Common CRM Pitfalls and Misconceptions about Customers

Despite the plethora of advice about pitfalls and best practices, people still make tons of mistakes, said Scott Rogers (@jayhawkscot) of thinkJar.

The clearest evidence is the language companies use when they’re trying to describe success with customers. The vast majority of companies are not using the words that show they are focused on the end results of their strategies. They use company-centric words like retention, loyalty, and lifetime value rather than customer-centric words such as experience, satisfaction, and customer centricity.

Perception gap between customers and companies

What the customer thinks is important is very different than what the company believes the customer thinks is important as IBM discovered in its CRM Study in 2011.

The study asked companies why they think customers follow them on social sites. And then they asked customers why they follow companies on social sites. For customers, the most important reasons for following a company in a social space were discounts and purchases. Clearly not understanding their customers’ desires, companies rated these two variables as customers’ least important reasons.

While more than ¾ of companies have some form of customer feedback mechanism, less than 10 percent think their efforts are stellar, said Rogers.

Similarly, 80 percent of organizations think their customer experiences are good. Eight percent of customers agree, according to a report from Bain and Company.

“Competitiveness is far more about doing what your customers value than doing what you think you’re good at,” said Rogers, quoting Clayton Christensen.

People make emotional decisions about products. This is their thinking. When we make decisions, we have our own values and beliefs and our own hurdles, said Rogers.

Rogers continued his conversation by looking at different aspects of the purchase and relationship cycle (loyalty, relationship, satisfaction, experience, and brand) and placed each one under a customer and company lens, showing how divergent the two groups actually are.

Here’s his analysis:

Loyalty

Customer Lens

Rational Loyalty

Rewards/Perks – Can purchase that kind of loyalty
Irrational Loyalty

Habit/inertia
Convenience
Familiarity
Lack of alternatives
Fear of change
Risk aversion
Affinity loyalty

Belonging
Connectedness
Emotional bond
Company Lens

Locked-in
Repeat purchases driven by
Product preference
Brand preference
Incentives
Strong emotional bond
Relationship

Customer lens

Willingness to share or invest precious resources (time, information, attention) in exchange for preferential treatment
Emotional bond with brand company
Company lens

4 types: mutually beneficial, parasitic, predator/prey, and competitive
Series of interactions or transactions over time
Preferential commitment to a brand/company
Strong emotional bond with brand/company
Building step to lifetime value
Willingness to share or invest precious resources (time, information, attention)
Satisfaction

Customer lens

Result of outcome of perceived performance versus expectations (of product, service, interaction, etc.), filtered by time, memory, and post experience environmental factors
Static point in time assessment
Company lens

A silver bullet metric – In actuality, none really exists
Key building block for loyalty
Emotional measure of outcome of experience with touch points.
The famous Net Promoter Score (NPS) asks, “How likely are you to recommend this product or brand to a friend?” Rogers did his own analysis of the value of the NPS, but he didn’t ask that question until after a series of questions about how satisfied the customer was with the product. He realized that by asking the satisfaction question first it jogged the person’s memory about the product use experience. When they finally got to the NPS question it actually had a very poor correlation with their satisfaction.

Experience

Customer Lens

My perception of the experience is my reality – Tough for companies to ask about the journey.
Perceptions are unique
Perceptions are influenced by other pre- and post-experience factors, some of which have nothing to do with the experience
Perceptions are influenced by expectations
Company Lens

Sum of every touch point
Sensory stimuli and emotions generated while using product/service
Impact of touch points on rational and emotional needs and expectations of customers
Brand

Customer Lens

Defined by the customer
Influenced by company, friends, family, peers, reviews, etc.
It’s what the customer thinks it is. It’s not what the brand creates.
Sum of all perceptions, associations, and attitudes held by customers
Company Lens

Differentiator
Market asset created by marketing
Reputation
Emotional bond with customer
Sum of all perceptions, associations, and attitudes held by customer
Measure of Net Present Value (NPV) of future revenues
Premium pricing potential
Sentiment that doesn’t drive behavior can be an indicator of future behavior. Results can often take a long time to present themselves, said Rogers.

Customers have a value journey. You buy a product to get a job done, but then along the way there’s investigation, awareness, intent, purchase, and then support. At that point customers reflect on the value in use.

Recommendations

To reduce the customer-company perception gap, Rogers recommends:

Understanding the customers’ needs and values are critical to success – It’s their successful outcomes that matter.
“Your product/service is means to an end, and thus they are creating value with the product, not from the product,” said Wim Rampen.
Understanding the customers’ mindsets and perceptions are critical to crafting strategies and processes to improve the experience from their standpoint.
Attitude or sentiment does not always equal behavior. Identify when they do and don’t and develop strategies and tactics accordingly.
There are no single “silver bullet” metrics for satisfaction (e.g., CSAT, PTS), loyalty, or customer effort that will help you grow and improve your business. Why customers do what they do is not that simple.
Measure what is important to the customer (e.g., outcomes) not just what is important to you. Measure what you can take actions on, and those that have true cause and effect relationships.