9 Reasons why your CRM sucks

I have been working with clients and their CRM programs for some time, and I have always been pretty amazed at how lousy so many of them are. Not that these companies aren’t interested in having more loyal customers (after all, loyalty = increased share of wallet), it’s just that other factors seem to come into play that impede that progress, or they just break some simple rules. So here are some issues with CRM I have come across, and a few suggestions how companies can improve their programs.

Oh, and before I begin, for the record, I want to be clear about what I believe CRM is for – it’s to build advocacy for your brand. In essence, it’s communicating with your 10,000 customers in a way that makes them feel like you’ve only got 10.

Okay, with that said, here we go.

9 Reasons why your CRM sucks:

1. You think CRM is a just direct mail program. How many times, as a consumer, have you received a direct mail offer from a company that ‘knows’ you, but they’ve sent you something ill timed (like a limited time, 15% off oil change coupon, the week after you got your oil changed) or offering you something you don’t want or need (like a product you’ve already bought)? The reason why this happens is that many companies believe that CRM is just a database for addresses, and to cut down on the cost of developing several communications, they use the entire list to blast out blanket offers.

I’ve been told several times to send out a direct mail offer with multiple offers to the entire list, because at least one of the offers applies to everyone on the list.

This doesn’t create customer loyalty. It’s an inauthentic offer that makes us feel like customer number 9,872.

2. Garbage in = Garbage out. Many companies don’t do a good job of purging customers after they have bought a certain product or service. Generally because this is a manual process and some one just didn’t get to it. As a result, customers get offers for things they already have. What’s worse, the offers they receive generally offer a better deal than they originally received. This is a good example of how a company can actually pay money to piss their customers off. So always make sure that you have a quality assurance mechanism in place for data entry or find a way to automate it.

3. You communicate too much. I hate to call a company out, but Amazon, if you’re listening, stop with the emails already. I probably receive an email offer once every two days from Amazon. I’m sorry, but I don’t read books that fast. If I did, I’d be much smarter. All this extra communication does is annoy me and makes me immediately delete your emails. Good thing for Amazon is that they’re too big to care. But if you’re not a monopoly, please heed this advice: Unless you’re my best friend (which you’re not), don’t talk to me all the time.

4. Everything is an offer. If you want to build loyalty with me, offer me something that isn’t an offer. I wrote a post about this a while ago about the power of ‘Thank You’. If you want me to like you more, next time you speak with me, try giving me helpful advice on what I have just bought (reinforce my good decision to go with you), or give me something I’m not expecting, or, better yet, connect me to others who have bought the same thing. Perhaps we can build a community of brand advocates for you.

5. You use contests to collect addresses. Not good. More often than not people will enter your contest to win the contest. They have no interest in your products or services. That whole “No Purchase Necessary” thing is hard to distinguish between who is interested and who isn’t. But if you have to run a contest, here’s a good tip, start your list with with the people who actually bought something.

Of course another way to build up your list is to offer a discount on a future purchase, and don’t just make it a blanket offer. If possible, make the discount relevant to their purchase. For example, if you’re a cable provider, offer a free on demand movie or discount on a specialty channel. Don’t offer a 25% discount on your phone service.

6. You think short term. Many companies make the mistake of believing that CRM is something that migrates customers from interested to engaged to advocacy in 6 months. It doesn’t work like that. How long do you date someone before asking them to marry you? CRM takes time. And remember the goal – advocacy. It may not mean an increase in share of wallet, but it could mean an increase in WOM and new customers. So don’t be pushy. Customers are a skeptical lot to start out with.

7. You didn’t talk to actual customers before offering them something. When you get together with friends and talk about companies, you either praise them or kill them with respect to their: customer service, call center, product, locations, parking, price, etc. Everyone’s got an opinion. So why is it that so many companies embark on CRM programs without talking to a single soul first? If you want to know how to improve your relationships with your customers, try talking to them. And here, qualitative trumps quantitative results. Get to know what your customers really want before you begin.

And don’t just use tools like Twitter Search, Google Alerts or BingTweets to eavesdrop on them. You can use those tools to find out if you’re doing a good job or not. But don’t use them as the foundation of your CRM program.

