Free-Range Organic Blogs... by John Burton

Case Study: How Santa Claus Succeeded Despite Providing Worst-In-Class Customer Service – and Why He Will Fail in the Next Five Years

Everything Done Wrong, Yet Everything Gone Right!

 

Santa Claus – the man, the myth, the legend – is an old-money mogul who carved out a business empire by manufacturing and distributing toys to children around the world – free of charge – one night each year. He is revered around the world – whether as Father Christmas, Saint Nicholas, Sinterklaas, Papa Noel, Peré Noel, Christkindl, or Kriss Kringle. Santa made his billions using a once-revolutionary business blueprint: 1) provide an invaluable, innovative product/service, 2) give it away for free, 3) market your brand like hell, 4) make a fortune through advertising, endorsements, product placements, cross-promotion, and guest appearance fees. It’s a business model that few others, with the notable exception of perhaps Google, have ever attempted or mastered.

 

Yet, despite his great successes in the past, many analysts question whether he will be able to adapt and thrive in today’s new business reality. Santa seems oddly out of place in the 21st century. For example, in today’s health and fitness-conscious world of no-fat and low-carb, here is a man who doesn’t exercise or diet; in fact, he is openly and jovially obese. And while the rest of the world slowly shifts toward smoking bans to protect public health and reduce sky-rocketing health insurance costs, Santa clings to his pipe and rings of smoke encircling his head like a wreath. Not only is Santa out of touch with current health trends, but he seems decades (if not centuries) behind the fashion trends as well. While today’s young fashionistas wear plaid prints like the characters in the popular Twilight film saga, Santa skulks around in his old red bishops robes from the 1800’s. And, most importantly, while other businesses and organizations have rushed into Web 2.0 technologies and Social CRM capabilities to enhance their customer service offerings, Santa still lumbers along with slow, antiquated communication channels like the postal letter. Forget about Web chat, co-browsing, email response management, or social networking – Santa still hasn’t even implemented Fax or Electronic Data Interchange (EDI).

 

 
image from www.flickr.com/photos/efphoto/4155954766/

 

In fact, Santa seems to ignore all guidelines about how to run a modern business. While the rest of the world is enacting new legislation to encourage local manufacturing and to protect worker’s right, Santa outsources his manufacturing activities to a remote third-world location outside the jurisdiction of any government or human-rights agencies. He skirts potential child-labor laws by claiming his small, youthful laborers are not children, but magical creatures from middle earth. And he avoids paying healthcare costs, 401K, and government taxes by quite cleverly classifying his workers as “contractors” rather than “employees.” I wouldn’t be surprised if he is also involved in stock-option backdating or insider trading. Perhaps the only area where he shines is his use of an environmentally friendly “green” reindeer-powered sleigh rather than a coal-powered alternative he prototyped, but never implemented, back in the early 1900’s.

 

Will Atrocious Customer Service Bring Down Father Christmas?

 

Let’s be honest. There are a lot of companies who have been taken to task by customers for delivering  poor customer service (think AOL, DirecTV, Qwest, Comcast, Sprint, Capital One, HSBC, Abercrombie & Fitch – all of whom appear on the 2009 MSN Money "Customer Service Hall of Shame"). Yet Santa Claus is probably the worst offender of all. To begin with – let’s face it – he rarely fulfills an order correctly. In the ten years that I wrote to him as a child, the deliveries were routinely laden with errors and omissions. Every year he got multiple things wrong, including the items and quantities. Some years he even failed to bring anything I asked for. Even when I placed my order directly with him in person at the mall, the deliveries were similarly botched. And to make it all worse, he doesn’t allow customer returns. That’s right – he sends you the wrong items and quantities, and you can’t exchange or return it. That’s worse than Abercrombie and Fitch’s restrictive return practices.

