CRM  no replacement for emotional ties to customers

Having a strong business strategy is essential to getting the best out of customer relationship management technology, according to a marketing expert.

“”Most CRM programs fail because businesses rush into software technology as an end to itself without determining what their customer strategy

is,”” Guy Stevenson, managing director of the Canadian division of OgilvyOne Worldwide, told a Toronto seminar Wednesday staged by the Canadian Marketing Association.

Only by combining data from CRM applications and other sources with core business insights can companies understand what their customers want, he said.

In an interview Stevenson said the disappointment management has with CRM applications is “”a huge problem.”” Surveys show 55 per cent of North American executives don’t believe they’ve seen a return on their CRM investments, he said.

In particular, he said, companies must know the emotional needs that will influence customer loyalty at what he called “”moments of truth.””

These are events that can alter a customer’s relationship with a business. Some are predictable and can be prepared for, such as the loss of luggage by an airline. But others can’t be — say the loss of a signal during an important phone call. So companies have to create an emotional bond with their best customers so when they experience something negative they’ll be forgiving.

While the old maxim that 20 per cent of a company’s customers generate 80 per cent of its profit is true, one study shows that only five per cent of the average businesses’ customer base has a strong emotional bond to its products. That bond is stronger, Stevenson added, among market leaders.

American Express built a strong bond to high-income users of its credit card by creating an Ultra Cardmember program, he said, by sending personalized mailings to members. By analyzing spending and other CRM data, members were mailed tailored promotions and offers.

On the other, hand, he also told the audience, there can be an “”occasional hiccup”” with some customer programs. One spouse of an Amex Ultra cardholder who opened her husband’s mail wrote to complain about the accuracy of the statement, wondering how all of her husband’s spending was on hotels although he was home every night.

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