8. Your CRM program doesn’t include other inbound/outbound areas. Cardinal sin. If your call centers do not have access to customer information or if your direct mail agency doesn’t have access to what transpired on your Twitter feed, you stand a very good chance of making yourself look like you don’t listen. Make sure any time there is a communication with a customer that his/her record is updated (if it is relevant). If something was solved in the call center, but the customer’s record isn’t de-duped for it, they can receive a communication about the same thing, thereby eliminating the two-way conversation we’re all trying to create.

9. You’re not really listening or helping. This is my last point, but it’s pretty significant. One of the ways to build loyalty through CRM is to create a dialogue with your customers. If they feel like you’re listening, that makes them feel like they are important to you. Do not make the critical mistake of giving them avenues to reach you, like a call center, then putting them on hold for 30 minutes, making them listen to the pre-recorded message “You call is important to us…”. If you want to build some loyalty, you have to give them a reason to be loyal. And being helpful helps. Perhaps one of the benefits of your CRM program could be immediate access to a representative when they call, or anticipating problems they may have and delivering solutions to them proactively. Don’t make them come to you. Show them that you care.

In any event, what’s important to realize about CRM is this:

CRM is time consuming, frustrating to implement, and it costs money.

That’s why it’s so easy to do it badly or dump it when times get bad. But if Frederick Reichheld, the loyalty expert, is correct by saying, “the one thing successful companies have in common are customers who would recommend their company to others”, my question to you is, how can you not afford to do CRM, and do it well?

The power of Thank You

I’ve been doing some thinking about this for some time, and was reminded of it recently after we had some people over for dinner party. Everyone thanked us when they left, but one couple sent us a nice card in the mail to thank us for the special evening. It wasn’t a big deal, but that little card did something quite incredible. After reading it, my girlfriend said “we should have them over again.” So, with one small, little gesture, these people moved to the top of our guest list for future dinners.

So, if that’s the case, why do so many companies do such a poor job of thanking customers? And I’m not talking about thanking them at the cash register. That’s just their version of our front door. I’m talking about thanking customers like our guests did. Such a simple gesture creates so much goodwill – because it is so unexpected.

I’ve worked on many a direct mail program, and they’re always geared towards getting the customer to spend. Even if the card starts with a thank you, it’s usually ends with a 20% off offer that attempts to entice the customer to spend more in the near future. That’s not a thank you. That’s a ‘now here’s something else you can do for us’.

How many times have you bought something and received a proper thank you from a company? I know it happens, because I have received one before. A very nice card just to say ‘Thanks for your business’. And do you know what I did? First, I told all of my friends. Then, a few months later, I went back and purchased from them again.

So if you want to boost revenue, increase word of mouth, and have a positive long-term forecast, it doesn’t take much effort, and you don’t even need to have a discount sale. Just treat us like you care, and say thank you. And I promise we’ll move you right to the top of our guest list.

Will data kill creativity?

This is something I’ve been rolling around in my head for a while now. And I’ve decided to make a case for and against this argument.

Creativity’s dead, dude

Have you ever been walking down the street on a sweltering day, were super thirsty and thought to yourself “Man, I could go for a lemonade right about now,” just as you walked past a store that had a sign in the window that read:

Ice Cold Lemonade – $1.00

If so, you reacted like I did. You rushed in and bought one. Because you got the right offer at the right time. This is what data, if used properly, can do for marketers. The reason why we rely on creativity so much is that we don’t target our offers correctly. We don’t know how to target just the lemonade drinkers, so we go after the soda drinkers or gatorade drinkers or beer drinkers and promise them that lemonade is the next best thing, or even better than what they’re drinking now.