 

Not only does Santa manage to screw up the most basic orders (come on, how hard is it to remember “Atari 2600”), and  refuse to accept any returns or exchanges (what exactly was I supposed to do with a “Pet Rock”), but he doesn’t publish the telephone number of his customer service center anywhere. I’m starting to doubt if he even has a customer service center. I did an Internet search and found a dozen different Web sites claiming to be affiliated with Santa Claus, as well as several different mailing addresses for the North Pole including addresses in Canada, Alaska, Finland, Denmark, and Sweden. You would think Santa would at least offer some kind of annoying, poorly designed IVR phone tree that forces callers into an endless loop of confusing menu options, while repeating ad naseum that users should visit the Web self-service site for faster service. Alas, no such IVR or Web self-service site exists. If you want to do business with Santa your only option is to pen a letter, put a stamp on it, and send it off to the Northern abyss – hoping that it one day ends up on the doorstep of Father Christmas.

 

With such a laisezz-faire approach to customer service, it is not surprising to learn that Santa’s customer satisfaction ratings and Net Promoter score have dropped significantly in past years. Customers – even the toddler variety – are becoming increasingly sophisticated and empowered. Four-year-olds are tweeting with one another on their iPhones and posting scathing (though often infantile) customer reviews on sites like Epinions, Yelp, my3cents, theSqueakyWheel, and measuredUp. According to my own research, there is a 43% likelihood that Santa will lose significant market share to rivals who embrace Web 2.0 and Social CRM strategies in the next five years. Potential up-and-coming challengers to keep an eye on include:

The Easter Bunny – Most of his business and revenue currently comes in the month of March and he is looking to diversify into other seasonal holidays like Halloween and Christmas to provide a more predictable annual revenue stream.

The Tooth Fairy – She is currently bleeding money and will likely burn through another $100 million in 2010. She desperately needs a more profitable business model. Her experience at sneaking into homes late at night and leaving behind cash without being detected should translate well into Christmas toy deliveries. However, questions remain about whether her flitty image will resonate with the much coveted male-toddler demographic.

Amazon.com – They have the money, the online infrastructure, and the physical distribution network in place to give Santa a run for his money. But there are concerns about whether the Net retailer can eat into Santa’s extremely loyal customer base. Watch for a potential partnership or acquisition.

Private Equity – Private investors could potentially make a fortune buying Santa’s operations on the cheap and then dismantling and selling off his various assets such as intellectual property, North Pole production facilities, and magical sleigh – not to mention his invaluable customer database containing a wealth of detailed, personal information on nearly every consumer in the world.

Conclusion

Santa Claus – like many established, blue-blood companies – has a long history of business success, but a strategy that hasn’t fundamentally changed since he built his first wooden sleigh hundreds of years ago. In the meantime, modern technologies and communication channels have evolved to include tools like Web self service, email response management, Web chat, SMS text messaging, and social networking. Santa, along with all the rest of us who have perhaps been a bit slow in keeping up with technologies and communication channels demanded by our customers, risks losing customers to up-start competitors who may suddenly come out of nowhere. The risk is that while we kick off our boots by the fire with some fresh-baked cookies and eggnog after a hard night’s work, the Easter Bunny and Tooth Fairy are out there working on a business plan. A business plan that most assuredly doesn’t involve a team of caribou pulling a hand-made wooden sled.

 

Update Dec 15, 2009 -- Santa Responds: The following statement from Santa Claus was released by William "Bill" Pritchett, Secretary of Press for the North Pole:

I read with interest John Burton's recent blog entitled, "Case Study: How Santa Clause Succeeded Despite Providing Worst-In Class Customer Service -- and Why He Will Fail in the Next Five Years." Although it is peak season and all of us at the North Pole are busily preparing for our biggest night of the year, I find it necessary to take the time to respond personally to Burton's points, given the negative tone in his comments about my business model and the seriousness his allegations against me.

 

I, Santa Claus, have a provided a consistent, high-quality customer experience to children around the world for centuries.  Over the years, my operations have grown organically, and the power of my brand in global markets underscores my world-wide reach.  Whether you're an American who visits Santa Claus at the local mall, a British child who believes in Father Christmas, or a child in France, Brazil, Sweden, or the Netherlands who knows me as Pere Noel, Papa Noel, Jultomten, or Kerstman respectively, you understand that I symbolize peace, hope, love, and of course, toys, delivered just-in-time, right through your chimney.

