The CRM State of the Union: It’s Time for Empathy with the Customer


With consumers now in control of the conversation, businesses must start approaching the customer as a lifelong relationship that needs to be nurtured.

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Amazon’s purchase of Whole Foods over the summer wasn’t just another notch on its belt. It showcases a trend that is consuming the marketplace. We no longer live in the Age of the Product. We’ve entered the Age of the Customer—where consumers now command the conversation about how companies act, communicate, deliver their products, and portray their brand.

Before, consumers made decisions primarily based on quality and availability. But today, the market presents consumers with a sea of options to chose from in almost every category imaginable. This uptick in choice, along with the proliferation of subscription-based business models, is changing how customers select and interact with products and services.

While businesses began adopting a customer-centric approach decades ago, customer relationship management (CRM) software and methodologies have failed to keep pace. CRM still treats customers as mere line-item sales prospects in a database, rather than as lifelong relationships that businesses must nurture.

Businesses that understand and act on this change are already reaping substantial rewards. According to Forrester Research customer experience leaders enjoy five times the revenue growth that laggards do; and customers who receive excellent experiences will pay 4.5 times higher price premiums than those who receive poor ones.

However, many businesses (and CRM systems) fall short. According to Forrester, although 84 percent of firms aspire to become a customer experience leader, only one in five delivers good or great customer experience. Inadequate CRM and sales force automation (SFA) systems are often to blame.

Forrester analyst John Bruno writes: “Over the last two decades, SFA has actually done very little to help salespeople sell. Instead, the features and functionality of SFA solutions were designed around the needs of managers and executives. These tools allowed organizations to scale their businesses, but as buying behaviors changed, the solutions and strategies around them were slow to react.”

CRM as we know it needs to change.

Evolution of the CRM Market

The seed of CRM took root in the 1970s when companies increasingly housed customer information in the data layer using mainframe computers. But this rudimentary customer data management provided little insight into how to improve the customer’s interactions with the business. In 1993, Siebel Systems unveiled what is now legacy CRM via new technologies and business strategies designed to optimize sales and marketing efforts using customer data. By the end of the decade, introduced the burgeoning cloud-based CRM market and has dominated the definition of CRM ever since.

However, this definition has myopically focused on customer data management and the optimization of business processes. The problem remains that this interpretation and implementation of CRM does not place the “relationship” at its center. This definition views the customer as something to manage and optimize for profitability, rather than someone with whom to build a lifelong personal relationship. CRM is used primarily to analyze customer buying behaviors, entice them into a sales pipeline, and report this process up the management chain.

This is a failing strategy in the Age of the Customer. CRM systems shouldn’t just manage customers; they should help businesses build relationships with them. It’s time to put the R back in CRM.

A Sea Change for CRM

The shift from a product- to a customer-centric approach is forcing businesses to fundamentally rethink how they engage customers. It costs eight times more to acquire new customers than to retain existing ones—so every single customer interaction matters. Each one provides a chance to build a better customer relationship, and it is this relationship that forms the core of customer experience and the basis for product and brand loyalty.

Today, the fastest-growing companies have evolved beyond the customer-centric model of the past and now focus their attention on the entire customer relationship. With competitors just one click away, today’s best brands focus on building loyalty and trust through every single customer interaction.

Modern CRM must put your customer relationship front and center and enable you to measure, act on, and grow each customer relationship over time.

Unfortunately, legacy CRMs have failed to harness the power of customer relationships. Customers today have much higher expectations of the companies and brands they select.  They want tailored experiences. They want convenience, familiarity, trust, and a deep relationship with the brands they support, and they want every customer experience to reinforce that relationship.

What’s Next?

Through 2020, businesses that deploy CRM technology in such a way that it reflects empathy toward the customer are three times more likely to fend off a digital disrupter, according to Gartner. Furthermore, “greater customer intimacy” was the top-cited business driver for the office of the chief data officer (62 percent) in another recent Gartner study.

CRMs of the future will employ relationship-linking to help determine the best way to interact with customers, making clear social connections and possible avenues of influence that would otherwise be hidden in legacy CRM.

Rather than blindly cold-calling contacts, sales representatives could analyze each prospect’s connections and experience with the business. The CRM could uncover whether members of the team have strong social connections to the contact and recommend a personalized handoff. Or, a relationship graph could measure the improvement or decline of a customer’s relationship with a firm and raise the alarm if it dips to risky levels—helping companies proactively address dissatisfaction and reduce churn.

Today’s best brands focus on building loyalty and trust through every customer interaction. The CRM of the future will enable relationship-centric companies to harness that vast stream of data to customize and personalize each customer’s experience—building brand loyalty, trust, and credibility in a fortuitous loop where every interaction deepens that customer relationship.

By Anthony Smith via CRM Magazine.

Image: The Connected Cause.

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