COLUMN -
Customer Relationships
Customer Relationship Management:
What it is and What it's not
Changing the Soft
Science of Relationships
The association
community has a lot to teach for-profit organizations
about governance, especially in this time of WorldCom and
Enron scandals, but for-profit organizations are way ahead
of associations in one area where you'd think non-profits
would have an edge: Building relationships.
This is not to say that
for-profit organizations get it right all the time. In
fact, most of them lack the community-building mandate of
associations. But the modern processes that establish and
build customer relationships have been created by
for-profit organizations.
They're measuring
customer interactions and altering their business
behaviors to improve those interactions. That's the core
goal of customer relationship management (CRM).
What should you know
about CRM? And is it a panacea for your association? We'll
be exploring these two topics in six articles over the
next year. I welcome your comments at
paul@pkward.com as we go along.
It's Not an Attitude
For-profit
organizations made mistakes as they deployed CRM
solutions. First, they weren't sure what it was. Some
thought that it had to do with better help desk training
and web site personalization. Others thought they didn't
even need a particular CRM “solution,” that all they had
to do was better motivate the troops and everything would
magically improve.
Help desks and good web
sites are two tactics that can certainly be part of a CRM
solution. But a big part of CRM is making and keeping
promises in ways that differentiate an organization. Help
desks and web sites are only two critical
"promise-keeping" business processes.
One association staffer
told me last year that his new executive director
instructed them to respond to every member email within 24
hours. That's a positive step for the association, which
has gathered the reputation of being aloof from members
and interested mainly in trade show revenue. But the
staffer went on to say that his regular duties suffered
because he had to spend the extra time answering emails.
Clearly the association has too few people and not enough
technology to do all the jobs at hand.
Improving how your
association deals with customers isn't just about being
peppy with them. As my friend and colleague Paul
Greenberg, author of CRM at the Speed of Light
stresses that CRM is definitely not an attitude. "Systems
improve business interactions with customers. To think you
can improve customer relationships reliably and
consistently with only an improved attitude is wrong. You
need a program, an initiative, and that's CRM." CRM
involves doing more with your staff than just giving them
a pep talk. [Interview with author, December 2003]
Measuring Touches
One of the critical
pieces of CRM is measuring the interactions you have with
your prospects, members, partners and staff members. They
all have a stake in what you're doing, and you have a
stake in them. Measuring your interactions with these
stakeholders seems like a big task. It is.
But consider: If you
only measure interactions with members, you have no data
about why prospects decide not to join. Isn't that
critical information?
And if you don't
measure your interactions with partners such as your
journal vendor or trade show management company, you can't
control and improve the chain of events that lead to value
with your members. Isn't that critical information, too?
Finally, you must
consider your staff. They're your customers. You give
them a job, a mission and a desk. In return, they
contribute to creating value for members. If you don't
motivate them, manage them well and give them tools and
incentives to create more value, then you'll wind up
creating less value. That's not what you want.
If you've forgotten
that your staff are customers, too, you're not alone. Paul
Greenberg uses the story of a corporation's sales team
that is managed badly. "I know a company, which I won't
name, that pays its sales people as soon as the sale is
made. They don't compensate them for the delivery of the
product. This means the company is creating a sales force
for which follow-up is irrelevant. Ultimately of course
the commission is rescinded if the product isn't delivered
and a sale is cancelled." [Interview with Author, December
2003]
Even worse than a
cancelled sale is a disgruntled customer. So consider your
staff member your customer too. Make sure you create a
system of compensation and incentives for employees that
encourage them to satisfy the member completely. John
Graham of the American Society of Association Executives
told me, "You have to incent the staff. That means they
win if you win."
The Customer
Eco-System
One reason that CRM is
so important is that the Internet erodes what used to be
called loyalty.
A proper business
definition of loyalty is beyond the scope of this series,
but let's agree for now that loyalty is a feeling a
customer or member has to your association that results in
a long relationship with a high future net value. So the
metric for us managers is total net customer lifetime
value.
Google™ and email
disrupt all that.
When it costs
absolutely nothing for a prospect or member to use Google
to find information on the Internet, they may view your
association's journal as unnecessarily expensive. As for
your annual meeting, it's at risk, too. Any diligent
person can use the Internet and email to maintain a
network of his or her own.
This makes your job
harder because your members can leave you or join you with
more fluidity, using your resources for just as much
networking and content as they need to get started and
then moving on. If that happens, a member's future value,
on average, will drop. And since we've agreed to define
loyalty as being measured by the net future value of a
member, you're facing a loyalty crisis.
As Gartner Research
said three years ago, "Understanding that CRM is about
more than creating satisfied customers is the key. CRM is
about forming a relationship with customers that make it
unlikely that they will want to go elsewhere. CRM is about
customer loyalty." [“What's So Hard About CRM?” CRM
Corner, Gartner Research, Dec 2000-Jan 2001.]
When prospects make
choices based on perceived value (quality divided by
cost), then cheap alternatives can have tremendous value
to them. The prospect gets zero-cost content from the
Internet. And they can use the Internet to quickly find
other associations that may cost less than you do or
provide more perceived value than you can.
This is what Paul
Greenberg calls the customer eco-system. Customers make
the choices of what to consume at low- or zero-cost. That
means that you must make sure your services are attractive
enough, provide real quality and are fairly priced.
(Notice I didn't say "inexpensive." Pricing strategies are
beyond the scope of these articles. Feel free to email me
if you're curious.)
The Association Free
Fall
Is your membership
dropping? It is for many associations. Some blame it on
terrorism. Some blame it on the bad economy.
These factors do
contribute to the problems of dropping membership. But
some associations are actually increasing membership. The
American Bus Association, for example, recently finished a
successful meeting in New York City where they broke
attendance records, following a year in which they broke
membership records.
I suggested above that
the Internet contributes to a lower net future value to
you of a given person. So if the Internet is at fault for
your membership decline, what can you do about it?
While it may seem a
daunting challenge to compete with the Internet on an
association budget, it can be done.
But you first should
take a look at HOW the Internet and the new economy
ushered in deep cultural and business changes. The
customer eco-system gives added power to prospects and
members. If you understand how the Internet creates that
power for your prospects and members, you have a chance to
contribute to that power, and as a result, actually build
loyalty.
Next Time
Next time, we'll cover
the black holes for loyalty, down which your prospects and
members disappear, never to return to you. We also will
cover how to unify the experience that your prospects and
members have with your association. We'll talk about
personalization and market chunking. And we'll define what
makes up a CRM solution and how such a solution can help
you win loyalty, unify a customer's experience and
simplify personalization and market chunking.
 Paul
K. Ward is a CRM, Branding and Customer Value
Consultant www.Pkward.com.
Paul regularly meets with top Washington-area
executives to discuss business best practices, and has
recently inaugurated an advisory group for the American
Society of Association Executives to assist in creating
ASAE member value. He writes for ASAE Global Link,
ASAE Association Management and Canada's The
Canadian Association.
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