 

Burton criticized me for being "oddly out of place in the 21st century," mostly because I had not embraced the healthy lifestyle that he and so many others have adopted.  Although I do still occasionally smoke my pipe, and I have broad face and a little round belly that shakes when I laugh, like a bowlful of jelly, I do promote health and fitness through many of the toys that I give.  Who do you think brought Michael Jordan his first basketball on a Christmas Eve long ago?  And who made sure Lance Armstrong found his first bicycle under the Christmas tree?  Burton himself has benefited from my generous health and fit gift giving over the years.  The Garmin watch he uses today on all of his long runs was a gift from me, not to mention all the other sporting goods he has received over the years.  My long record of giving children around the world roller blades, jump ropes, bicycles, sleds, and ice skates speaks volumes about my commitment to healthy, active living. 

 

I was also criticized in the blog for being behind in technology.  The piece pointed out that other business had rushed into Web 2.0 technologies, Social CRM, Web chat, co-browsing, email response management, and social networking, and that I had not even implemented Fax or EDI.  This may be true, but Burton failed to point out the best-in-class Santa Analytics Platform (SAP) currently in use at the North Pole.  After all, I see you when you're sleeping, I know when you're awake, and I know if you've been bad or good.  Behind this capability lies the most advanced business intelligence solution ever implemented.  Not even Wal-Mart can begin to touch the level of customer tracking that is capable with SAP.  In addition, our North Pole data process center houses our advanced billing system, allowing me to invoice parents based on their ability to pay.  This is the key behind one of my key brand attributes: "He doesn't care if you're rich or poor, he loves you just the same."  Finally, no competitor in the toy delivery sector has the information systems in place to handle global packaging, labeling, and delivery like this jolly old elf.  For example, neither the Easter Bunny nor the Tooth Fairy has the ability to print double-byte labels for the Japanese market or Nota Fiscals for deliveries bound for Brazil.  Just because the Tooth Fairy can sneak into a home and replace a tooth with money of multiple currencies does not mean that she understands global taxes and can meet Inco Term requirements for global toy delivery.  Even if she had the systems capability, she would not be able to delivery toys on time, as I consistently have, especially if she were to encounter a foggy Christmas Eve. (Such conditions require special navigation equipment.)  While I am constantly monitoring the IT field to see which technologies might enhance my business processes, I tend to take a wait-and-see approach so that I don't get burned by vendor instability.  For example, I attempted to implement Child Relationship Management (CRM) software several years ago so that children could submit their gift requests via the web, but after the vendor was acquired by Oracle, the result was just confusion. 

 

I especially take issue with Burton's comments on my "atrocious" customer service.  He seems to believe that his personal experience with "botched" deliveries is indicative of the typical child's Christmas morning experience.  Believe me, I knew John wanted that Atari 2600 for Christmas back in '84, but I also know that he lied to his mom about who broke her favorite lamp in early December of that year.  John was always a good student, and his mom always believed his story over his brother Erik's.  However, I found it particularly reprehensible that John made his brother take the heat for something that was clearly his own fault.  I hope John gave this some thought while he played with his "Pet Rock" that Christmas morning, while other children across the country fired up their Atari 2600s to play Frogger and Centipede.  Trust me, Santa's strongest brand attribute is accuracy in order delivery.  If there are issues with incomplete or missing deliveries, the issue can always be traced back to the behavior of the recipient.   With this kind of accuracy in shipping, there is no need for Santa to open a customer call center and implement flexible return policies.

