CRM - Is this the key to improved customer relations?

CRM can be a building block to good customer service – but only if the foundations there are already strong.

n the previous decade, it was not unusual for companies to speak about Customer Relationship Management, or CRM, as the key to good customer relations. Vast sums of money were invested in complicated computer systems, designed to inform you about your customers, allowing you to tailor your services more directly to them. Although now largely devoid of the place that it once occupied, it still has an influence over the market, and is seeing a growth again. In particular, the finance industry has seen an increased reliance on CRM. However the question needs to be asked; is CRM really helping to improve customer relations?

But let us look at the background first. The CRM premise seemed simple – knowing and understanding your customer would strengthen their loyalty to you and lead to increased profits. Systems were put in place in many companies to log preferences and trends in their customers, in order to target them with things such as premium services, loyalty cards and special offers. CRM quickly became the new 'must-have' technology. Disillusion with the early systems were clear: instead of providing a unified picture of their customers, companies were left with a mass of data to sift through. Suitable products for particular customers were not clear from the data being produced.

Such early systems were condemned as a failure, and improvements forced to be made. Analytics systems entered the equation, using an analysis of customer data collected, along with analytical reasoning to match customers with products. Although it has overcome some of the problems initially associated with CRM, its benefits seem far more in the favour of the provider than of the customer.

In reality, is our trust and loyalty really gained by being offered special offers and premium cards? Does this genuinely encourage us to use the services of the company? The answer is – it depends. Customer loyalty is not something that can just be won by quick-fix solutions like special offers and premium cards, but is something that requires investment of a very different sort. What is requires is an investment in the services being offered – their quality, the people offering them, and their effectiveness.

What CRM often fails to take into account are the people themselves: whilst it deals with customers as figures, it often does not see them as individuals with basic needs to be met. By trying to retain loyalty by offering extra services, attention is often deflected from providing a decent basic service. How often have we taken up offers that seem good on paper, but have actually proved to be of poor service, quality and worth? If a restaurant offers us a discount as we have used it before and they have our name, what is driving us to return is probably not the discount itself as a first reason, but instead whether we had a good experience of it before. If the initial service was inadequate then we will in all likelihood not return, despite the offer.

What companies need to be focusing on is that initial service. If we use the example of the restaurant again, what we need to initially experience is a fantastic service, polite staff, good food, reasonable prices and a good overall view of the place. With this in place, a trust of some sort has been established, whether we use it again or not. We trust that we will get a good, enjoyable meal and experience if we use the establishment, based on our initial judgement. If we are then offered a discount, that initial trust established will be called upon if we take it up. If we were dissatisfied with the initial experience, a discount is unlikely to tempt us back there again.

If we were satisfied with the initial experience, and do use the discount, we then expect the same level of service from the restaurant again. It is this aspect of the experience that will begin to build up a customer loyalty: we have received a good service more than once. No amount of offers, discounts and cards would win such loyalty if the basic requirements were not there. If a company does not get its services right in the first place, what is the use of targeting clients specifically, according to a profile that has been built up?

Clearly for many companies, CRM is the key to their customer relations, but in relying on it too much at the neglect of other factors, it is unlikely to result in good customer relations. Treating customers as statistics to increase profits is never a good way to actually improve customer service. The initial investment in basic services is far more important to win the customer over in the first place. However, keeping existing customers is far cheaper than winning over new ones, so CRM is not necessarily completely useless. Once that initial trust has been established, CRM can help to retain customers by targeting their needs. However, their loyalty will only remain if the basics remain good and constant, regardless of offers and cards you throw at them.

CRM can be a building block to good customer service – but only if the foundations there are already strong.

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