COLUMN -
Customer Relationships
Customer
Relationship Management:
What it is and
What it's not - Part Three
Changing the Soft Science of
Relationships
Welcome to the third article in a
series on CRM for non-profits.
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.
In this article, we’ll talk about the
importance of becoming a customer-centered association,
how important it is to manage that change, and quick tips
various topics that will help you exploit a few CRM
principles such as the customer eco-system and
differentiation.
New Processes: Tyrants or Liberators?
Implementing CRM is not for the faint of
heart. But it sure is worth it. You’ll want to plot out
not only what CRM activities you want to adopt, but also
how to change your association’s habits from what they
are now to what they ought to be.
That means changing the way everybody does
his or her jobs. That won’t be easy – and not just because
it takes time out of everyone’s day to learn new concepts
and procedures.
As my colleague, writer and lecturer Peter
de Jager says, people don’t resist change. They resist
being changed. And one way to get your staff to accept
change is to offer changes that make sense them. You may
have to explain the changes one-on-one. And your staff may
give you ideas that will improve the change plan you had
in mind.
Once you prove to your staff that these
changes make sense, you’re on your way.
If you skimp on getting staff on board,
and if you ignore their deeply felt and carefully-reasoned
objections, you’ll come across as a tyrant trying to push
an agenda that is sure to be more expensive and
time-consuming to implement.
But if you manage the change process
right, your new customer centric association will show
your staff (ideally through metrics) that many of their
daily activities directly affect prospecting, member
satisfaction, service delivery and overall value. This
will translate into a side effect of good CRM: your staff
will become more loyal to the association, too!
Change Management Plan
Since most organizations benefit from
becoming more customer-centric, they won’t see a benefit
unless they change, and .most organizations need a change
management plan to help.
JJ Miller, the CRM program manager at the
Defense Logistics Agency (DLA) spoke in May 2004 at the
National Press Club about how important it is to identify
a change plan. One of his superiors told him that
launching a new initiative like CRM is “like changing
spark plugs while you’re driving at eighty miles per
hour.”
Miller said at the Press Club meeting,
“First you start with business process engineering. This
is the handshake between functional folks and IT.” For
associations, this means that everyone will have to work
closely with IT (or a consultant) to distill the essence
of how they currently interact with members and prospects,
how they manage data, and how they create value. This
study results in a snapshot of how things currently
operate. Then, over time, management will implement new
processes that serve new goals.
Miller said that the DLA decided to
include change management planning right from the start.
“You’ve got to discover both the ‘as it is’ and the ‘how
it’s going to be’,” said Miller. “The enterprise
transition plan is built on that.” And Miller, who is
serving as the CRM functional architect for DLA, said
their enterprise transition plan is being crafted
alongside the CRM plan, right from the start.
BearingPoint is helping out the DLA.
You’ll want to find a consultancy to help you out within
your budget.
Why Should You Commit to Change?
I’ve mentioned before the concept of the
“customer eco-system”, a term used by my colleague Paul
Greenberg (author of CRM at the Speed of Light) to
describe how the Internet has changed the power structure
of the economy. In the old days, associations and
companies created products and services, priced them and
promoted them using something like the Ford Motor Company
model: Mass manufacture of general-purpose goods and
services to a relatively undifferentiated market. Over
time, market differentiation became a key component to
selling and product development: Associations and
companies actually started to be customer-centric based on
increasingly good customer data.
More enlightened associations and
companies took this a step further and began to create new
products and services with direct input from customers.
Sun Microsystems does this by actually putting staff
members at a customer’s site, allowing them to co-create
new software that helps the customer in the short-term and
Sun Micro in the long term. Even so, these enlightened
companies view the power structure as a
“corporate-customer eco-system”. That means the
corporation presumes that customers will be willing to
remain in a long-term conversation with them.
That’s no longer true. Customers drive the
entire relationship. They want to know: What do you have
for me? What does it cost? Is it the best value I can get?
As quick as they can type google.com, customers can get
answers to those questions.
Quick Reality Check
You’d better offer them a clear value
proposition on your web site – and using language and
images that speak right to the site visitor.