 

Finally, I must respond to the accusation that I skirt child-labor laws by employing elves within my manufacturing operations.  In my workshop we follow all labor laws very carefully to avoid lawsuits.  I'm still trying to settle out of court with a family who claims one of my reindeer ran over their grandma several years ago -- the last thing I need is a legal battle with elf labor over salaries or benefits.  Let me go on the record as stating that I have always supported worker's rights, and my facilities have the best working conditions and safety records in the wooden toy manufacturing sector.  In fact, the elves are among my most valued employees and have been a key to my business success for these past several centuries.  Many of them have been promoted over the years to oversee partnerships with Nintendo, Sony, Nike, Mattel, and others.  To suggest that I would exploit these workers because of their small stature is enough to get your named moved to the "naughty" list.  I haven't taken that step just yet, but after I've stopped at the Burton home this year, there may be one less lump of coal in my bag!

-- Santa Claus

 

Note that this blog thread was also cross-posted at www.theSocialCustomer.com.

Contact Center Versus Web Self Service

I’d like to share a secret with you. Whenever someone asks me a tough question I simply pretend that I know the answer and speak with confidence in a loud, authoratative voice. The next day I email the person with the correct answer — after having consulted an reilable source like Google, WikiPedia, the online help of the relevant software application, or one of my knowledgeable colleagues. This seems to work great, so I don’t plan to change anything.

Recently, someone asked me the following question: “Many companies seem to be trying to shift customers from the Contact Center toward Web Self Service in order to reduce service costs. Do you think this is a silly strategy? Do you have any recommendations or best practices on when companies should use the Contact Center versus Web Self Service?”. My response was as follows…

“Yes, it’s certainly a very silly strategy! Customers should be allowed to choose their preferred channel. Banishing customers to the Web for self service is essentially admitting that you don’t care about the customer, or that your Contact Center agents aren’t smart enough to find the answer! Forcing your customers to the dark alleys of the Internet in order to fend for themselves, is like a cheap motel that tells you to go around to the back door. The Contact Center on the other hand is a five-star luxury hotel where customers are greeted by a real person — wearing white gloves and welcoming them onto the red carpet. Sure it costs more, but it also ensures that customers have a positive customer experience and it increases the chance that the customer will do business with you again. More importantly, letting customers speak to a real, live person not only allows you to better reinforce your brand image, but can actually turn your cost center into a profit center via increased cross-sell and up-sell revenue. Obviously, a trained sales professional can close a lot more sales opportunities than a static web page link that says, “click here to see other junk we want to sell you.” The only customers you should ever send to the Web are customers who you never want to see or hear from again!"

After I finished giving my response, the person thanked my immensely and walked away. Tomorrow they will likely receive an email in their inbox saying something like the following…

“Actually, both the Contact Center and Web Self Service should be part of most companies’ strategies. While the Contact Center is ideal for complicated or hard to solve issues (like technical trouble shooting) or for very high-value customers who require high-touch customer service, the Web is a fast and convenient way for customers to handle simple tasks like checking their account balances, updating their account information, or finding information. In addition, the Web is a very cost-effective channel for providing customer service for low-margin products or unprofitable customers. The challenge of doing business today is to continually provide better customer service while constantly reducing service-related costs. While you can certainly steer certain customers to one channel or another, in the end it probably makes the most sense to let the customer choose which channel they find most convenient and appropriate for their needs.”

This Year, Resolve to Improve Your Relationship... With Your Customers

The holiday season provides us with an excellent opportunity to take stock of our lives, and to appreciate all of the wonderful gifts we've received. I'm not just referring to gifts that you can buy on the Internet, such as dual-zone heated mattress pads or LED neck ties with built in WiFi detectors. I'm referring to gifts such as loved ones: family, friends, and (sure, why not) even pets. I'm also referring to gifts like good health, good jobs, and of course, good wine (I myself enjoy almost any decent 1997 vintage — as long as it is red, Californian, and sourced exclusively from grapes of the To-Kalon vineyard). While we all probably agree that our lives are truly rich with blessings, I doubt many people know the true value of the blessings in their lives (i.e., how much those blessings would sell for on the open market like eBay or Yahoo Auctions.) While it might be relatively straight forward for a company to determine its assets and liabilities, how does a person go about calculating the depreciation of their parents, or accounting for goodwill of intangible assets like a mother-in-law? So I decided to give it a try. I made a list of my most-prized assets and possessions and put them up for auction on the Internet to see what the blessings in my life were worth in hard cash. Here’s the list:

