The Future of CRM is Customer Engagement
What’s the future of customer relationship management (CRM) and what does it take to create lasting customer engagement? Recently Paige had the chance to sit down with Paul Greenberg, who’s sometimes referred to as “the Godfather of CRM.” Paul’s the author of CRM at the Speed of Light, a seminal work that’s been through four editions and is available in nine languages. He’s got another book coming out next year from the Harvard Business Press called A Commonwealth of Self-Interest, about business strategies and programs for customer engagement. He’s the managing principal of The 56 Group, a consulting firm, and describes himself as an “absolutely ardent New York Yankees fan.”
Their discussion ranged over the future of CRM, the role of marketing automation, and how to make connections with customers, whether they’re water utility customers in Scotland or hockey fans in Philadelphia. This discussion has been edited for brevity.
ACT-ON: The most successful companies are those that are customer-centric and know how to sell the way the customer wants to buy. What company or companies do you see doing this well?
PAUL GREENBERG: It’s interesting, the last 15, 20 years we’ve all been talking about customer centrism. It’s a good term. It means something. But it’s become bland; every company claims it and very few of them do it. “Customer engaged” is a more active term. It means that you have actually got the eyes and ears of the customer. And the customer is interacting with you; the customer is interested in you. That’s customer engaged.
I’ll give you two extremely different examples. One is Scottish Water, which is a utility company in Scotland. The other is the Philadelphia Flyers hockey team. Just to be clear I’m a Rangers fan. But I love the Flyers for what they’re doing.
Scottish Water spends hundreds and thousands of hours trying to figure out how to get the customers they have what they need. And they want the customers to help them do this. So they build major league customer engagement strategies. For example, I have a 230-page document on their current customer engagement strategy. It covers the approximately 125 things Scottish Power does. And they ask their users these kinds of questions:
“Which of these things are most important to you? Which ones are kind of medium? Which ones are low but still important to you? And which ones are just not all that important to you? Help us prioritize, so that we can budget and build accordingly.”
They do this through online surveys, focus groups (which I’m not a huge fan of), every avenue known to the human species, and every channel that is possible. This company is constantly interacting with their customers, getting their feedback, and building their models, and investing accordingly. And then, which is really important in this whole process, they tell their customers what they’re doing. They don’t just say thanks and go away, which is what happens nine-tenths of the time with feedback.
They say, here’s what we’re doing. And then they ask, does this work for you? The customer will say, maybe, maybe not. Then the company says to the maybe-nots: Tell us why not. They have the conversation. They move on. They figure it out. They move ahead again. So for example, a top priority issue might be the utility bill. The billing is too high, pricing is too high. An actual example of a low-level important issue was the odor of the water. Interruptions were a huge issue for them.
That’s not sexy at all. But that’s engagement – their customers are actually fully involved with them. And the company is acting on the decisions that they’re making together, providing the customers what they actually want.
So here’s my definition of customer engagement: It’s the ongoing interactions between company and customer – offered by the company, chosen by the customer. Key to everything.
So now, on the whole other end of the spectrum, we see the Philadelphia Flyers. They have two programs. One’s called How You Doing? [LAUGHTER] It’s been around for years. And secondly they have the Early Bird program. Now just so you understand: in terms of sports, the “customer” is a season ticket holder. That is the key customer in all of sports. The Flyers know that there are two things they have to do: retain the customers they have, and get new season ticket holders. That means that the ambiance at the stadium is going to matter. One goal is to convert the casual game goer to a season ticket holder.
So, the How You Doing? program is very simple. Every single person who comes to Wachovia Center is greeted. When you walk in the door, a staff member will greet you. Then they ask you a question: Can I do anything for you? And if that customer says – or the fan says – yes, that staff member is empowered to literally just leave their station and go do it immediately. That could be a senior vice president. It doesn’t matter. Every single person is responsible.
There’s a lot more to this, but I’ll put it this way:
- 87 percent of all the fans over the last five years have been greeted and have actively interacted.
- The fans rate the results, one to five. Five star meaning highly satisfying. 97 percent highly satisfied, five out of five.
The Early Bird program is this: We want you to renew your season ticket early. Not give us more money; renew early. The benefits are obvious. The Flyers get revenue in the bank, and they can start planning for the next season. It really has a huge uptick for them. How they do it? It’s the customer experience they provide, what I call “consumable experiences.”
The Flyers have everybody tiered, one through five stars, based on the propensity to renew. Five star, four star people get physical postcards. It’s not online, it’s not web, it’s not video on YouTube. It’s a postcard that lists the things you can get with early renewal, and the list is just wow-cool. For example (this is my favorite in particular) if you’ve got a kid between 6 and 14, that kid can go on the ice during a live game, and as the team’s coming out, they can high five the team. That’s amazing, that just blows me away.
There’s many more like that. And regardless of your propensity to renew, you get invited to the team barbeque. [LAUGHTER] It’s the one you go to and you just hang with the team all day. Any early bird renewal does that. So here are the numbers from a three-year study from 2010, 2011, and 2012:
- One star: 83.7 percent of all season ticket holders renewed early
- Two stars: 84.7 percent renewed early
- Three stars: It was 82 percent
- Four stars: It went up to 89 percent
- Five stars:92 percent
I don’t know if I’m exact on the numbers, but it’s close enough. 92 percent. That’s phenomenal. That’s engagement. That’s a team that’s customer-centric. They get it. The best thing, of course, is to have a winning season. But this team also knows you don’t have that all the time – and yet these guys are wildly successful. They’re selling out all the time, because they are fully engaged at every single level with the fans.