Proper use of data will allow us to target accurately with no spillover into audiences who have no desire for our product. Imagine what kind of data we have access to right now or will have access to in the very near future. Here’s a small example:

Imagine your grocery store i.e. Safeway (who knows what you purchase – and when you purchase) sells your purchase data to NBC and TIVO. NBC, in turn, uses that data to sell air time to Country Time Lemonade. Now if digital television works the way it should (or will), NBC should be able to hyper-target Country Time Lemonade commercials to the people who have bought it in the past, or show tendencies to purchase lemonade-type products, and show these commercials (whether streaming or on regular television) at times just before the viewer tends to go out and buy his/her groceries. On TIVO, banner ads could be coordinated to run, real-time with Country Time Lemonade offers on the bottom of the viewer’s screen just prior to shopping behavior. Going one-step further, these ads could be further targeted to run only when the temperature rises above a certain threshold.

Now, if we could target like this, i.e. the right time, the right place, the right person. Do we really need to say anything more to them than Country Time Lemonade at Safeway only $1.00? I think not.

Creativity is on its way out.

Data Shmata

Consumers are emotional creatures. They bond to people and brands that share similar values or make them feel better about themselves. The way to do that initially is to get their attention through creative means. You may be able to use data to target lemonade drinkers, but only by creative means will you be able to make Country Time Lemonade appeal more than a competitor’s brand. Data alone cannot build brand affinity.

In fact, creativity will become more of an asset in the future because even though much data will be available, many companies will fail to use it properly, merely because they will not understand how to. You see evidence of this today with failed CRM programs from multinationals. A quick example:

I purchased a digital terminal for my cable over 4 years ago, and yet I am still receiving limited time offers from my cable company to purchase a digital terminal for a steep discount (with free on-demand movies, to boot). Now, I’m sure they’re putting this offer out there to increase loyalty and bundling of products, but due to their misuse of data mining, they’ve made me more disloyal (“Why don’t I get any free movies?”).

So, creativity will still be king for generating attention in the marketplace. We’re a long way off from living in a data-ruled world.

Buy me a drink before asking for sex – a lesson for Twitter

I’ve noticed that the majority of people on Twitter are only focused on building up sheer numbers of followers, regardless of quality. However there are a small minority who actually care about building relationships.

Those who genuinely want to start a relationship generally send me a personal, direct, non-automated message once I start following them. For example:

Hey Rodger, reply to me @richardr if you could recommend another fun and smart person to follow.

A nice touch. But there are also those who are sending me direct messages under the guise of relationship building, generally to build a business of some sort:

Thanks for the follow! Would you like to know How to Get 16,000 Followers in 90 days & Make Money?

You’re the ones I want to talk to.

If I’m following you on Twitter, I probably either find you:

A. Interesting (worth following/generating relationship with); or
B. Likely to follow me

Whichever one it is, it doesn’t matter how you communicate with me, whether it be through Twitter, the phone, or in person, one thing I’ve learned as a marketer is that no one likes the high pressure sales guy – no matter what you’re selling.

So even if you’re trying to build a business through Twitter, try working on our relationship first. Make me feel like I’m worth connecting to, then I might be more likely to check out your wares. When your first direct message to me is already selling me something, it’s akin to walking up to me and asking me for sex after merely catching my eye in a crowded room. It may work with a few people, but your conversion rate might be a bit better if you buy me a drink and get to know me first.

Learn CRM from Grandma

Ever wonder how to implement an effective Customer Relationship Management (CRM) program in your company? Your grandmother is a great person to learn from. Grandma always knows when to reach out to us. It’s usually during Christmas or your birthday, but that’s when you’re expecting to hear from her. To not hear from her would raise questions like “Does she care anymore?” or “Does that mean no $18 cheque?” But grandma is also savvy about when she contacts you when you’re not expecting it. Sometimes it’s just to say hello or to send you some cookies she’s baked. But her contact with you always leaves you in a better place than where you were.

The reason why grandma is such a good example of CRM is that she contacts you when you need to hear from her, and when she contacts you unexpectedly, it’s always in your best interest. It’s what we call: the right offer at the right time. That’s great CRM. And that’s why we love hearing from Grandma.

Often times we lose sight of what’s in our customers’ best interest. We contact them because we want to squeeze them for a few more dollars (read: our best interest). If you want to create loyal customers and brand advocates, take the time to learn about them. Figure out when they need to hear from you and when they’d be delightfully surprised to hear from you. Don’t always sell to them. When you do that I guarantee you they”ll think of you when they receive Grandma’s next $18 cheque.