Have Your Customers Changed and Has Your CRM Strategy Followed Suit?
Part 1: The Problem With Customer Experience
The topic of how the internet changed the way people buy stuff has been extensively documented and studied. In a nutshell, the internet destroyed the information asymmetry that compelled buyers to engage a sales rep for information such as pricing or discounts or product specs. The most conservative estimate of the completed phases in the sales cycle when a buyer finally contacts a seller is currently 57%. I consider this a widely accepted fact now and will not delve into it.
To contend with the buyer’s amplified voice and choice, sellers adopt the idea of customer experience. In another nutshell, with out-sourcing and globalization, products/services become increasingly difficult to differentiate on price, hence the need to design a unique customer experience. The stats currently in circulation point to roughly 80% of buyers being willing to pay more for a better experience. For example, if I walk into a retail store to buy a suit requiring some custom work, I’m willing to pay more for the store to deliver it at my home within 24 hours and custom-fit versus inconveniently returning to the store to retrieve it.
Where it breaks down...
To embrace customer experience, sellers turn to modern (read hosted) customer relationship management (CRM) software with the belief that the more data they amass about their customers, the more the customer’s experience can be improved based on the insights hidden therein. However, the numbers seem to indicate that CRM is not necessarily the panacea – in fact – the failure rate of CRM projects is roughly 70%. By failure, I mean the opposite of meeting the prior-intended objectives. For example, a sales VP procures CRM hoping the system empowers frontline staff only to realize the sales reps actually work for the CRM. The system is only as good as the data input by the users. Where does that leave us? Put simply – chasing the ever-moving customer with clunky technology.
So on the one hand buying behavior has dramatically shifted due to the internet, on the other, sellers with the right intentions fail to adjust despite deploying mostly internet-based CRM systems. Of course a number of factors collude to drive the failure rate upwards, but at the heart of the matter lie three key principles to consider. People, process and technology. In part 2 of my next brief article, I will discuss people. Stay tuned.