are:
- (Stage I) Determining Critical Issues - Begin by determining critical issues of customers and competitors' customers. A topical guide is used at each interview to assure consistency in the topics covered. The information obtained during this phase provides the necessary data to develop the survey used in Stage II.
- (Stage II) Prioritizing Issues/Attributes - This phase enables an organization to prioritize issues and attributes found during the initial phase. All customers are surveyed. The results highlight strengthens and weaknesses, identify factors that contribute to the customer's perceptions of quality, measure customer priorities, determine perceived performance levels including competitors and provide a baseline measurement (benchmark) for future comparisons.
- (Stage III) Ongoing Measurement - This process continually provides an organization with ongoing measurement in two areas - quantitative surveys, and qualitative interviews. The customer feedback is used to identify opportunities in the product design, product performance, and the effectiveness of the business strategy.
Consider the example of a telecommunications equipment supplier. In the first stage, the customers determined that the following list represented the critical issues:
- Ease of Use
- Customer Service Expertise
- Operating Cost
In the second stage, these five critical issues were identified as the key drivers of customer satisfaction. The prioritized listing of the key drivers and the relative weight of each is shown below :
- Availability (35%)
- Price (25%)
- Customer Service Expertise (20%)
- Ease of Use (20%)
In the third stage the overall customer satisfaction is periodically measured as a function of these four key drivers and the business processes are managed and optimized based on customer feedback. This is where the classic closed loop process performs – the customer feedback is examined, assessed against what is most important to the customer, and then this becomes the basis for corrective action plans. The corrective action plans focus on process optimization and are frequently identified as lean, six sigma, or Kaizen initiatives. After corrective actions are implemented, the results are assessed, the efforts tweaked and tuned, and the customer satisfaction measured. The process is sustainable.
Effective CRM programs don’t have to be rocket science. They do have to have a simple and practical approach that will identify what the customer needs, and then they need to have a plan on how the When they successfully identify the correct attributes of customer satisfaction and the relative importance of each attribute then they will understand their customers better than the customer’s understand themselves – and those firms that have done this well will tell you that this is something that you can take to the bank!