In this new power arrangement, your
customers must see themselves on your website. If
customers don’t see their own needs reflected in your
design and content, they won’t come back.
And because this customer eco-system is
creating increased pressure for all organizations to step
up their CRM initiatives, you just cannot stand still.
What worked a year ago just doesn’t work anymore.
That’s why you should commit to change.
Where does your association fit in this
customer eco-system? Here’s a quick checklist for you that
can help you assess yourself. We assume that your web site
reveals your best value to the world. Bring up your web
site and ask these questions:
-
How much of the content of your site
“above the fold” (the top 600 pixels) is about products,
services and events?
-
How many menu items focus on your
organization’s history, mission, values, contact
information and accomplishments?
-
How many images focus on staff,
buildings or abstract concepts?
That’s a simple quiz. Let’s see how you
did.
First, you must examine what appears
“above the fold” only, because even today most Internet
users are using 800x600 displays. If your best content is
below 600 pixels, you should re-design your site. You’ve
got about ten to fifteen seconds to capture the interest
of a prospect and to re-invigorate the interest of an
existing member.
How will you do that if you load up the
top of the site with your history, mission, values and
accomplishments? Look at your site statistics. Which pages
are visited the most? Why not bring that content forward
and to the top of your home page?
Of course, you can’t know by site
statistics what content your visitors want but simply
cannot find.
As for images on your site, you may think
your home page real estate doesn’t need to feature them.
In almost all cases, you’d be wrong. Images communicate
faster than words. If you choose the images well, you’ll
be able to make a connection with your customers
(prospects and members) that proves you care about them.
How did you do on the quiz? If you didn’t
do well, you might rationalize that the problems with your
site design aren’t your problems. You can blame IT or the
designer.
But if you’re only noticing these problems
now, you can also probably point to an association culture
that is not centered on your members. And since CRM is
intrinsically customer-centered, you have two problems to
solve that go much deeper than changing your web site:
You’ve got to plan for a real commitment to CRM, and
you’ve got to plan a culture change.
Pleasing and finding members
Customer Relationship Management may not
seem to fit for your association if you don’t think of
members as customers. Members, some might assert, join an
association based on its values. It doesn’t matter whether
or not the membership poses an actual “value” in the pure,
capitalistic sense of the word (product quality divided by
price).
The customer eco-system has shifted the
market to the point that such capitalistic decision-making
is far more common among members and prospects. Simply
put, your members want value, too. Couple this new
eco-system with a struggling economy that doesn’t leave a
lot of extra income in members’ pockets and your
association may be at risk. If you’re not thinking about
members as customers, you may defer a CRM program until
it’s too late. One association I know of has let its
customer-centric plans slip so far 18 months at this
point), that they have lost 20,000 members, or about 1/3
of their entire membership, in that time.
CRM traditionally has four large-scale
processes it recommends for dealing with customers and
prospects. (Some of these don’t quite apply to
non-traditional customers such as suppliers. We’ll cover
that in a moment.)
-
Identify your customers and
prospects: If you know where you can find them, you can
market to them
-
Differentiate your customers and
prospects: Find out what they want from you, and if that
varies from group to group, name those groups in terms
relating to what they need from you
-
Interact with your customers and
prospects: Choose the right way to reach out to them so
that you can develop a sustainable relationship
-
Customize your offerings for your
differentiated groups: This is another way of saying
that your product and service development needs to
accommodate the specific needs of your differentiated
market
This IDIC approach has served many
organizations well as a framework for understanding the
goals of any new CRM processes. I’d like to examine one of
these to give you an idea of how simple and powerful these
principles can be.
Interacting with your customers and
prospects seems a natural idea. It’s often an overlooked
opportunity, mostly because much of an association’s
attention is spent focusing on members’ needs. But what
about your prospects? Sure, they’re not bringing in money
yet, so you might have a hard time justifying a huge
budget to interact with them. But you don’t need a huge
budget.