• Framed “Perfect Attendance” certificate issued by Maplewood Elementary school, second grade.
• Signed 8 X 10 glossy photograph of the complete cast of the 1980's television series "The Dukes of Hazard."
• 15 inch, "Rambo-style" hunting/survival knife circa 1985, complete with liquid-filled compass (though broken and no longer "liquid-filled"), waterproof matches, fishing line and hook, and snakebite kit (only used once).
• Collection of friends and family members in various conditions and ages (most still in good shape.)

After an intense five-day eBay auction in which three different bidders (two of whom I suspect were my parents) battled it out, the winning bidder took home the complete lot of items for $17.50 USD, plus shipping and handling. Cleary I was devastated as I had always assumed that the treasures of my childhood were priceless, or would fetch millions of dollars from some private collector — perhaps an oil-rich Sheik or Sultan, or a Las Vegas casino looking to attract tourists. Luckily for me, the winning bidder was indeed my mother, and all of my prized possessions were saved.

However, the experience got me thinking. As companies, we often tend over-value our products and services. We produce "things" and offer "stuff" that may be indeed useful to some people — but that may also get shelved in a closet by other people. The products that we sell obviously have a price tag — often a very large price tag — but, our products are NOT our most valuable assets. Our most valuable assets are the relationships that we have with our customers. Too often, when we take inventory of our successes as companies we look mostly at metrics like sales revenue, stock price growth, and peer-group market-share gain. While these indicators tell us how much money we’ve made, how much our investors made, and how much money we took from competitors, they don't directly tell us about the health of our relationships with our customers.

If we want to improve our customer relationships, we have to work at them — like any other relationship. In many cases, the advice that relationship coaches and therapists give for improving personal relationships can be applied equally to customer relationships. Ok, so perhaps "never go to bed angry" is not quite so relevant, but advice like "practice open communication" and "set aside time for working on the relationship" is highly applicable. For example, if 100% of our time is fully budgeted to non-value added tasks such as filling out bathroom-break request forms, cut-and-pasting from one spreadsheet to another, and changing traffic light icons from green to red and back again, that leaves no time for working on our customer relationships. Every person in the company should have dedicated "customer time" set aside for things such as reading customer presentations and case studies, responding to customer emails and trouble tickets, speaking with customers on the telephone, and yes even visiting customers in person.

This year let’s all make a resolution to spend time each day — even just ten to thirty minutes — working on ways to improve our customer relationships (assuming of course that we didn't auction off our customers on eBay, or give them away as Christmas presents.)

What if... CRM Vendors Sold Coffee?

One morning while standing in line at Starbucks, half-asleep with a string of droll on my chin, I marveled at how effortlessly Starbucks combines world-class customer service with obnoxious operational efficiency. It wasn't even six a.m. yet, but these folks were moving at full speed with smiles glued to their faces like Olympic ice-dancing champions. Perhaps it was the intoxicating smell of freshly brewed Java, but I allowed my still groggy, un-caffeinated mind to momentarily ponder what would happen if CRM vendors decided to enter the retail coffee business? What would happen if CRM vendors sold cappuccino?

Well, first of all, I suppose the CRM vendors would get rid of those paper cups and plastic lids -- which work just fine -- and introduce the world’s most technologically-engineered coffee cup platforms. The titanium-alloy lids would have built-in thermal detection and reporting systems which could be configured to display the temperature in Kelvin (but probably not in Celsius or Fahrenheit). The cups would also contain variable fluid-volume sensors that would send workflow notifications to your manager whenever the cup was low or empty. And of course, both the cup and lid would come unassembled in seven pieces, which could be configured in at least 28 different industry versions. Finally, the lids would come out of the box without any sipping spout; instead, you would need to take your cup down the street to a third-party systems integrator who would charge you $10 to install a spout so that you could drink you coffee, which by now would be cold. To solve this dilemma, CRM vendors would offer an optional temperature-maintenance service, where for a yearly fee of 17% to 22% of annual coffee-license fees, they would provide a dedicated team of off-shore support people who would remotely reheat your coffee within three working days (local holidays and weekends excluded).

