Does customer loyalty pay itself off? Why CRM Failed?

Since 2002, CRM project had been quickly turned from boom to bust, because number of CRM implementations did not archive expected results. As a result, it has became a scary project for many CEOs.

Although, some people claimed that CRM implementation made relationship with customers worse than not having it, there were actually benefits to customers, who got better services, new innovations, better promotions, etc. Nevertheless, the problem was these benefit cannot pay off its investment, which normally is very high due to nature of CRM complexity to involve many departments and numbers of technologies.

On the other hand, another important reason that CRM project did not achieve its expected result is because everyone realized the benefits of CRM and was scared to be left behind, which likely to happen if only one company was differentiated by CRM. Therefore, they decided to implement CRM substantially because their competitors did, and, again, they are all square.

Although, everyone was all square, CRM might be still pay itself off if the overall industry can increase size of wallet share, for example, in case of giant retail store, everyone, Tesco, Carefour, Makro, Central, The Mall, have their own CRM and customer loyalty programs to persuade customers to spend more money to these retail stores.

However, there were only a few cases that the whole industry can increase wallet share by just implementing CRM or customer loyalty programs, since there are many others factors like preference, trends, technologies, innovation, etc.

Yet, customers have the same wallet size, so, if there are winners, there must be losers. In retail chain case, the losers are local pop-and-mom shops, which could be considered as an economics failure in term of inequality and monopoly.

How to Understand Customers

What are the values of the products to the customers?
What are the customers feeling about the products (comparing to other competitors)?
What are the customers expected from the products?

Simple question, but never been easy to answer. Does everyone in the company understand the meaning of these 3 quetions, what current reponses from customers are, and, more importantly, what can we do to improve the response. Additionally, marketer can learn from the response to understand the customers better and to further improve customer satisfactions and customer loyalty.

To find out the answer of those quetions, there are 2 ways of getting the answers:

1. Information System (CRM) – if you want to focus on existing customers
2. Market Research – good mixture of both quantitative and qualitative reserch will give understanding of customers for both existing customers (for in-dept understanding), and external customers (potential customers and competitors’ customers).

However, once we understand our customer needs and expected values, the next step is how should we do thing differently and what changes do we need to get better customer satisfaction or customer loyalty. To answer this question, it depends on value of the product and the way that user experience it.

For example, if the product was bottle water, customers would experience the value of the bottle water by seeing the bottle shape/design, looking at the price/promotion, opening the bottle, tasting it, and, perhaps, taking it with them in their bag pack. So, what you need to change is substantially about your product, price, promotion and place. On the other hand, if your product was a service, customers would experience the value of the service by preferred channels (e-mail, phone, walk-in, etc.), self-serving through internet (how easy/simple/effective e-service is), talking to an service/sale agent, waiting for an agent and getting their problem solved, etc.

Through the different ways of experiencing the value of product/service, marketer need to understand this in order to fix the right problem to, ultimately, improve customer satisfaction or customer loyalty.