The Customer Has the Answers

Posted: November 17, 2005 in CRM

I have been involved in some situations recently that have caused me to think a lot about the idea of the customer experience.  I made a presentation — by phone during a nor’easter — in October to an executive education seminar at Duke University’s business school.  Martha Rogers, whose work with Don Peppers I have previously written about and, I believe, is very important to the evolution of CRM, invited me.  I am also preparing for a webinar later in December sponsored by CRMA in Atlanta.  The webinar is loosely framed by the concept of customer loyalty — getting, keeping, and using it.  Other speakers will include Ginger Conlon and Paul Greenberg, two of my favorite people in CRM.

One theme that unifies my participation in these events as well as much of the buzz in CRM today is managing the customer experience.  Customer Experience Management or CEM seems to be another wrinkle in the CRM movement that’s been gaining traction recently, but to me it seems like a distinction without a difference.

Identifying What Makes a Customer Tick

When it comes to CEM I think we’re looking through the wrong end of the telescope.  I can fully buy into the idea and the importance of treating the customer well and being attentive to the signals a customer gives off by virtue of his or her existence and background.  But most CEM "solutions" that I have experience with have a reading-the-tea-leaves quality to them.  How much can you confidently infer from a click stream?

Forrester Research published a white paper in March, "Identifying the Emotive Customer" by Fiona McDonnell, that identifies three levels of data collection — extraction, exchange, and engagement — that correspond with increasingly useful and important customer information on which one can hope to understand what makes the customer "tick."  Most of what I have seen in the CEM space works off the ideas of "extracting" and "exchanging" a lot of data about the customer and then applying high powered software to slice and dice it.  But it falls short of getting to the emotional heart of a relationship that leads to engagement which will bond the customer to a vendor and keep him or her coming back.

Technologies involved in the CEM process can include analytics, rules processing, workflow, and a common repository of customer information.  And while each of these can make valuable contributions to understanding the customer during a transaction, I think we run the risk of over reliance to the point of being blinded to their limitations.  While all of these (and other) tools do a wonderful job of helping us understand the customer in the situation immediately before us, they do nothing, or very little, to help us find out about what the customer might want or need later.

Wants and Needs

Why is that important?  Well, it takes time and effort to develop the products, messages, and programs of tomorrow and if you aren’t doing your best to collect the raw material of customer need today, when tomorrow comes you will be automatically behind the curve.

In The Support Economy, an important book analyzing this situation, Harvard Business School professor Shoshana Zuboff discusses the ideas of "vendor space" and "customer space."  The names connote the primary places where each group works and feels most comfortable.  According to Zuboff, too often vendors live in a world of their own, thinking up what to make and then figuring out how to sell it.  Meanwhile, customers live in their own spaces knowing about their wants and needs and rarely communicating these ideas to the people who can fulfill them.

My issue with CEM, is that it is a solution for managing transactions in vendor space.  All of the click-stream data, collected demographics, records of past purchases and currently installed or in use products and services that make up a customer’s background are great for helping a vendor within the current transaction.  But none of these technologies does much to help us understand the customer’s future requirements and the reasons they will come back for another purchase.

Satisfaction Doesn’t Mean Loyalty

Thus, at the end of a transaction or at another time opportune to the denizens of vendor space, we measure customer satisfaction.  Customer sat answers the question, "How do you like us so far?" but sheds little light on the questions, "Will you come back?", "Why?", and "When?"  Those are issues of loyalty not pure satisfaction.  And as we’ve seen from loyalty studies by companies like Walker Information, customer loyalty is measurable and the results can be a humbling experience because if you are a vendor chances are good that your loyalty numbers are far below your satisfaction numbers.

Peppers and Rogers as well as others tell us that we’re in an era of organic growth, one in which new customers are scarce and repeat business is the key to future success in numerous markets.  As it is used today, CEM might get you a cross sell or an up sell, but it won’t do much to emotionally engage your customer and entice him or her to share his or her thoughts about what to build next.

Keep it Simple

When all else fails you can simply ask the customer.  It is a blindingly simple concept — truly a ‘duh’ moment — and there are solutions coming to market now that take much of the labor and cost out of the asking process.  Labor, cost, and tradition are the three main reasons that vendors have historically avoided venturing into customer space.  But with requirements for labor and cost receding like the polar ice caps, can we any longer afford avoiding that outreach?

Comments
  1. Oh you are so right! CEM is a bastardized concept – because it assumes that the “vendor space” is where businesses craft and conduct their “customer experience experiments.” The truth is that the problem lies in that this is application of old logic to a new kind of customer and it don’t work anymore, mama. There is a REQUIREMENT in this 21st century of ours to find a new business logic that emphasizes the co-creation of value not the give and take of it per se. Though that will come as a result. CEM is the last gasp of the old vestiges of Henry Ford’s Model T production lines a.k.a. mass customization or whatever else you want to “extract” from it. What seems to be needed is the levels of transparency and collaboration between companies and their customers so that smart decisionmaking can be made and intelligent value can be created by those who have the deep knowledge of the products and services being produced and offered. That means the companies and individual customers. Look at the world of PC/Video gaming – the mod community or the creation of customized avatars in the Massively Multiplayer Online Gaming world. The highly customized avatars are typically reflections of the individual playing the game as are the modifications for the game using the game engine and authoring tools. Entirely new creations are the result that are both providing and giving value to the company and the customer with the company being the producer but also the aggregator. The customer is both the consumer and the producer of the kind of meaningful experience that has value. Valve Software has made millions of dollars off of a game modification of their game Half-Life called CounterStrike – a user creation that is priceless for both the users and game companies. A little of the new prototypes that we’re talking about reside in this approach rather than the really tired Customer Experience Management “method” which is repackaging control of the relationship between the company and the customer by the vendor rather than using the insight to create the actual and infinitely more valuable in all senses collaboration.

So, what did you think?

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