Suddenly my early-morning day dream was interrupted when the barista handed me my extra-hot-low-foam-Venti-triple-vanilla-skim cappuccino. Clearly, I concluded, CRM vendors could not cut it in the retail consumer coffee market. Coffee junkies want their fix, and they want it quick. Coffee addicts have no patience for things like service outages, crashes, bugs, long implementations, delayed release cycles, or endless support packages. People are serious about their coffee, and there is no room for error. Just imagine what would happen if customers were as serious about CRM as they are about coffee? Without a steady, fast-flowing supply of caffeine, all businesses would come to a stand still!

So what’s the lesson to be learned here? If CRM vendors want to become as beloved and ubiquitous as the morning cup of brew, they need to make the transition from engineering companies who understand technology (or worse, marketing companies who only understand advertising) to customer-service companies who truly understand people.

Customers Don't Read Annual Reports: They Judge a Company by its Front-Line Employees

Who do you think has more influence over customers and end users: the polished Harvard, Wharton or INSEAD educated CEO with rock-star charisma, or the university student (beer-chugging champion) working part time in a call center or retail location? I'll give you a clue — many customers never talk directly to the CEO, but customers talk with call-center agents and retail employees every day. You might have naturally assumed that the CEO has more influence over customers, but let's take a look at the responsibilities of a CEO. The CEO does a lot more than just sit around monitoring the company’s online stock price all day with his finger on the browser refresh button. Rather, the CEO is ultimately responsible for everything that happens at a company! However, in reality, CEOs delegate much of the day-to-day work to other employees. For example, CEOs of software companies don’t waste their time writing function modules or debugging source code, just as CEOs of Formula One race teams probably don’t even know how to release the parking brake, much less drive an F1 race car. (Note to Formula One CEOs, F1 cars don't actually have parking brakes — or turn signals for that matter.)

Let's assume that a customer is buying a product or service from a large, international business-to-consumer (B2C) company. Maybe the customer is buying a new digital camera, opening a bank account, or shopping for a new vehicle. Chances are that the employee helping the customer and taking the customer’s money is not the company's CEO. The CEO is probably stuck in traffic on the way to an airport (drafting up a business case to buy a helicopter in order to save money on limousine costs). The person answering end-user questions about the product and helping the customer with their purchase is likely one of the lowest members of the organization, or worse yet, maybe not even a member of the organization but — gasp — a channel partner. When customers form opinions about companies, it is based on interaction with these front-line employees, not the CEO. Customers don't usually meet with CEOs, and customers rarely read annual reports. Rather, customers judge companies by the quality of service provided by call center agents, retail workers, third-party contractors, and channel partners.

Time for a pop quiz: what's your company’s mission statement? Don't feel bad if you can't recite it by heart; in a very unscientific survey of three neighbors, one paperboy, and one overnight delivery driver (who ran back to his truck and drove away without even acknowledging me), 0% of respondents were able to successfully recall their company mission statement! In an ideal world, companies should ensure that its employees are aware of and can articulate the company’s mission, vision, and value statements. Each customer touch point in an organization should enforce the company's brand image and core messaging. Complicating this task, many companies today outsource at least portion of their value chain — whether it is by using third-party call center agents, selling through channel partners or value-added resellers, or using contracted service providers and technicians. These extended employees heavily affect customer’s perception of the company.

