What on earth has happened to the ‘R’ in CRM?

01 Feb 2024

Imagine going to a restaurant, one you’ve researched a bit through recommendations from friends and reading reviews, then spending time salivating over the menu to choose the best combination of starter, main, and dessert that you feel will maximise the culinary experience, placing the order with the waiter (let’s say octopus, lamb, lemon tart) and then, just as you are tucking in, the waiter returns and says…

Waiter - ‘Do you want the steak?’
Me - ‘Pardon?’
Waiter - ‘Do you want the steak – you can have 20% off?’
Me - ‘Sorry, but I’ve chosen what I would like (for this visit to your restaurant)’
Waiter - ‘Yeah, I know, but do you want the steak at 20% off? Ok if not the steak, how about the cheeseboard? We are doing two for one today. How about that, then?’
Me – ‘Er, no thanks’

Now imagine that happening another 28 times. Even though the food was sensational, would you go back, recommend it to a friend or write a favourable review?

Well, I bought a shirt from Charles Tyrwhitt and after I’d pointed out a glitch in the service, for which they thanked me, I’ve received 28 pieces of shouty offer-based communications in the space of a few weeks with no attempt to build back from the service glitch or to get to know me even a little bit to give the impression I was going to get a tailored experience. This Constant Selling Mode (CSM) presents a real problem in terms of customer experience.

I’m more than happy with the shirt, but for a business claiming to reside in Jermyn Street, I was expecting a lot more. The in-life customer experience isn’t living up to my expectations and will ultimately result in me hitting the unsubscribe button.

In a panel somewhere, perhaps, is this quote from the founder:  

“I love it when new customers tell me they don’t know how they lived without us. My business has been built slowly, one customer at a time, so we will never take your business for granted. We will work tirelessly to make sure you love whatever you buy from our extensive range, and we will do everything possible to make it easy for you to dress well.”
Nick Wheeler, CEO and Founder, Charles Tyrwhitt

This is an example of an all-too-common problem of a business who see short-term ‘revenue’ gain as being more important than the long-term benefits of building a sustainable ‘relationship.’ Not everyone is in market all the time, which is why part of marketing’s job is to be the warm-up act for a future purchase. We all know this, and why we gave CRM its name in the first place. But somewhere, the value of the ‘R’ seems to have been lost.

Given the number of brands treating us all in a similar way isn’t there an increasing need to re-balance the equation so that strategies are developed to deliver both? Interestingly we are aware of some brands who are starting to see the value in a ‘less is more’ approach and beginning to put the ‘R’ back into CRM by expanding the remit beyond just comms.

How can we make this shift sustainable?

One, we think, is structural. For there to be a better balance, we need to consider a more holistic view of the customer across brand and revenue metrics. Currently many marketing departments and, as a consequence, the agencies that support them are very dedicated to their specific roles, be that brand building or sales-focused. But the customer never sees it that way, of course.

They see one brand, whereas the brand often sees them as ‘two’ customers. How many businesses have someone overseeing the total customer experience from product or service delivery through the in-life experience all the way to service recovery? For many brands we work with we’re dealing with the head of customer comms, which means they are operating with one hand tied behind their back in terms of customer experience.

Given the huge investment being made in Martech alone, with the desire to improve the customer experience, it would be a poor outcome to find that structural change hasn’t aligned with this new capability.

The second is measurement. The great power of all the data-driven marketing at our disposal lies in our ability to segment. Actionable target segments lead to better results. But to create a segment, you need to find out something about the customer, and that’s where the R in CRM comes in.

Measuring short-term changes in revenue is easier as opposed to providing a measure for customer experience. But customer experience contributes hugely towards a business and brand equity score and likelihood to buy again.

One of the metrics that sits at the core of customer marketing is Lifetime Value (LTV), which is the total revenue a customer will generate for a business throughout the relationship. And, perhaps, here in lies the measurement problem. With just ‘revenue’ as the focus of this metric, it’s not that surprising to come across some ‘shouty waiters’.

One of the aims for CRM should surely be to understand how much the value of good customer experience contributes to the financial success of a business over and above pure revenue. Not only that, but at a segment and, ultimately, individual level. If you know for whom customer experience is improving or declining, you can adjust your marketing efforts accordingly.

As Chair of the Creative Committee at the DMA, we are exploring how updating LTV as a KPI could better reflect the short- and long-term performance of customer marketing more holistically. But for this to work, we need someone who can ‘referee’ those two elements for the benefit of the business as mentioned above.

One thing we found interesting was that none of the DMA Awards recognises the value of LTV specifically. We would love to hear your thoughts on whether that could be a small incentive for change.

At the end of the day, all we ask as customers is that brands make an effort to get to know us in the first place so they can ‘show me that you know me’. Mr Wheeler, sometimes less truly does equal more.

#CRM, #DMA, #brandequity, #customerexperience, #lifetimevalue

About The Author

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Tony Spong

Lead Consultant, Brand Strategy

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