Just identify your prospects – and
differentiate them – so you can figure out inexpensive
ways to interact with them. Notice we’re using the IDIC
principles specifically on prospects now. The reason is
simple: Not all prospects are alike, so don’t treat them
alike. Some are just about ready to jump on board with
you. They just need to be prodded.
Does your website offer a free
e-newsletter to everyone – not just members but also
non-members? You can bet that anyone non-member who signs
up for it is a good prospect. And how much extra would it
cost for you to put that extra infrastructure in place?
Call your IT folks right now to ask them.
You can further differentiate “almost
customers” if you can offer products and services for a
fee to non-members. Since they’re opening up your wallet
for you, they may be tempted to join to gain access to
more services, or to get discounts on the products and
services they buy.
One way I recommend to associations to
model prospects and customers is to take apart the “buying
cycle”. There are several ways to do this, but a good
start is to think of these folks as being somewhere along
this path:
-
I’m aware of
you
-
I’m exploring
what you offer by interacting with you
-
I’m negotiating
with myself whether it is relevant to my needs and
provides a good value
-
I’m accepting
that you provide good value
-
I’m acting to
join
-
I’m a member
-
I’m succeeding
in measurable ways
-
I’m being
rewarded by the association for my success
Notice that most of the steps on this path
apply to prospects. The way prospects interact with you
can tell you a lot about whether they will be good members
one day. If they only sign up for freebies, they may not
become a member soon. If they interact with you by buying
products or services, you have a better chance of
converting them.
This differentiation drives what you do
next. You can create new processes to give these “almost
members” what they want from you – in proportion to the
return you receive. Free services should cost you almost
nothing to promote. Paid products and services provide
revenues you can tap into to promote membership to the
purchasers.
Of course, CRM is about your current
members, too. We’ll get into what you can do for them next
time. I wanted to alert you to the concept first, though,
that prospects are almost customers, and you can certainly
benefit from CRM principles as you try to convert them.
Other “customers”
You have other customers, too. What about
your suppliers? Aren’t they involved in exchanging value
with you? If so, that makes them a customer. If not, get a
new supplier.
For example, if your member orders a book
supplied by a vendor, that vendor becomes part of a chain
of events that creates value for your member. This is the
so-called value chain. And if a poorly performing vendor
breaks a link in that chain, it doesn’t matter to your
member that it’s not your association’s fault.
So treat your vendors like customers, and
make sure they treat you like one, too. Identify their
needs. Differentiate them according to the value they can
provide you. Interact with them regularly. And customize
your interactions to make the value exchange even more
valuable. For example, if you work with a publisher to
prepare and print your journal, ask yourself:
What do they need from me so that I can
provide greater value to members? It might be that your
members would like your journal in electronic format, and
your vendor is struggling to provide this. Struggle with
them to make it happen.
Is the journal vendor helping me provide
the most value to members? By differentiating among your
vendors, you can spend more time improving vendor
relations with those vendors most likely to help you
retain members.
Can we streamline our operations with the
journal vendor so that we improve efficiency and take
advantage of new opportunities? Just being in regular
touch with them, you may find out that your journal vendor
is offering innovative services to its other clients that
it doesn’t offer to you. They must just have overlooked
calling you about these other services – or perhaps they
thought you didn’t need them because you didn’t ask!
Customizing your interactions with the
journal vendor can also be key to a better relationship.
Take a look at their production, marketing and fulfillment
processes while asking yourself whether you can help out.
The more well integrated your relationship, the greater
the opportunity is for cost savings and for new products
and services you cannot now even imagine.
Next Time
Next time we’ll walk you through how to
choose systems to support your customers – which as you
now know, include your prospects and your suppliers. We’ll
pay close attention to another valuable customer segment:
Your volunteers, including your board and your committee
members.
 Paul
K. Ward advises associations and
for-profits on member and customer
relationship strategies and technology. He
writes for ASAE and for The Canadian
Association, has contributed to a best-selling
book on Customer Relationship Management and
speaks regularly on globalization and customer
value topics. Paul is pursuing his global
executive MBA from TRIUM, an international
program created by the Hautes Etudes
Commerciales (HEC-Paris), New York
University-Stern (NYU-Stern) and the London
School of Economics.
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