Let's take a theoretical example: assume I contact my local telephone company, let's call them UT&S, to order high-speed Internet access. I would probably expect a visit from an UT&S technician dressed in an official uniform driving a professional-looking work truck with the company logo painted on the side. What if instead my neighbor Paul from down the street shows up in jeans and food-stained shirt, driving his family's mini-van. Paul isn't an employee of UT&S, he's an outsourced contractor. When I quiz Paul about whether he even knows what UT&S stands for, he sets down his beer (just kidding, Paul wouldn't actually be drinking a beer; he's a whiskey guy) and gives me a puzzled look. After I explain to him that UT&S stands for "United Telegraph & Semaphore company” he gives me an even more puzzled look! "Why would you buy high-speed Internet from a company who specializes in telegraphs,” he asks? Good question. Maybe I’ll go ask the CEO. I hear he might be touring with the Rolling Stones this summer...

Disclaimer: The views expressed in this Blog post are the personal views of the author, John Burton, and do not necessarily reflect the views of his neighbors, friends, family members, elementary school teachers, church pastor, or employer. John has never worked as a CEO and has no banking relationship with any CEOs. Read this Blog entry at your own risk. Always consult a physician before reading any Blog. Ask your doctor if Blogs are right for you!

Does computer code increase customer loyalty?

I have a very disheartening annoucement. Although there are a plethora of pills available from pharamcies and overseas Web sites to help you shed pounds in your sleep, regrow lost hair, or incite miracles in the bedroom... there is still no magic pill (nor any pill cocktail) to increase customer loyalty.  Similarly, you cannot increase customer loyalty by installing new software — no matter how expensive, shiny or well-engineered the code.  Sure, everyone wants to increase customer loyalty. We all understand that it is five or ten times more expensive to acquire new customers than to retain existing customers.  We know that loyal customers are more likely to spend more money, to buy more often, and to refer new customers.  We desperately want to believe that we can increase customer loyalty by changing the font color on our website.  But unfortunately, it is not so.  Dogs and soldiers might offer unquestioned loyalty; customers do not. In truth, it is very difficult to increase customer loyalty.  There are really only two effective methods of increasing customer loyalty: 1) by implementing a comprehensive loyalty management program, and/or 2) offering superior customer experience.

The first method is to implement a comprehensive loyalty management program.  Such a program will often includes a points-based customer reward system, such as the very successful airline frequent-flyer programs.  Other industries have also adopted this approach — with less or mixed success — including hotel chains, credit card companies, or rental car agencies.  Even grocery store chains have tried it.  I personally carry three grocery-store “club cards” in my wallet and I routinely present my Safeway card at Albertson's, and vice versa.  In fact, the grocery chain that I am perhaps most loyal to doesn't even offer a membership program — although they do have a "frequent sandwich eater" program of which I am a “Triple-Platinum-with-Diamond-and-Sapphire-Inlay” member.

The second method of increasing customer loyalty is to offer superior customer experience.  This means offering products and services that delight the targeted customer, without wasting resources developing features or services that the customer doesn’t care about.  Every company thinks that they provide superior customer experience, but few actually do.  Harvard Management Update found that while 80% of companies feel they provide “superior customer experience”, only 8% of customers agree!  Let’s take an example of a company who does it right, my favorite grocery store, Whole Foods Market.  Instead of using membership-card based costs savings to promote loyalty, they provide natural and organic foods along with friendly customer service.  Their prices are not cheap; however, their customers are gladly willing to pay more in order to buy healthy food in a friendly setting.  This is what customer loyalty is all about — providing enough value to customers so that they are willing to repeatedly do business with you instead of shopping around for the lowest price.  This is the type of loyalty that inspires cult-like followings (think Starbucks, BMW, Harley-Davidson, Tiffany’s, iPod.)

So how do you start your own cult-like following of devoted customers?  You could dress in robes and speak in riddles, saying mysterious things like, "the answers your seek are known only to themselves." Or... you could just think about what your customers really need, and then provide it in a simple, usable, understandable manner.  If you build value, they will come (and they will buy.)  And they will probably bring their friends.  And their friends will probably buy too!

