Page 213 - DMGT308_CUSTOMER_RELATIONSHIP_MANAGEMENT

Customer Relationship Management

Notes
!
Caution Whether you’re a fan of the latest TLA or not, what you should take away from
CEM is the imperative to find out how experiences drive the customer to—or, heaven
forbid, from—your business, service or product. Then use that knowledge to build an
emotional attachment between the customer and your brand, a relationship, even.
How Important are Experiences to your Customer?

Customer Experience Management is a method of increasing customer loyalty, a daunting task
as more products and services become commodities in today’s global economy. Loyalty can
increase your bottom line, because loyal customers buy more, stick around longer and refer
others.
Not surprisingly, CEM proponents claim it will help turn customers into “raving fans” or
advocates. Like members of the Harley-Davidson Owners Group (who call themselves,
appropriately, HOGs), people who are so passionate about your product or service that they get
tattooed with your logos.

In CRMGuru’s April 2006 online research, more than 600 respondents gave 2,000 industry ratings
based on their own experiences. We asked respondents to rate the importance of three factors in
earning their loyalty, using a seven-point scale.
Across 12 industries, nearly 80 percent of respondents of a research give “high quality interactions”
and “superior product or service” high importance ratings (Top 2 Box). “Lowest price or cost of
ownership” received only 31 percent of high importance ratings.
As you might expect, there were differences between industries. Banking and fixed-line telecom
customers rated interactions higher than product or price. In banking, of course, the main
product is money—the perfect commodity. As many telephone customers are locked into service
and pricing, company interactions rise in importance. It’s not clear how one can be truly “loyal”
to a monopoly, however.
Not surprisingly, customers of full-service restaurants rated both the product (food) and
interactions highly, and price was tied for the lowest importance. Automobile customers provided
quite similar ratings. Wireless customers rated price the most important of all industries, but
product/service and interactions were also average or higher.
One surprise: electronics. All three dimensions were scored lower than average. Possibly, this
simply means that it’s harder to earn gizmo shoppers’ loyalty, no matter what the manufacturer
does. Barnes says that, since the customers’ principal contact is with the product, they are “most
likely to define experiences as involving some form of contact with people.”

High-Quality Interactions Drive Loyalty

The companies should not lose focus on providing competitive products or services. But winning
the hearts and wallets of customers requires equal attention to the quality of interactions between
a company and its customers.
This may be obvious in service-intensive industries like airlines or financial services, but as
noted earlier, even customers of product-focused industries like electronics place significant
value on interactions.

Customer Experience Industry Trends Globalization and the Internet have created an abundance
of goods and services, and it has become increasingly difficult to differentiate based on the core
offering (functional capabilities) or price. An IBM study in 2005 revealed that, “to create a new
and lasting source of competitive advantage, businesses must manage the customer experience.”

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