CRM: Just Like the Corner Shop?

It's not unusual to hear senior managers claiming that their company is aiming to recreate the 'customer intimacy' that was characteristic of the corner shop in earlier generations. Of course, most corner shops sold to poor consumers at very high margins, and in some cases used credit as an insidious loyalty device to ensure that the customer's business did not go elsewhere. In the distant past, for some workers the only shops that would trade with them were company shops, working on terms that were severe enough to trigger the foundation of the co-operative movement. Such analogies can be misleading because they do not ask whether a giant telecommunications company, bank or a retailer should even be aspiring to such 'intimacy'. Today's self-service era has cut out 'unnecessary' human intervention, allowing big companies to supply vast numbers of individuals with products and services that are far cheaper in real terms than those bought by our supposedly 'lucky' forebears, while for those of us who like privacy, the absence of human intervention is a blessing.

This raises some interesting questions. Are large companies going too far in trying to match their offer to individuals? Are CRM initiatives that aim to recreate customer intimacy for very large companies doomed to failure because they aim too high or because they aim to do it too fast? Do those large companies that succeed in creating customer intimacy do so only by adopting an unprofitable business model? Do most customers prefer to avoid intimacy, now that they have discovered that they can get much of what they want from large companies without getting too involved?

However, the story is not all doom and gloom. In fact, many of the larger companies that are succeeding (by their business measures and by measures of customer satisfaction) in customer management are doing so almost by stealth, over a period of years. In these companies, we see a steady rise in value per customer, declining recruitment of low or negative value customers, better customer retention, and increasing cost-effectiveness of customer management (largely driven by propositions which make it easy for customers to get what they want by using lower cost channels and by their taking on themselves some of the costs of being managed). In these large companies, we find programme management disciplines being observed, by teams which combine marketing, customer service and systems people, working to common objectives and with a clear mandate from senior management to take time to improve customer management, on the condition that returns to customer management are achieved not too long after the investment, and that the benefits of improved customer management are visible in cost savings (eg use of lower cost channels of communication and distribution) as well as in revenue gains (which usually take longer).

Most noticeable of all in these companies is the relatively high proportion of internal input (relative to consultancy input) at the beginning of the journey, with most of the external spend being later, on implementation rather than on reconsidering directions. Putting it another way, big companies cannot do CRM through consultants - they must have critical mass of people in areas such as marketing, IT, customer service and operations who are committed to improving customer management, who have the knowledge and skills required to do so, who are committed to staying with their company to see it through, and perhaps most importantly of all, are wise enough to see through the nice CRM phrases into a more realistic world where it is understood that managing customers is mostly about managing people who manage customers (and only rarely about doing it entirely through computers, as on the Web).

So, size matters in a strange way in CRM. It does make succeeding in CRM more difficult, and makes it take longer. But it probably also means that when you have 'got CRM going', and when you are measuring your progress carefully, with metrics that include not just what customers are doing (hopefully buying more, more often, additional products etc) or thinking (hopefully more satisfied) but also your internal process metrics (fewer leads lost, faster reactions to customers, better targeting), it becomes self-sustaining, partly because success breeds success. Customers like it when companies get the basics right, and so do staff.