Grandma's Award-Winning CRM Recipie

The United States and Canada are arguably no longer agrarian farming economies, and nowadays families are usually more likely to eat buffalo wings and chicken nuggets than to grow and eat their own fruits and vegetables. Nonetheless, the annual autumn-harvest festival of Thanksgiving is still a time where families gather together to celebrate, and to eat — mashed potatoes, yams, stuffing, cranberry sauce, and turkey. There are actually quite a few ways to prepare a Turkey (Google search for “turkey recipes” returns a 579,000 results). Some traditional (and some not so traditional) techniques including baking, rotisserie-roasting, grilling, smoking, barbecuing, sashimi, and even — my grandmother’s award-winning technique for cooking almost anything — deep frying!

My grandmother was an amazing woman. But her answer to almost any question or problem invariably involved one of three things: elbow grease, churchin’ up, or deep frying. For example, Grandma didn’t know much about CRM. Clearly, “deep frying” is not the answer to the question, “What is the best way to implement CRM?”. So, what is the recipe for perfect CRM, crispy-golden brown on the outside and tender and moist inside? Unfortunately working with CRM is not like cooking a turkey (although there are definitely some turkeys working in the CRM industry). There is no recipe for CRM. In fact, people don’t even agree on list of key CRM ingredients. And to make things more difficult, unlike cooking a turkey, CRM is never really “done”. Regardless of the initial scope of the project, there are always additional features, users, support packages, and releases. In this respect, CRM is more like an elephant than a turkey. You can’t stick the whole thing in your deep fryer, but rather need to do it in small pieces.

So, if CRM is not like following a recipe, then what is it like? CRM is more like finding your way home safely after being dropped off in Detroit at night without any clothes, money, or cell phone. Most people will probably never be heard from again, but a few will come home wearing an Armani suit, a Rolex, and a smile. These people are called survivors. And survival skills are what you need to deal with CRM. Here are three key skills that can help you survive even the nastiest CRM encounters:

1. Think ahead! When implementing CRM, make sure to plan ahead and consider the roadmap of future add-ons, adjustments, and enhancements. Don’t box yourself into a corner tomorrow by cutting corners today. For example, assume that you plan to start by implementing a small 30 user telephone-only call center for North America customer support. At some point, as your organization grows (perhaps via acquisitions and mergers) and/or consolidates disparate IT systems, you might want to extend your call center to other regions. You might also want to shift from a telephony-only call center to a full-feature interaction center including communication channels such as email and chat. Finally, you might even want to offer the interaction center to internal users as part of a shared-services organization for internal IT Help Desk, Human Resources (HR) Employee Interaction Center (EIC), or Finance/Accounting Interaction Center. In order to keep your options for growth open, you should consider future requirements when making current hardware/software decisions. For example, instead of buying proprietary hardware routers and switches, you might consider an all-software Internet-Protocol (IP) based solution for multi-channel communication.
2. Think big (but start small)! Consider how the tactical topics you are working on fit into the larger, more strategic project or program. Even the best individual features are of little value if they don’t play well with the complete application. For example, you can go on a shopping spree and purchase stand-alone, best-of-breed systems for Trouble Ticketing, Workforce Management, and Knowledge Management. However, if the systems don't integrate effortlessly into your CRM and ERP systems, then those bleeding-edge systems end up creating more work, bigger headaches, and higher Total Cost of Ownership (TCO) rather than adding value. Also, instead of rolling out the entire CRM suite at once, consider a phased/controlled roll out beginning with a small (but strategic) piece of CRM such as the Interaction Center or Internet Sales.
3. Don’t panic; stay focused! Panicking leads to hyperventilation and dizziness. Take a minute to clear your head and assess the situation. It is critical to stay focused on the long-term project plan and not get side-tracked by short-term obstacles. As your CRM project moves forward, it is natural that more people will start to get excited and want to add cool new features and capabilities. However, scope creep can dilute key, limited resources and lead to soul-crushing delays and postponements. Additionally, things never go exactly as planned. Bad things will happen. Very bad things. However, chances are that things are not as bad as you think. Or, even if things really are as bad as you think... they could always be worse. You could be a turkey about to be deep fried! Stay focused and stay the course. Things will be OK.

Note to vegetarians: please replace the words “turkey” and “elephant” above with “potato” and “pumpkin”.