One other thing happens. Look, we’re all human beings, and there are only two things that we all have in common with each other. One, we’re self-interested; we each have an individual life we want to lead. The second is that we all want to be happy. So if you’re an employee of this team, you want to do things to help the team. But you’re also self-interested; you want something for it too. The team makes this happen. You can get high ratings as an employee from these fans, through these cards, and the greetings and so on.
And you get compensated for it. Not just small bonuses. If you’re really good, you can get a $1,000 bonus. You can get a vacation. This is in the DNA of the company. Everybody is engaged, employees, and customers, and management, and staff. Everybody.
So you have on the one hand Scottish Water. You have on the other hand the Philadelphia Flyers. Two extreme examples. Both customer-centric. But really, they’re customer engaged.
The future of CRM
ACT-ON: How do you see CRM evolving over the next few years?
PAUL GREENBERG: Let’s look back, say, 10 years. You had traditional CRM which everyone knew was sales force automation. Then marketing automation was incorporated into that, and customer service. But what wasn’t incorporated at the time was social channels. Then we had the communications revolution, the information revolution. And CRM evolved again, to social CRM.
With social CRM, in addition to those customer-facing functions, from a technology standpoint, they incorporated the ability to communicate with customers – because the customer is now controlling the conversation. Social channels became integrated technologically. Now what we’re seeing is a whole other big transition. Social CRM is no longer social CRM. It’s just CRM; every CRM application in the world has it. But there’s a huge transition going on. It’s a monster.
We’re moving to a place where customer engagements are becoming primary. A McKinsey survey showed that for 69 percent of the surveyed corporations, customer engagement was top of mind, the number one of the top three things they were concerned about. Gartner is forecasting by 2017 that the market for CRM will be $37 billion. It’s probably still one fifth or sixth of what the customer engagement market’s going to be.
So you know what CRM becomes in this? It becomes a subsumed market, a submarket inside of a larger customer engagement market. And CRM, despite the many battles I and others have waged, has become the technology to handle the operations and transactions of customer-facing businesses. It’s the system of record. It’s going to grow, but at the same time it’s going to occupy a specific place in a much bigger kind of – I don’t use the word revolution very lightly, so I’m not going to call it that. But say, a much bigger evolution of the market toward engagement.
ACT-ON: Do you see marketing automation playing a role in helping companies deliver a unified customer experience?
PAUL GREENBERG: Marketing automation is part of CRM from an umbrella standpoint. But what’s been interesting about marketing in particular – I’m just going to eliminate the “automation” piece for a second – what’s interesting about marketing in particular is that it has become by far the hottest single area of the customer-facing universe. But it’s also beginning to morph. It’s morphing into marketing – not at the place to push messages in the face of people, but as the first line of engagement. It’s not just where you intersect the customer for the first time; it’s also about how you keep the customer engaged.
This all goes to the heart of how it handles customer experience. Marketing is now becoming aligned with sales. And that’s a big deal. It’s actually a very big deal. It was first identified by Peppers and Rogers back in 2008 with a paper called “The New Power Couple.” And then very funnily, Aberdeen Group did an entirely different paper in 2011 also entitled “The New Power Couple.”
The whole idea basically showed that the alignment of sales and marketing actually improved, A, the revenue of a company, and B, the experience customers have with the company because it was a coherent interaction between the two departments who had been at odds historically, because they had different objectives. So now what you see is, A, marketers being given revenue objectives; and B, discussions going on between the two departments so that they are marketing the campaigns and the messaging is aligned. Sales people are not necessarily altering the corporate marketing, and marketers are sensitive to what salespeople need.
Now what’s the benefit to a customer? Well, benefit one is the customer doesn’t get confused by hearing one message from the corporate level and another from the sales guy. So there’s a certain level of confidence that it’s either built or retained depending on the relationship of the customer to the company to begin with. Secondly, because marketing has the technology to make messaging consistent and scale it, the messaging becomes something that customers can see here – and see there – and see everywhere.
And that’s important. I mean that’s beyond important. Because the customer is saying, I want to see this on the web, I want to see this in an email, I want to see this – to put it in the current horrible term name, “omnichannel.” (The world’s worst name. It’s accurate, but it’s the world’s worst name.)
So, marketing automation serves that omnichannel experience that people are looking for. It’s one of the strengths of marketing automation, that it can normalize things. Meaning you can have consistent messaging, you can have the capability to actually accomplish what you need to accomplish and measure it, you can have the ability to get it to the customers in the places they want to see it, in the way that you want to get it there. And that’s important. But it’s not very sexy, and most sales and marketing people love the sexy stuff, the real hot stuff.
But most customers actually don’t. Most customers what whatever it is they want, when they want it. And they want to hear what they need to hear and learn what they need to learn the way they want to learn it. And that’s it. They don’t really have to be delighted all day and night. They simply have to be satisfied enough to want to continue to interact with you. And marketing automation technologically enables that.
ACT-ON: Very enlightening! Thank you, Paul.
PAUL GREENBERG: Thank you, Paige.