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Thursday, Mar 28, 2002

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Marketing - Customer Relationship Management

"Empower customers to solve problems"

Sankar Radhakrishnan

"If you just focus on gathering information about your customers and marketing to them, and don't focus on execution, then you are not going to actually get the rewards of CRM."

Patricia Seybold, CEO, Patricia Seybold Group.

Visualise a situation in which a business' customers actually go about managing their relationship with the firm. That, in a sentence, is what Patricia Seybold, founder and CEO of the Boston-based Patricia Seybold Group (PSG), advocates.

Seybold, often described as the `guru of customer relationship management', is also the author of and The Customer Revolution, bestsellers both. Her company has also developed two tools _ `customer scenario mapping' and `customer flight deck' _ that are used in most of the consulting engagements with clients such as National Semiconductor.

Seybold, who was recently in Mumbai to conduct a workshop `The best practices for the customer economy', spoke to Catalyst on just what businesses need to do to get really customer-centric. Edited excerpts from the interview:

This is your first visit to India. What have been your learnings over the last few days?

Most of the learning I've done is by talking to the folks at the workshop. Meeting with a large group means you get several perspectives. So, I've learnt everything from how to put paint in paint cans and how to put toothpaste in toothpaste tubes for this market to the challenges that are being faced by the hotel business, the telecom business and so on.

Indian businesses talk a great deal about customers mattering to them. Yet, customer relationship initiatives are mostly limited to things like smiling at customers and saying `Come again, sir' or `Have a great day, Madame'. But is this enough, and more important, what do corporates here really need to do?

I think one of the advantages that Indians have is that they are very courteous, very outgoing and very cordial. So that's kind of step one. But from a customer relationship management (CRM) standpoint, the big shift in thinking is really getting into the customer's shoes and understanding what it is the customer is trying to accomplish, and then organising yourself so you can actually do that.

On the frontline it means that the person serving the customer needs to be empowered to make decisions and take actions that will actually solve the customer's problems. I think right now most Indian companies, like most companies internationally, have policies that were designed to protect them from customers as opposed to policies that are designed to actually make it easy for customers. So, I think one of the things top management needs to do is look through all the policies they have and see which ones may actually be damaging to some customers and work at correcting them.

One aspect of CRM is developing customer loyalty towards the company. What about the reverse: as in how do <147,1,0>you get the company and its employees to be loyal to customers?

What I find works the best is simple - training. The best way to do that employee training is to actually have the employees, the customers and the management all together in a room working through the issues from the customers' point of view. That's the way we use `customer scenario mapping' to bring in a group of customers and say `how do you want to do business with us in these different areas?' That gets everybody on the same platform and shows them exactly which policies need to be changed and how. And the employees can then see what actions they can take to improve things.

You also need to put into place a system to monitor and measure both customer satisfaction and those particular incidents that matter the most to customers, what I call `the moments of truth'. Thus, everybody can see what the bottomline is _ what the impact is in terms of customer loyalty, increased share of wallet, increased spending on the part of that group of customers and so on.

Won't culture have something to do with the way customers give feedback to the company? It's one thing to get the customers, employees and the management in a room, but it's another thing to get the customers to give honest feedback, especially in India where people tend to be extremely polite. What does a company do in such a situation?

I have discovered that the `customer scenario mapping' approach works really well across cultures, and have done it all over the world. The reason is because you are not just asking the customers `What do you think?' or `How are we doing?' What you are doing is getting the customer to stand up and objectively say `Here's how I would ideally like my task accomplished'. And as they go through it, if your facilitation is good, you can ask them `Is that the way you'd really like to do it?' or `Is that the way you do it today so you don't hurt people's feelings?' And when you get a bunch of customers together and really egg them on, they will get very honest.

How does the `customer scenario mapping' approach work?

We define a `customer scenario' as the set of steps a customer needs or is willing to take in order to reach their desired outcome. And scenarios are different by context. So a customer who's in a hurry is going to have a different scenario from a customer who's got time to spare.

The other thing about scenarios is that at each step of the way the customer may choose to use different touch points. And what you want to do is to capture all those touch points so you can see the whole scenario. That's the reason we advocate using customer scenarios as opposed to designing business processes, because the customer scenarios are very context-driven and they change a lot. So what you want to figure out is how you can align your business processes as customer scenarios change.

It's also a continuous process. So you pick a particular target segment of people who behave in a particular way and you'll find that three to six key scenarios are common in terms of how they interact with your firm, and you then pick the ones that are the areas of frustration for those customers. And once you've begun to fix those, you work on the next set, and the customers keep raising the bar. And once the basics are over they keep coming back and saying `If you could do this for me it would be really good'. It's a kind of lock-in, but it's more seduction because you have shown customers that you can take care of their basic needs and now they are willing to share with you what they really want.

The other tool you've developed is the `customer flight deck'. How does it work?

The `customer flight deck' is designed to set the service mark for a performance measurement system that focuses only on the customer matrix. It's just a way to get a snapshot view and continuous view of the matrix around each of your customer segments. So again, we recommend that clients do a separate `flight deck' for each customer segment. And there are four things we suggest to measure and monitor _ the customer numbers, how you're doing and building the number of customers and the depth of your relationship; how you're doing on customer retention for that group; how you're doing the quality of customer experiences of that group measured by those `moments of truth' and the outcomes you've identified; and then how you're doing on profitability as defined by customer revenues minus cost-to-serve at the very basic.

The other thing that's very specific about this approach is that the matrix is measured in as near real-time as possible. So, the companies we work with are surveying all the time, every ten minutes if they can!

A lot of your work talks about the success of Tesco's online grocery retailing venture. On the other hand, Webvan, which was perhaps a trailblazer in online grocery retailing, landed in trouble. Why do you think this happened?

What I have noticed about Tesco is that unlike everybody else who went after the online grocery market, Tesco started with operational efficiency. It started by saying `If we were to do home delivery on a mass scale, how do we achieve the scale in each store and not build up separate distribution systems, a separate set of warehouses and so on'.

The interesting thing about Tesco is that the system was designed by a store manager. He knew exactly what the traffic patterns were in the store, he knew how to optimise it both for customers and the employees.

So do all good CRM systems need to involve frontline employees at the design stage?

Yes, absolutely. And they also need to go all the way back through. This is where my definition of CRM is a little different and explains why I call it CMR (customer-managed relationship) instead of CRM. Because, if you just focus on gathering information about your customers and marketing to your customers, and you don't focus on execution, how you actually deliver your products and services, then you are not going to actually get the rewards of CRM. You can spend millions on CRM systems, but if you don't actually improve the efficiency and effectiveness of how you deliver those products and services, it's not going to help.

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