CRM, CCA & eRetail Business Objectives |
In the 2000-10 eRetailNews Report on Customer Relationship Management, we describe a business model built around a Customer Centric Architecture (CCA). This model advocates the importance within eRetail of an information architecture that is customer focused and not product focused. Many Customer Relationship Management (CRM) applications on the market are designed to support components of the Customer Centric Architecture. In supporting the CCA business cycle, CRM components focus on one or more of the key components in the cycle:
The process of attracting, nurturing and retaining customers is remarkably similar to the natural cycle we go through in our personal relationships; attracting a partner, courting/wedding, and staying together. Attracting customers focuses on bringing new customers into the business. Nurturing requires us to develop our relationship with the customer so that they continue to do business with us and increase their business over time. Retaining customers is vital since the cost of acquiring a new customer is roughly ten times the cost of retaining an existing one. Attracting CustomersTo attract customers eRetailers must satisfy a particular need or collection of needs better than alternative providers. "Better" will depend upon each customer's values, expectations and personal experience. Typically, customers will purchase your product or service because it clearly demonstrates an ability to satisfy their needs in one or more of the following ways:
Note: customer service affects many of the attributes of product and service delivery listed above. For example, providing outstanding customer service may make it easier and faster for a customer to satisfy their needs by using your company. In contrast, some customers are willing to accept sub-standard service in exchange for low price, but if they can get the same price from a competitor offering better service, all other things being equal, the competitor will attract the customer. Attracting customers involves communicating your message to potential customers in such a way that they perceive your company can satisfy one or more of their needs better than their existing supplier. This includes making potential customers aware of needs they previously had not recognized. Finally, if they have no alternative, a customer may buy from you regardless of how poor your service is. (Customer service is typically poor in monopolies because there is no competitive reason to invest in it, other than to deter competitors from entering the market). One of the reasons why the Internet has spurred so much attention on customer service is because, for many companies, service is their biggest differentiator in a highly competitive marketplace. Nurturing CustomersNurturing is the process of helping customers to get more value from their relationship with you while remaining focused on their needs. Many companies consider merchandising techniques such as cross-selling and up-selling as components of a nurturing strategy. While these techniques can increase the value of business conducted with a single customer, it should not be done at the expense of satisfying the customer's needs. Cross-selling and up-selling should leverage customer knowledge to offer products which the customer really needs, thereby saving them time by not having to purchase them elsewhere. A common example of this is offering batteries with electronic items. Beware: If the customer has no need for the products offered, they will perceive cross-selling tactics as pressure selling and may shop elsewhere. The same is true of up-selling. Customers may perceive this as the "bait and switch" selling strategy, where low priced goods are offered to attract the customer before switching them to higher margin products. Unless the customer has a legitimate need for the higher margin item, this tactic demonstrates a product-focused strategy that ignores the customer's needs. Therein lies the road to failure in the long term as more and more customers communicate their dissatisfaction. Down-selling can be effective! This account of down-selling is an example of taking into account the customer's true needs when purchasing a digital camera from Cameraworld.com.
My point here is simple: be sure to identify the customer's needs before making product recommendations; otherwise, your recommendations are hollow and lack credibility. Another crucial factor in nurturing customers; presenting them with an appropriate assortment of products based upon their individual needs. Given the ability of an eRetail store to offer a far wider assortment of merchandise than a traditional store, technology is now being used in an attempt to personalize assortments to the needs of the individual consumer. Other techniques for nurturing customers include excelling in delivering to customer expectations in areas of customer service, fulfillment and returns. It is up to you how you choose to set your customer expectations. If you offer a low priced product, you may choose to set your customer's expectations of service very low. No matter what the level at which you set your customer's expectations, be sure you meet them every time. Unless you do, you will not nurture your customers, you will alienate them. Retaining CustomersRetaining customers is difficult. Like all relationships, customers need to be managed based on their individual needs. As these needs evolve, your company's products and services must adapt themselves to the customer, or you risk losing them to another company that meets their new needs better. Consider customer acquisition to be a zero-sum game. By that I mean for every new customer you acquire, one of your competitors has lost that customer because they did not satisfy the customer's needs as well as you do. It is just as easy for you to lose your customers in the same way, especially on the Internet, where trying out a competitor's service is such an easy process. A continuous focus on satisfying or existing customer needs is the key to customer retention. Customer retention and customer loyalty are not the same thing. It is possible to lose a very loyal customer if you no longer satisfy his or her needs. However, building strong customer loyalty means the customer is more likely to give you a second and even a third chance to rectify mistakes, so strong loyalty does increase retention. eRetailers use many tactics to keep customers loyal:
What each of these tactics has in common is they are all ways to tell customers that you appreciate their business. The other most important way to retain customers is to show them you are concerned about their particular needs and ensuring that you satisfy them well. Examples of how companies demonstrate this caring attitude can be seen in the way they ask customers for feedback, how they talk to their customers and how they empower their staff to delight every customer. Attraction, nurturing and retention are all integral components of the new e-Business model - the Customer Centric Architecture.
The Micro Community And Customer Profiling Strategy | Marketing | Technology | Profiles | Industry |
